GTM Best Practices

Remember the Obama Administration plan to double exports as a way to rebuild the US economy? Well it looks like the one part vision and a pinch of desire to change is not enough.  The New York Times has analyzed the progress so far, with mixed results, and highlights the many barriers to achieving the goals of the National Export Initiative (NEI).

The challenges include:

• Manufacturing Leadership. We are becoming more and more of a service economy.  As the country is fighting to exit the recession, companies are uncertain of their ability to access capital and invest in the US in this time of increasing regulation and taxes.  Simply put,  manufacturing capacity and jobs are being exported (but unfortunately don’t count towards the doubling objective).  So if you aren’t producing more how do you export more?
• The Rising Strength of the Dollar. The Euro bottomed with the banking crisis and has caused the dollar to appreciate.  While China has talked about slowly appreciating the renminbi, it is still promoting a steady flow of exports to world markets, and increasing competition for US Exports.
• The Political Sensitivity of Trade Agreements.  As the election year approaches, I can’t see Congress getting too aggressive on trade agreements.  Clearly from a State-level there are winners and losers when trade agreements like NAFTA are implemented.  Who is going to fire up the old job debate now when the economy is stuck in neutral and slowly rolling backwards?

Exports in the first four months of 2010 have increased by 17 % versus the same period in 2009. However today we learned that the real trade deficit increased in June from $46bn to $54bn.

Clearly we aren’t playing on a level field and struggle with trade barriers erected by countries around the world.   For example, a wine industry expert says, “The single most restrictive barrier to wine exports remains the high import tariffs of most of the major markets buying U.S. wine today.”

Read more about the barriers to increasing exports at the New York Times: Hurdles Deter Obama’s Pledge to Double Exports.

Thanks to Lauren for the inspiration for this post.

I ran across this report from Management Dynamics.  Check it out.

Benchmark Report: Export Compliance Management

This report profiles export compliance programs of large, small, & medium-sized enterprises in many industries to reveal challenges companies face in managing export compliance. Receive a copy of the Export Compliance Benchmark!

When most people think of export compliance, images of large multinational corporations come to mind. Universities are in the business of education and they don’t sell products, so why would a university need export compliance procedures?

Since 9/11, the U.S. government has become increasingly concerned with foreign nationals on student visas gaining access through research grants to sensitive information and technology. Because of increased scrutiny, one incentive is the cost of non-compliance. Penalties range from 5 to 10 years imprisonment and fines of $250,000 to $1,000,000. Additional costs include loss of contracts, grants, employees and other collaborative efforts. Some of the recent violations include:

• Professor convicted for allowing unauthorized foreign citizens access to restricted technology in violation of the Arms Export Control Act
• University fined for financial dealings with Iran and Cuba
• Universities cited for failure to obtain licenses for access by foreign nationals to military technology
• University involved in unauthorized export of biological materials

Knowledge is power. University of Tennessee faced its second count of export violation this year because its professors were unknowing violating export laws. Read more about this case from this Denied Party Screening blog.

After reading an article recommending to consult freight forwarders for export regulations, ExportLawBlog says:

“The defense of “my freight forwarder did it” is the export law equivalent of “the dog ate my homework.” It’s not going to keep you from doing detention. Worse, many freight forwarders have no working knowledge of export laws and little interest in complying because DDTC and BIS usually whack the exporter not the freight forwarder in these matters.”

So hear is another good example of informed compliance.  Quite simply, if you are the exporter or the importer of record, you are ultimately responsible for what your trading partners do.  Given this, we see many companies starting to implement the process and information systems required to keep their company in compliance.

One place to start is with Web-based access to an up-to-date database of international trade rules and regulations that can help answer tough trade questions before they bite you.

Former University of Tennessee Professor John Reece Roth was recently sentenced  to 48 months in prison for violating the Arms Export Control Act.

U.S. District Judge Tom Varlan said UT professor emeritus J. Reece Roth could have caused “harm to the security of the United States” by allowing foreign national students, one from China and one from Iran, to work on a contract to produce technology to be used on unmanned Air Force drones.

Varlan noted that the Air Force was forced to scrap the research out of fear it had been compromised, although there was no testimony at Roth’s trial last year that any foreign government actually had accessed the information or that Roth ever had tried to sell or give the information to foreign governments.

Roth repeatedly has said he did not believe that mere research and the results of that research violated the Arms Export Control Act. However, Varlan said testimony showed Roth continued to allow foreign national students access to restricted data and even took various reports to China with him after he was twice warned by UT officials about the law.

Interested in learning how you can better manage this facet of trade compliance?  Check out more details here.

A nice overview of the export compliance process showing key technology enablers.  Good 3 minute overview for management to understand what you are trying to do…Introduction to Automating Export Compliance.

You can’t mess with export controls, especially if you deal with sensitive technologies.  Here’s an example of the consequences of export control violations: Atmospheric Glow Technologies and former University of Tennessee professor J. Reece Roth.

July 2006: Feds start inspecting.
June 2008: Company files for bankruptcy
August 2008: Company pleads guilty
May 2009: Prosecuters recommend 5  – 6 1/2 years in prison for Mr. Roth. Meanwhile sentencing will take place at another hearing at an undetermined date in the future.

Props again to International Trade Law blog:

Dr. Roth faces a maximum penalty of five years in prison and a $250,000 fine for the conspiracy and fraud convictions. The 15 convictions for violating the AECA each carry a maximum penalty of 10 years in prison and a $1 million fine.

Atmospheric Glow Technologies faces a maximum criminal fine of $1,000,000 and a maximum term of five years of probation for each of the 10 counts.

KnoxNews.com has good coverage of the whole saga