How to navigate new global markets both confidently and smoothly with BlueBlox

Trade compliance involves operating within the various global regulations that surround trading activities, especially the import and export of products, services, information and technology. It essentially refers to the obligation of businesses to comply with the laws and regulations of the countries involved in cross border trade.

The complex regulatory frameworks impacting business’ daily operations are often not harmonised across trading nations, however, navigating the seemingly endless requirements – from customs to tariffs, licenses, valuations, origins and export controls – amid an ever-changing global trade environment can be increasingly challenging. As nations change their sanctions policies to address the current state of foreign affairs (often with little warning), so do the national regulations that companies must follow in their global trade compliance processes.

And the consequences for not complying? Firstly, and perhaps most importantly, are the hefty monetary fines that companies and individuals can incur. These can even lead to bankruptcy in the case of smaller organisations and run up enormous legal bills for those facing criminal sanctions for more serious offences. Additionally, extra operating and warehouse costs, wasted time, product delays, seized shipments and logistics disruptions are also commonplace. For businesses, regardless of size, what is certain is that non-compliance will ultimately eat into your bottom line.

Getting trade compliance right, on the other hand, ensures you’ll meet the demands of customers and suppliers, all while supporting long-term growth, sustainability and competitive advantage. It’s essential for mitigating risk, protecting corporate reputations and employees in the process by facilitating legal and responsible trading. Money is further ultimately saved in the long run by the avoidance of penalties, delays and investigations.

The Key Elements

Valuation

All imported goods must establish a value in order to calculate customs duty, import VAT and trade statistics. If this calculation is found to be in error, it can lead to fines, along with under or over payment of duties. As this is one of the more common elements to be disputed by authorities, it is also integral that, as a business, you are able to defend your valuation methodology and calculations, avoiding disruptions or further investigations.

Things get more complex when the imported goods being valued are classed as service support products. Essentially falling under the umbrella of post-sales maintenance, these items are not in and of themselves products that are bought and sold but rather care items relating to warranty, training, repair or upgrades. They are often the hardware or software parts that keep our daily devices running, and are further critical to the smooth operation of a wide range of institutions, including, perhaps most notably, institutions such as hospitals and banks. These can further be delivered directly by the manufacturer of the product or (as in the case of emerging markets) independent or third-party providers who may or may not be aligned with the original manufacturer.

The key question that thus arises here is: How do you value goods that are not a part of a monetary transaction? Valuation is subject to a strict hierarchy and methodology that must be thoroughly understood in order to get right. International valuation agreements set by the World Trade Organisation (WTO) must always be upheld and are in place to promote fairness, neutrality and uniformity in customs duty assessment.

Tariff classification

Tariff classification is the process of determining the correct commodity code for your goods to have them accurately identified and recorded. It is fundamental for customs compliance as well as establishing accurate duty rates, the origin of goods, export control, amongst many other customs procedures. It is also relatively easy to get wrong, leading to lengthy investigations and fines at the border, along with an incorrect payment of customs duty. If the duty you are paying is too little, you may end up having to make up for the deficiency, and if you have been paying too much, it is highly unlikely you will be refunded.

Origin

Origin is split into two categories: preferential and non-preferential. The former relates to specific trade agreements between (most commonly) two and (sometimes) groups of countries. If the goods you are exporting are subject to preferential rates of duty, it most commonly means that they have met the criteria of either being manufactured from materials that have been grown or produced in the beneficiary country, or have undergone a certain amount of working or processing in the beneficiary country.

The latter applies in the absence of any trade preferences and refers to the data element on each international shipment dictating the origin of where the good being shipped was grown, produced or manufactured. Two basic concepts determine the origin of goods: wholly obtained products and products having undergone a last substantial transformation. The first applies when only one country is involved in producing a good, the second when two or more are involved.

Licenses and permits

There are numerous controls surrounding the import and export of certain products, particularly those that fall into the categories of medicine, chemicals, technology, military, art and animals. Attempting to move such goods without the corresponding license is a criminal offence, resulting in pricy penalties, legal charges, and confiscation. The best way to stay compliant is to establish specific license management controls with clear lines of responsibility.

Importer of Record (IOR)

An IOR is the legal entity or person in the destination country that is responsible for ensuring compliance requirements are met before internationally imported goods can be cleared through customs. Generally, any locally registered entity can act as the IOR, though they must have a presence within the intended trading country to do so.

When an entity is not present to ensure that all entry documents required by the customs authorities (i.e. product classification, payment of duties and taxes and valuation of products) meet the applicable regulations of the country of importation, an IOR service provider can be appointed to help. Appointing an IOR service provider can enable companies to enter into new territories without having to deal with the hassle or challenge of setting up legal entities in those markets, which can be incredibly expensive. Again, this is particularly critical for businesses that deliver service support, as well as those with business models built on e-commerce, the circular economy, and off-shore sales.

So, how can BlueBlox help?

Established in 2014, BlueBlox is an international trade compliance consultancy known for enabling and streamlining cross border trade. Serving multinational high-tech or telecommunications companies and manufacturers, BlueBlox works to reduce the gap between international agreed standards and local practical application, consulting on both trade compliance and Importer and Exporter of Record (IOR/EOR), as well as offering support with trade facilitation and government negotiations. What truly sets the leading business apart is that it does so within tough emerging markets in Africa, the Middle East and Eastern Europe, helping clients penetrate and reap the rewards of less explored markets while overcoming the complex trade and legislative barriers that guard them. In doing so, BlueBlox hopes to empower both international and local markets to grow exponentially.

The company utilises its strong network of field consultants throughout Africa, the Middle East and Eastern Europe – who are well equipped with local, operational and legal knowledge – to provide expert advice on international and national trade-related matters. All solutions are tailored according to specific client and country requirements, and the company’s people-centred approach ensures that all stakeholders involved benefit from a smooth and compliant trade programme that address current and future goals. Moreover, the consultancy is continually working on new products and services that focus on making trade more accessible and understandable for economic operators both big and small in accordance with its core belief that “business should be easy…”.

What are the different services available?

Trade Consulting

The trade consulting services provided by BlueBlox differ depending on the specific requirements or challenges affecting a client’s business. These services are tailored and divided into three approaches subject to client’s needs: proactive, active and reactive.

Proactive solutions concern information and advice and are aimed at clients or individuals who like to be prepared and aware of various legislations and regulations before the major challenges hit. For example, one of the most beneficial services found in this category is ‘market assessment’. This involves BlueBlox’s experts evaluating whether it is worth entering a market based on its economic and political status, ease of entry, transparency, access to information, and accuracy of operational execution by authorities. It is the ultimate way to ensure businesses make smart decisions that benefit them in the long term rather than hastily jumping into something that could turn out to be a damaging waste of time, money and resources.

Active consulting is aimed at the hands-on individual or companies that always want to make processes and operations better. It focuses on what a business wishes to improve next through the completion of reviews, comprehensive analysis, and the drafting of development plans. For example, valuation defence development is a key player in this type of strategy and involves clients working closely together with BlueBlox’s incredibly insightful team to draw up a comprehensive defence in the event a value is challenged. This service can further be extended to tariff or origin defence and is based on local interpretation of legislation as well as internationally accepted standards.

Reactive consulting best fits those who find themselves to be in a crisis and need urgent assistance. It is geared towards resolving challenges and empowering clients to not give up in the face of adversity. Customs, valuation and classification disputes are all covered under this option, as are any challenges relating to imports, exports, documentation, and operations.

Trade Facilitation

BlueBlox is more than aware that sometimes getting advice (no matter how thorough) is just not enough. For this very reason, it offers trade facilitation services that allow its experts to get into the challenge with clients, helping them to solve issues side-by-side. Cross-border trade involves complex legislation, regulation, theoretical application and local practices. Thus, when facing challenges in the emerging markets, the art is in knowing how to combine these various elements into well-designed, compliant solutions that provide tangible results – and this is exactly what BlueBlox enables its clients to achieve, even when faced with significant obstacles.

The company’s trade facilitation services are split into two distinct approaches. Proactive facilitation is all about preventing issues from arising and involves BlueBlox’s experts exploring the legislative and operational requirements a client is subject to through engagements with local authorities. Reactive facilitation concerns situations that arise outside of a client’s control, with resolutions focused on BlueBlox representing a brand or business in every way possible, acting as an ambassador on their behalf during any required negotiations. It is important to note that despite being trade lawyers, BlueBlox believes that most disputes can be resolved through discussion and clarification, avoiding the stress, time and costs of litigation.

Instead, the consultancy aims to develop solutions that end as a win-win for all involved. It helps to keep in mind that the legislation in developing markets is often not just inconsistent, but in some regions, only partly implemented. Thus, by incorporating the needs on both ends of the trade compliance spectrum, BlueBlox opens up the space to develop the expertise and competency of officials in the chosen trading country, creating a sustainable and legitimate infrastructure that benefits the broader economy. To further ensure that both service options deliver the impact required, BlueBlox makes a point to continuously develop and leverage its relationships with governments, chambers of commerce, and the WTO in Brussels, providing mutually beneficial, compliant solutions.

It is through its unique model of trade facilitation that BlueBlox has been able to obtain significant breakthroughs on behalf of its clients in some of the world’s toughest emerging markets. For example, within the Nigerian market, BlueBlox secured an export approval signed by the nation’s very president, enabling the consultancy’s client to export its service parts out of Nigeria – an operation that would normally be prohibited. The massive win has ensured BlueBlox’s client continues to export its previously trapped goods (valued in excess of $7 million) out of Nigeria correctly and compliantly and operate their service support business model with confidence to this day.

Another incredible milestone reached by BlueBlox was achieved within the Egyptian market when the company’s experts obtained the first valuation ruling in 150 years in a client’s favour. Through the collection and distribution of coherent documentation, the consultancy proved that its client’s calculated value and valuation methodology were in fact correct, compliant and in accordance with GATT, the WTO customs valuation agreement, and the Egyptian Customs Legislation. With this ruling, the client’s service supply chain in Egypt has since operated seamlessly, without uplifts, disputes or customs delays.

Trade Performance

Trade performance develops, maintains and improves businesses’ end-to-end supply chain infrastructure and ensures compliance, flexibility and agility so that even when things are going very well, they are sure to stay that way. It’s all about continuous improvement, and BlueBlox works on a one-to-one level with clients to create a set of measures that control and optimise efficiency. These considerations include operations and cycle time, cost and expenditure, compliance and risk, and people and processes. Once a set of relevant measures are effectively implemented, key performance indicators can further be established to identify and address areas of concern and opportunity, allowing for continuous growth. In this way, businesses are provided with the visibility and accountability needed to have confidence in their operations. Areas of expertise that BlueBlox covers under this strategy include customs approved trader schemes, free trade agreements, free zone operations, documentation review, compliance organisation structure, and supplier capability.

Trade Training

As has become increasingly evident: in the world of global trade, mistakes can cost you and your business dearly. As such, it is of the utmost importance that all teams involved in a business’ cross border trade operations and transactions understand the implications of their actions. BlueBlox’s training solutions enable all functions, sales, logistics, compliance and legal teams to be readily equipped with the information they need to make informed compliant decisions.

The consultancy offers a five-step approach to establish which of its courses are best suited to individual business needs and goals. It begins with an assessment to ensure its team fully comprehends the business’ current level of understanding and in which areas it needs to be developed. This is followed by the ‘assembly’ stage, during which the experts will assemble the training material that addresses a business’s unique requirements, followed by the delivery of said material through engaging, practical sessions. Team evaluation is next and involves course leaders validating understanding. Finally comes management review, which sees BlueBlox’s team review the benefits of the training programme with real-life examples derived from the client’s daily operations data.

IOR/EOR Advisory

Drawing on years of both practical and operational experience in IOR and EOR services, BlueBlox’s consulting team helps clients streamline and optimise their existing IOR and EOR service solutions. For those that do not already have a framework in place, the consultancy is able to assist any company in building a solid foundation with a step-by-step guide that takes in individual business models. This is followed by the creation of an IOR and EOR network that is then implemented in a client’s chosen trading country (so long as the IOR model is applicable there). More precisely, BlueBlox can assist with design and deployment, legislative defence, local supplier vetting and auditing, contract structuring, and pricing evaluation and benchmarking.

For those with an IOR or EOR solution already in place, BlueBlox can help elevate these models taking them to the next level with targeted consulting, facilitation, performance and training solutions that specifically improve processes and streamline any service support or spare parts supply chain.

Essentially BlueBlox is well positioned to support business through a multitude of trade challenges they may face within the African, Middle Eastern or Eastern Europe markets. The consultancy is known helping businesses in their cross-border trade, while they specialise in IOR and EOR Advisory services specifically geared in helping companies improve their service support and post sales supply chains.

BlueBlox GmbH has been awarded Trade Compliance Company of the Year by the Switzerland Prestige judging panel. The judges were particularly impressed by the legal and operational knowledge possessed by the BlueBlox team, enabling it to expertly advise on complex legislations across a range of jurisdictions, as well as a comprehensive understanding of the culture, language and intricacies of the specific developing regions in which they operate. For more information, please visit www.blueblox.ch.