Though less dramatic, there are also other financial risks. Where imports attract tariffs or duties, items purchased from overseas may turn out to be more expensive if, for example, the wrong tariff code is applied. Importers can pay more than necessary if the paperwork omits mention of any one of dozens of "preferential programs" under which tariffs are cut, or waived altogether, owing to a slew of free trade agreements. Moreover, even more expensively, tariffs for some goods vary throughout the year, as low-tariff special quotas expire, with the end result being that what seemed a bargain when the purchase order was placed, could turn out to be an expensive mistake when goods enter customs.
In addition to language barriers, and different formats for weights, units of measurements (UOM), dates, telephone numbers, addresses, etc., global trade management (GTM) and international trade logistics (ITL) compliance issues are other hurdles for e-business. Collaborative e-business applications must be able to comply with a variety of complex regulations to engage in global trade, and companies that cannot handle these regulations will end up leaving "a lot of money on the table" and walking away with very little profit.
There are some indications that almost half of the international orders to US via e-commerce remain unfulfilled because companies cannot handle the necessary customs and duty procedures. On the other hand, billions in US import duty refunds go unclaimed each year by companies that do not understand the trade laws. For example, under the US government's "duty drawback" scheme, importers that subsequently re-export what they import can be refunded up to 99 percent of the duties they paid; however, this is on the condition that they can prove that, for example, the widgets they are exporting are the same widgets they imported. This can be especially difficult to prove when the widgets in question are parts that are built into a complex assembly, and are regularly sourced from more than one supplier across the globe.
Further, customs requires that all imports be coded and categorized, and, because these codes vary among countries, they must also be harmonized from country to country, while restricted-party screening regulations may apply to products that cannot be imported or exported between specific countries for national security, health, and environmental reasons. All imports, for example, must specify a Harmonized Tariff Schedule (HTS) identification code to US Customs—a code which is found within the Harmonized Trade Schedule of the US, a two-volume catalog almost eight inches thick. Moreover, one must read it carefully, since previously acceptable descriptions like "general industrial goods" are no longer permitted. Even worse, the same type of product, made from different material will fall under different tariff laws. To illustrate, leather gloves attract one tariff, wool gloves another, and lined gloves still another.
To that end, many GTM solutions providers offer products that will extract data from a supplier's advance shipment notification (ASN) to create a US Customs Form 7501, which is used to collect duties and other fees, and which must declare exactly what is in a shipment coming to the US port. The system can even forward this electronic document to the user company's customs broker, ensuring that the shipment is ready to clear customs before it leaves the country of origin. Additionally, besides classifying each item in the shipment in line with official tariff codes, such as the HTS, the solution should also flag merchandise that is regulated by government agencies other than Customs.
For example, a retailer may import many items that incorporate animal products such as furs, feathers, skins, and bone, which are all regulated by the US Fish and Wildlife Service. Thus, a shipment that includes even one of these products must wait while the importer files the necessary documents, and, lo and behold, many shippers, and even their suppliers, do not realize that an item such as a shirt with mother-of-pearl buttons requires special treatment. A GTM application should automatically identify and separate items that need to be processed through Fish and Wildlife or other agencies, and allow other non-Fish and Wiildlife merchandise, to be cleared and moved. It should be able to create a separate entry for the Fish and Wildlife and only delay that portion of the shipment one day. Furthermore, once the system has assigned a code to a product, it will automatically attach the same code every time the company brings that item into the US, which will result with future saves in time-consuming chores.
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