Proponents list a host of benefits from FTAs, including:

- Expanded access to markets for both goods and services

- Greater protection of intellectual property rights

- Growth in jobs that would accompany the opening of new markets

Taking this into consideration, Management Dynamics offers a comprehensive Free Trade Agreement (FTA) management solution that provides solicitation and qualification in order to determine if a company’s product is eligible for preferential treatment. This can have a significant impact on the applicable duties for their products resulting in reduced total landed costs.

To learn more about the Free Trade Agreement Solution, read the full press release here.

Join our webinar, Best Practices for Managing Free Trade Agreement Management Processes, to learn how your company can successfully implement and optimize NAFTA.  Broadcasting live on Tuesday, April 19 at 2pm EDT, presenters will address key findings from this industry benchmark study.  Presenters include:

• Suzanne Richer, President, Customs & Trade Solutions, Inc.
• Scott Byrnes, Vice President of Marketing, Management Dynamics, Inc.
• Moderator: Lara Sowinski, Managing Editor of World Trade magazine

 Join us on Tuesday, April 19 at 2pm EDT.  Register today!

On one side, local and national business leaders are urging Congress to approve the agreement, citing the success of NAFTA and its effect on US exports and job creation. President Obama, at the time of his signing of KORUS-FTA, stated that deal would “boost US exports to 11 billion and support at least 70,000 jobs.”

Failing to act would hurt the US as well, proponents of the measure argue, as South Korea is in talks with Canada about a free trade agreement and has already inked one with the European Union. If approved, these agreements create a more attractive trading option for South Korean businesses than what the US has to offer, and thus inevitably decreasing the amount of US exports to South Korea.

If approved, the US will benefit from the gradual reduction of South Korea’s current tariffs of up to 40%, all the way down to zero in 95% of industries within three years, with most remaining tariffs being eliminated within ten years. This will obviously aid many trade industries by reducing the cost of trade and opening new opportunities, including the auto industry and the National Cattlemen’s Beef Association (NCBA), who, along with 60 other food and agricultural groups and companies, have sent a letter to Speaker of the House John Boehner (R-Ohio); House Democratic Leader Nancy Pelosi (D-Calif.); Senate Majority Leader Harry Reid (D-Nev.) and Senate Republican Leader Mitch McConnell (R-Ky.) in support of the recent agreement.

However, not all businesses and politicians support the agreement because they believe the agreement will actually hurt US businesses and create major job loss due to jobs going overseas. California, one of the US’s largest traders with Korea, lost 800,000 jobs due to NAFTA, according to the California Labor Federation, and would likely see further erosion of jobs with another free trade agreement.

California does not necessarily hold the trend for the rest of the US, as it shares the closest ties with South Korea with more than half of a million South Koreans living in the state, and thus is the most vulnerable economically.

Overall, free trade agreements will at the very least increase opportunities for US businesses to increase exports, and will likely save or create jobs as well. The free trade agreement is even more vital if the EU and Canada agreements get finalized, as US cannot afford to fall behind and lose export revenue to the Asian economic giant.

Receive the Trade Agreement Best Practices Benchmark Study Now!

Implementing and maintaining compliance with a free trade agreement is a complex and technical process. Make sure your company takes full advantage of the trade agreement savings by benchmarking your process against 300 respondents across many different industry verticals and revenue size.

Download the Trade Agreement Best Practices Benchmark Study today to learn key insider information related to program management challenges, monetary savings, legal responsibilities, and strategies to help your firm initiate and sustain an effective program.

International Sourcing Strategies

Taking a proactive approach to the implications of offshore sourcing helps protect your bottom line. Many North American manufacturers are finding it increasingly challenging to deal with a growing influx of imported materials and products originating from off competitors, especially those based in China and India.

These competitive pressures are compelling Canadian and US companies to consider various measures to protect market share, including shifting their sourcing arrangements for components, peripherals and finished products outside of North America, to take advantage of lower cost alternatives originating in the emerging economies of Asia, Eastern Europe and South America.

This post highlights the importance of doing the appropriate research and background checks of all the cost and regulatory elements BEFORE you commit buying components or finished goods from new off shore vendors.

Why is this more important than ever?

Because North American manufacturers have traditionally sourced most of their materials in the US., Canada or Mexico, where duty is generally not an issue of the goods are NAFTA qualifying, and Customs and regulatory issues are well documented and understood. These assumptions can not be taken for granted when sourcing goods outside North America. Canadian and US importers are encouraged to review the full spectrum of variables, including currency exchange ratios, marking and packaging requirements, duty rates and tariff treatment, anti-dumping/countervailing duty applicability, duty drawback eligibility, and NAFTA eligibility, if the offshore components are incorporated into products ultimately sold in Canada or the US.

For example, purchasing motors in China that are incorporated into machines you manufacture in Canada for sale to a customer in the US, may negate the finished product’s NAFTA eligibility and duty free status, thereby increasing the ultimate cost of the product, and possibly eroding your margin or forcing you to raise your retail price and risking your competitive position.

Conversely, if you purchase the motors from China and sell them to an US customer in the same condition and without modification, you may be eligible to recover all Canadian duties paid at time of import under the Duty Drawback program. Of course you will need to assess all the trade offs to arrive at a bottom line comparison that takes all the factors into consideration, and gives you and “apples to apples” view of the offshore versus North American sourcing options.

Taking a proactive approach to studying the implications of off shore sourcing can confirm that you will achieve the desired competitive cost advantage, help you avoid unexpected costs or surprises, and minimize the probability of unexpected regulatory issues with Canada Border Services Agency or United States Customs and Border Protection

However, developing expertise on the complex rules associated with NAFTA and free trade agreement qualification is difficult and individuals within firms responsible for signing certificates may not have the expertise required to complete the form.

After surveying import and export compliance managers from 200 firms, Customs & Trade Solutions Inc and Management Dynamics have compiled key statistics into our latest benchmark study, “Best Practices for Managing NAFTA and Free Trade Agreement Programs.”

Despite the hurdles for developing NAFTA and Free Trade Agreement (FTA) expertise, the programs bring strong benefits to companies.

For exporters, signing a NAFTA certificate allows their customers to legally declare a lower, preferential duty rate in the receiving country – making the exporter’s product more competitive on pricing than exporters not qualifying their product for NAFTA.

For an importer, cost savings associated with NAFTA qualifying products can be high and a major impact on the company’s bottom line. Most survey respondents  recognized savings of $50,000 to $500,000 annually due to NAFTA and/or other Free Trade Agreement qualifications – a strong indicator for the company to continue to pursue free trade agreement programs.

The benchmark study also revealed key findings in NAFTA qualification management:

• 86% of all firms used a manual process to manage their NAFTA data
• Only 34.3% of all companies were confident of the information they shared with Customs and their Customers through the NAFTA certificate
• 32% of respondents have had their customs group audited in the last 3 years

Additionally, firms qualifying products for trade agreements realized significant savings, with 28.2% of the participants posting savings of $500,000 or more per year. Clearly working with trade agreements can result in substantial savings to a firm, justifying both the staff and training programs for maintaining accuracy with the filing of NAFTA certificates.

On the other hand, 36% of all companies could not qualify their duty savings through their NAFTA / FTA programs. Management resources are generally allocated to programs where impact on the bottom line is quantifiable – so the key insight here is to start measuring your savings (or unnecessary spend if you have not implemented NAFTA) in order to secure future support of your programs.

Best Practices for Managing NAFTA and Free Trade Agreement Programs

Curious about what else the survey uncovered? If you’d like to benchmark your best practices, download the NAFTA Benchmark Report for yourself!

As companies turn to the supply chain to wring out additional cost savings, one of the most exciting areas of value creation is in the area of Foreign Trade Zones (FTZs).

FTZs were established in 1934 to stimulate economic growth by allowing companies to operate in a specially designated area, outside the Customs territory of the United States.  Now, seventy five years later, companies are still generating tremendous returns by reducing or eliminating duty payments, and minimizing transactional costs.

This webinar will help you build your business case for an FTZ as well as present a case study of best practices in the application, activation and on-going administration of a zone.

Register for the WT100 Webinar: The Business Case for Foreign Trade Zones

What you will learn:

• The overall process to apply for and certify an FTZ
• The key business benefit areas to present to senior management for approval
• Best practices in on-going administration of your FTZ
• How an FTZ fits in an overall Global Trade Management deployment

If you’re busy that day, sign up anyway. You can play back the scheduled broadcast anytime you like.

Global Trade Management: Strategies for Mastering Trade Compliance and Supply Chain Complexity.

For this research report, Aberdeen surveyed 136 global exporters and importers in August and September of this year.

Their findings revealed that trade compliance teams are actively revamping and augmenting their Global Trade Management (GTM), specifically their Global Trade Compliance programs, to stay current with supply and demand fluctuations, growing global operations, increasing operational complexity and risk, and trade lane changes.

Here are a few key findings in the report:

• Best-in-Class companies had 8.2% in average trade compliance cost to value ratio
• Best-in-Class companies achieved 95.0% perfect order rate received on imports received from international suppliers
• Best-in-Class companies experienced 96.0% for perfect order rate delivered on exports to international suppliers/customers
• Best-in-Class companies improved their average trade compliance cost to value ratio by 1.4% improvement, year over year
• Best-in-Class companies increased their total land cost per unit handled versus prior year by 0.6%, a 5.5 percentage point

Last week, two high-level officials “‘exchanged views on the timing and venue of an upcoming ministerial-level meeting on the trade agreement,’ said Carol Guthrie, a spokeswoman for the U.S. Trade Representative’s office.”

The two countries signed the agreement more than three years ago. It has languished because of U.S. auto industry concerns that it removes remaining U.S. tariffs on South Korean cars but does not do enough to eliminate non-tariff barriers that keep American cars out of South Korea.

Read the complete article: U.S. and South Korea eye date for trade pact meet.

In other news, the Governor of California, Arnold Schwarzenegger, called for ratification of the trade agreement during a speech made at the American Chamber of Commerce in Seoul:

“One of the most powerful tools to spread freedom, peace and prosperity is free trade and free enterprise. In his State of the Union Address, President Obama pledged to double American exports in five years and I commend him for his vision. Now we need to see the action,” said Governor Schwarzenegger. “The U.S.-Korea Free Trade Agreement, and two others, has been gathering dust in the halls of Congress for over three years. And while we stall, other global leaders are picking up the slack. The ratification of these agreements will lead to increased exports, production and investment, all of which create jobs at a time we need them most. So I say to Congress, if your number one priority is stimulating our economy, approve these free trade agreements so we can start putting people back to work — not next month, not next year, but right now.”

Read more of the Governor’s statement at: Governor Calls for Approval of U.S.-Korea Trade Agreement from the California Chamber of Commerce.

EAST RUTHERFORD, NJ, August 10, 2010 — Management Dynamics, a leading provider of Global Trade Management solutions, today announced the release of Trade Planner 3.0, a scenario-based planning tool that helps supply chain teams quickly and accurately evaluate alternative sourcing and distribution strategies to optimize total landed cost while assessing the impact of trade regulations.

According to U.S. Customs and Border Protection, companies import nearly $2 trillion worth of products annually from over 150 countries, a number that is expected to triple by 2015. With the increasing pressure to cut costs, accommodate new trade regulations, and take advantage of new preferential trade agreements, businesses need planning tools to improve the design of their global supply chains.

“Companies today are moving beyond sourcing decisions based on the lowest product invoice and are evaluating multiple dimensions including transportation costs, duties and taxes, regulatory compliance, and other country risk factors,” said Janet Suleski, Research Director, Gartner.  “Scenario-based planning solutions provide key players across sourcing, logistics and compliance with the ability to make faster, more accurate sourcing and distribution decisions.”

With Management Dynamics’ Trade Planner solution, users can quickly and easily compare the costs of sourcing and distributing one or multiple products from multiple locations to identify the optimal decision.  Trade Planner allows users to import product descriptions, classify products and store classifications by country in a product repository.  Trade Planner is fully integrated with Management Dynamics’ Global Trade Content and supports classification by the Harmonized Schedules and Export Control Numbers for over 122 countries, and identifies all applicable embargoes, prohibitions, license requirements, and other product specific barriers to importing and exporting.

“Businesses are increasingly global in scope and need new planning tools to continually monitor total landed cost, model the cost reduction opportunities of shifting a supply base, evaluate new preferential trade agreements and assess the impact of new trade regulations,” said Nathan Pieri, SVP Marketing & Product Management, Management Dynamics, Inc.  “Today, some of the world’s largest companies in retail, food service, electronics, and apparel, are utilizing Trade Planner 3.0 across the enterprise to collaborate and make better sourcing and distribution strategies by considering both cost and associated risks.”

Trade Planner 3.0 is an on-demand application that can be quickly and cost-effectively deployed – typically in a few days.

For Additional information:
Make better-informed sourcing and distribution decisions. Maintain import and export compliance with on-demand access to the most comprehensive source of global trade content in the industry. Learn more at Trade Planner.

About Management Dynamics, Inc.
Management Dynamics is a leading provider of global trade management solutions that improve the performance of global supply chains for importers, exporters, logistics service providers, and carriers. The company’s solutions synchronize the flow of information among trading partners, optimize supply chain execution decisions, and streamline import and export processes to ensure trade compliance and minimize cost and risk involved in cross-border transactions. Management Dynamics’ time-proven solutions are used by more than 14,000 global users at some of the world’s most successful 3PLs, carriers, manufacturers, retailers, and high technology companies.