This was recently shared by Theresa Garcia from Roanoke Trade
Amber Road, formerly Management Dynamics and a provider of global trade
management systems, has released a study on U.S.-based mid-market companies'
export compliance challenges and found they are increasingly at risk of
violating federal regulations.
Of the 150 companies surveyed, 23 percent
do not screen for restricted parties prior to engaging overseas customers. For
those that did perform this screening, 30 percent make checks manually using
spreadsheets or Websites. Only 41 percent of respondents had a comprehensive
export compliance program.
“The good news is U.S. exports are growing, and
mid-market companies in particular are increasing revenues by accessing foreign
markets,” said Scott Byrnes, vice president of marketing at Amber Road.
“Unfortunately, it appears that many mid-market companies aren’t fully aware of
the regulatory requirements governing global trade.”
The concern with this
lack of knowledge is that criminal and civil penalties for export control
violations are often harsh. Companies can face criminal penalties of up to
$500,000 per violation for "dual-use" export (items with both commercial and
military applications) control violations and an individual faces up to 10 years
in jail. Civil fines reach $12,000 per violation and can also include denial of
export privileges.
Respondents said a lack of executive sponsorship was a
primary reason for their trade compliance deficiencies.
According to a
March Bureau of Economic Analysis report, U.S. exports grew 7.7 percent from
January 2011 to January 2012. The bulk of the growth was related to small and
midsized companies. Companies of this size also accounted for 97.8 percent of
all U.S. exporters, according to the most recent report by the U.S.
International Trade Commission.
Other noteworthy findings from the report
include:
- 20 percent of companies don't have formal export compliance programs.
- 66 percent use manual processes to classify products.
- 35 percent have a management team that is somewhat aware of the regulations, but have no involvement in the compliance process.
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