In today's interconnected world, the expansion of international trade presents exciting opportunities for e-commerce businesses to grow globally. However, crossing borders comes with complexities, regulations, and potential risks that require careful attention. That’s where compliance comes in – staying current and adhering to global trade regulations is not only a legal obligation, but also a strategic necessity that can have crucial effects on a brand's reputation, profitability, and competitiveness. In this article, we’ll discuss the significance of trade compliance and how it sets the foundation for a successful international business plan, along with keeping you informed about recent regulation updates.

Why Is Trade Compliance So Important?

One of the primary reasons staying compliant with trade regulations is essential for global brands is the mitigation of legal risks. Non-compliance can lead to severe penalties, fines, and shipment delays, ultimately putting your company’s operations, profit, and access to foreign markets in jeopardy. 

Aside from the obvious legal requirements, maintaining a comprehensive understanding of global trade compliance will streamline logistics. In-depth knowledge of customs requirements and necessary documentation as well as import and export regulations ensures the seamless movement of your products across borders. As a result, supply chain efficiency improves, shipping delays reduce, and overall customer satisfaction increases.

And last but not least, being compliant can even give your business a competitive edge in the marketplace. International trade is a dynamic landscape with rules often undergoing changes due to political, economic, and environmental factors. Staying up-to-date with any developments enables your brand to proactively adapt to new challenges and stay ahead of the curve. Additionally, meeting country-specific regulations will grant you access to new markets, expanding your customer base and revenue potential.

Keeping Up with Customs and Trade Regulations

Navigating the complexities of international trade isn’t easy, especially with ever-evolving rules and regulations. That’s why partnering with a shipping carrier like Passport with in-house compliance experts is essential to ensure your company’s long-term success in the global marketplace. Our team is constantly monitoring regulatory developments to help brands become and stay compliant.

Here are three recent updates brands should be aware of:

• In March 2023, the European Union (EU) implemented ICS2, an advanced import control system for all goods entering the market that requires carriers to electronically submit mandatory information like Harmonized System (HS) codes and product descriptions before packages arrive in the EU, Norway, and Switzerland. ICS2 compliance is vital for brands to prevent shipping disruptions due to customs delays and avoid additional charges for inaccurate HS codes or unacceptable product descriptions. Enhanced enforcement went into place on July 19th, 2023.

• The Canada Border Services Agency (CBSA) released their verification priority list for July 2023 which ensures trade rules are being followed through targeted checks. The main components being audited include appropriate HS codes and correct product valuations, as well as the accurate application of origin rules. As an example, this month apparel was selected for valuation, which means CBSA will be focused on compliance related to the correct payment of duties and taxes on these goods.

• The New Zealand (NZ) tax authority is recently cracking down on goods and services tax (GST) registration for e-commerce transactions. GST registration is required for US businesses with sales in NZ exceeding $60k NZD (~$37k USD) within a 12-month period. If you register for NZ GST, you will need to charge the 15% GST at checkout, even for orders valued under the $1,000 NZD (~$630 USD) de minimis tax threshold.

In summary, the importance of trade compliance and staying on top of regulation updates cannot be emphasized enough. Beyond the legal requirements, it plays a critical role in a company’s overall success and sustainability in international markets. Staying compliant mitigates risks, fosters supply chain efficiency, unlocks new market opportunities, and keeps you ahead of the competition. Embracing the significance of trade compliance is an indispensable foundation for businesses aiming to thrive in the dynamic world of global e-commerce. 

How Passport Can Help

Passport’s team of licensed customs brokers and trade advisors is ready to guide you through the complexities of compliance in international markets. We're dedicated to offering brands support in classifying products, determining proper goods descriptions, and keeping you informed of relevant regulation updates. If you need assistance or have any questions, reach out to us at global.trade@passportshipping.com.