Trade Compliance Groups Seeing Bigger Role as Companies Adjust to Tariffs

The rapid changes in trade policy have elevated the need for adroit trade compliance management at international companies that hadn't previously been so concerned with customs duties, said two compliance professionals who spoke at the American Association of Exporters and Importers Annual Conference in Washington on June 28. "It's been an overall breaking down walls of communication" among the various groups at the company who "historically" didn't interact very often, said Antoinette Montoya, corporate export-import compliance manager at Bechtel Corporation. Now, though, "we've had a lot of really good strategic relationships built out of this," she said. Whatever happens with subsequent administrations, those relationships will "really help us in the long run," Montoya said.

Keeping senior management apprised of trade policy changes has become an important part of his job, as has sifting through regulatory text and making it easier to understand, said Richard Kloostra, Americas trade compliance manager at Hexion, a chemicals company. "Quoting regulation will completely confuse people a lot," he said. When "you lose somebody within the first two minutes of the conversation, forget it, they're done. You're going to have a tough time reeling them back in."

At Bechtel, a global construction and project management company, when there's a trade policy development, the senior management gets a summary with three or four lines saying "this is what we've seen in the news, this is actual or proposed, and what projects might be affected," Montoya said. The summary will then go into more detail about the specific projects, she said. Bechtel also uses a "knowledge management system" that includes far more information, including quotes from the regulations and links to the text, Montoya said. Bechtel is also meeting quarterly with its clients to help keep them up to date with regulatory changes, Montoya said. The Section 232 tariffs have had the biggest effect on Bechtel and construction clients, so the company gives updates on various components of the tariffs, including on customs rulings and exclusion requests, she said.

The trade remedies have also created some opportunities for the trade compliance groups to be helpful in other parts of their businesses. Kloostra said that soon after the Section 301 tariffs hit, "we got word from our customer base that a Chinese supplier was using a different tariff code than we were when we were importing," he said. Hexion sought and received a binding CBP ruling that confirmed that Hexion was using the right code, he said. "Then our sales team got to use that almost as a marketing tool to go out and show the customer 'We got this from U.S. Customs. This is the correct tariff code. It is coming in with a 25 percent duty from China, so buy from us.'"

Bechtel is using foreign-trade zones more as a way to defer costs related to both the Section 232 tariffs and antidumping duties, Montoya said. "Antidumping is getting to be a bigger and bigger factor in the costs of some of our steel," she said. There's been a game of "whack-a-mole" in recent years in which "once we get one thing under control, something else pops up." Whether that's an antidumping order, or changes to Section 232 tariffs on Turkish steel or quotas on steel from Brazil, Montoya's had to stay nimble, she said. "One project in the United States for Brazilian materials coming in would have used up that entire quota," she said. Bechtel has "had to deal with each item as it pops up specific to a project, so it's been interesting, to say the least," she said.

Within Hexion, the global trade compliance group is based in the company's procurement office, Kloostra said. That's somewhat unusual, but it "allows us to work with our commodity managers with our sourcing strategies and allows us to help them with trade optimization," he said. The increased profile of trade has also led to some "interesting questions," Kloostra said. For example, "'HTS, what is that? Is that a Canadian tax?'" and "'Can't you call somebody'" so that Indian goods can be imported under the Generalized System of Preferences again?