What can SMEs do?


All economic operators may benefit from trade facilitation measures, such as simplified customs clearance, comprehensive guarantees or authorized trader programmes. To benefit from these measures, operators and government engage into a partnership.

The trading community can do its part to become a trustworthy partner for government and benefit from such trade facilitation measures. They can change their conduct-of-business, namely their compliance management (*1), actively engage in private-public consultation and stay informed of the legal and regulatory framework. This entails knowing and respecting legal obligations regarding financial solvency, record keeping, accounting standards, and duty of care.

This means that SMEs have to, at least:

  • Put in place internal procedures to assess compliance risks and ensure compliance with regulatory requirement, including, amongst others, requirements resulting from Customs law regarding classification, valuation, preferential origin certificates and anti-dumping and countervailing duties, IP law, and trade law regarding export and import licenses, dual use goods, and international sanctions.
  • Put in place desk procedure to verify information submitted to government authorities and commercial partners, and review government decisions.
  • Establish a reliable system for record-keeping, ideally integrated or cross-referenced with the internal accounting system that allows a complete tracking of goods and shipments.

SMEs that would like to join Authorized Trader or Authorized Economic Operator programmes should inform itself of the detailed requirements of such programmes, in particular in the area of security and safety requirements for infrastructure and staff, and professional qualification requirements for staff.

Record-keeping

This term describes the rules regarding retention of records, recordkeeping requirements and procedures governing the maintenance, production, inspection, and examination of records.
Requirements for record-keeping span across several government agencies and result from different bodies of law including Customs and tax law. Generally, the rules define the required period (between 3-10 years), and the form in which the records must be stored (originals, paper and or electronic form), the obligations of third parties, such as clearing agents or freight forwarders to keep records on other operators’ behalf, and the examination rights of the relevant government authorities.

Example of record-keeping requirements of US Customs law - §1508 Tariff Act of 1930 (*2)

§1508. Recordkeeping
(a) Requirements
Any:

  1. owner, importer, consignee, importer of record, entry filer, or other party who —
    (A) imports merchandise into the customs territory of the United States, files a drawback claim, or transports or stores merchandise carried or held under bond, or
    (B) knowingly causes the importation or transportation or storage of merchandise carried or held under bond into or from the customs territory of the United States;
  1. agent of any party described in paragraph (1); or
  2. person whose activities require the filing of a declaration or entry, or both;


shall make, keep, and render for examination and inspection records (which for purposes of this section include, but are not limited to, statements, declarations, documents and electronically generated or machine readable data) which:

(A) pertain to any such activity, or to the information contained in the records required by this chapter in connection with any such activity; and
(B) are normally kept in the ordinary course of business.

Duty of care

Under Customs and commercial law duty-of-care commonly requires adherence of the operator to a standard of reasonable care when performing import and export activities.
This principle includes the duty to keep informed of applicable laws and regulations, to comply with regulatory requirements, to provide correct information and data to the government authorities, i.e. the obligation of 19 U.S. Code § 1484 to use “reasonable care” when making an entry with the US Bureau of Customs and Border Protection.

Duty-of-care is an important notion in case of an infringement of Customs law or other laws which can be treated as obvious negligence if it results from a lack of reasonable care. Operators need to apply particular care when classifying and determining the value of goods themselves, which commonly is not considered a minor error but an infringement and serious offenses and may lead to the imposition of penalties.

Tools

EU AEO Guidelines ; European Commission (2016) TAXUD/B2/047/2011 –Rev.6
US Bureau of Industry and Security Compliance guidelines: how to develop and effective export management and compliance program and manual

Integrated Services for MSMEs in International Trade (ISMIT)

SMEs can use the services of the online integrated platforms for accessing comprehensive services for participating in international trade. Currently, the UN/CEFACT is working on a such a concept titled, Integrated Services for MSMEs in International Trade (ISMIT). The ISMIT concept proposes an integrated, end-to-end eCommerce trade services platform for MSMEs to more effective engage in cross-border trade. The services can include access to logistics service providers, financing services, insurance services as well as regulatory services that can either be through connectivity to a Single Window or directly to Customs for export and import declarations and to other government administrations. The UN/CEFACT project can be followed here.


(*1) This entails that Operators keep pace with regulatory requirements and adopt procedures and controls to ensure compliance.
(*2) Record “the terms includes any information required for the entry of merchandise (the (a)(1)(A) list) and other information pertaining to, or from which is derived, any information element set forth in a collection of information required by the Tariff Act of 1930, as amended, in connection with any activity listed in paragraph (a)(2) of this section. (19 CFR § 163)