International Trade Compliance Software: How It Works

David Noah | February 13, 2019 | Export Compliance
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International Trade Compliance Software: How It Works | Shipping SolutionsOne of the more frustrating parts of this job is seeing the costly mistakes small and midsize exporters make when it comes to export compliance.

Because they aren’t “one of the big guys,” some U.S. companies think export compliance regulations don't apply to them (or that they won’t get caught if they don’t follow the regs). Instead, they ignore the regulations, or they breeze through their company’s compliance process and neglect to cross all the T’s and dot all the I’s.

Alternately, many small and medium-size businesses either don’t know or don’t understand the requirements until it’s too late.

This is wrong—and reckless. Even the smallest U.S. business that sends its products to customers outside the country is subject to a variety of export regulations and could face substantial penalties for violating them.

There’s no way to get around it: Exporters must understand the regulations that govern compliance. The good news is, once you’ve taken time to understand the regs, implementing compliance is easy with trade compliance software solutions.

Download the free white paper: What You Need to Know about Export Compliance

Your Best Bet for Export Compliance: Trade Compliance Software Solutions

International trade compliance solutions like those offered by Shipping Solutions make it easy to integrate export controls into your exporting process.

  • It helps you make more informed decisions about who you’re shipping to.
  • It gives your team a repeatable process anyone can follow.
  • It provides an audit trail that shows you’re doing your due diligence.

It’s not only the easier way to be a successful exporter, it’s the best way.

How Trade Compliance Software Works

Shipping Solutions offers several trade compliance software solutions, which we call Trade Wizards. These Wizards help exporters and importers ensure they are following regulations for everything from product classification, to license determination, to denied parties screenings, and more.

Because your export and import compliance needs may differ from what other companies need, we’ve made our menu of tools à la carte, so you can subscribe to only those services you actually need. Here’s a little bit more about them:

Product Classification

Shipping Solutions’ Product Classification Wizard helps your company to identify products' correct Schedule B or Harmonized System (HS) code, both of which are required on your export documents and import paperwork.

It also searches the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) to see if the government identifies your product as a controlled item; once identified, it then helps you determine the proper Export Control Classification Number (ECCN) or the U.S. Munitions List (USML) category required for export license determination.

 

Export Controls Wizard

The Export Controls Wizard allows you to use the ECCN or USML code you just found to see if your product requires an export license and if there are any potential license exceptions you can use for your particular item.

 

Restricted Party Screening

Government export regulations prohibit trade with specific individuals, companies, institutions and organizations. Instead of publishing the names of all these denied parties in a single list, each government department and agency with jurisdiction over exports publishes its own list, which means there are dozens of lists to check!

With our Restricted Party Screening Wizard, you can check all the U.S. lists—as well as the United Nations list, European Union list, and lists from several other countries—at one time and in just seconds. That’s 140+ lists you can check against your customers with the click of a button. (It even works when government websites do not—like in the case of a government shutdown!)

 

Shipping Solutions Professional

This software helps you create and manage compliant, accurate export documents and meet your AES filing requirements; it even includes the Restricted Party Screening and Export Controls Wizards built in. With Shipping Solutions Professional, you have access to a shipment log that enables you to record and keep track of all your compliance efforts, so you are prepared in case of an audit. It is an essential part of your export documentation process.

Request a Free Demo

Request a free demo to see how Shipping Solutions software will help you ensure compliance.

If you’re not ready to take your exporting compliance to the next level, and you’re just interested in learning more about the process you should follow for each export transaction, keep reading.

The Export Compliance Process

1. Determine Jurisdiction

The first step in export compliance is to determine who has jurisdiction over your goods. While most items are controlled by the U.S. Department of Commerce under the Export Administration Regulations (EAR), your items may not be, especially if they have a direct military application. In that case, they may fall under the jurisdiction of the State Department's Directorate of Defense Trade Controls (DDTC). You can learn more about determining jurisdiction here.

2. Classify Your Product

You then need to determine a USML or ECCN classification for your products. Depending on the classification, you will also need to determine whether or not you need a license to export that item. You can get the step-by-step guide for product classification in our free white paper, How to Determine if You Need an Export License.

3. Check for Restricted Parties

Restricted parties are individuals, businesses and other organizations that have been identified as engaging in activities related to the proliferation of weapons of mass destruction; are known to be involved in terrorism or drug trafficking; or have had their export privileges suspended. All exporters should check all the parties in every export transaction against the various denied party screening lists to prevent incurring penalties.

To make it easier to stay in compliance and save precious time, try our Restricted Party Screening Wizard for free, so you can be sure that you are accessing the most current information available. You can also do this manually via the Federal Register, but be aware that the number of lists to be checked is large, and the task time-consuming, but you could face jail time if you are found to be in violation of these regulations.

4. Check for Red Flags

Even products that seem harmless can sometimes be used in ways not intended. Companies are responsible for knowing how their products will be used once they leave the country. Some of these end uses are prohibited, while others may require an export license.

For example, companies may not export to certain entities involved in the proliferation of weapons of mass destruction (e.g., nuclear, biological, chemical) and the missiles to deliver them without specific authorization, no matter what the items are. BIS publishes a list of Red Flags that may be indications that the use of a product may be prohibited.

5. Document Your Compliance

A properly implemented Export Management and Compliance Program (EMCP) will help ensure your company is following all processes and procedures correctly and reduce the chance of violating export regulations. In the event your company accidentally violates export regs, a well-written EMCP can substantially reduce penalties, as long as you can document that you regularly follow the written EMCP procedures. The BIS considers that a strong mitigating factor when determining penalties.

6. Use Software to Tie It All Together

Instead of using multiple tools, manual processes, and more, use trade compliance management software like Shipping Solutions to manage every aspect of your exporting. You’ll be able to oversee all aspects of exporting including:

  • Creating more than two dozen export documents to print or email.
  • Filing through AESDirect on the ACE portal.
  • Running export compliance screenings.
  • Importing orders seamlessly from your ERP system.
  • Documenting the steps in your export compliance program.

Using one tool for all your exporting needs shows that you are serious about becoming a successful exporter. To see how Shipping Solutions can help your company meet its export requirements, just fill out the form below to arrange a free online demo of the software.

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