Digitization Continues to Hit Crossborder Transactions

Globally operating businesses must overcome processing hurdles for added supply chain efficiency in free trade agreement management


While the provided benefits that Free Trade Agreements (FTAs) present—such as increased trade, economic growth, additional services, lower product cost—help spur market expansion and opportunities for countries operating under FTAs across the world, it is vital to consider the continuing technological mandates that will affect business processes for companies in those countries.

The June 1st passage of the Ventanilla Unica de Comercio Exterior Mexicano (VUCEM) system is one such mandate that adds to the growing list of federal regulations requiring digitized documents. Established by the Mexican government, the system enables importers, exporters and other involved parties to send electronic information once to a single entity to comply with all requirements of foreign trade. And a number of companies such as MFI International and Integration Point already implement the portal throughout their business processes—which any companies looking to trade with Mexico will have to abide by.

“We have customers on a global scale and we see more and more countries and government offices moving in this direction of acquiring electronic data,” explained Melissa Irmen, Senior Vice President, Products & Strategy, Integration Point. “And every time we go into a new situation in a different country, the same thing happens. The U.S. Customs and Border Protection has been working on their new system, the Automated Commercial Environment (ACE), for a good while now and one of the functionalities that they are bringing to play is the ACE Document Image System (DIS)—which again falls along the lines of this idea to take electronic documentation with a single entry filing.”

Commercial invoices, packing lists, invoice working sheets, TSCA import certification forms and specified EPA, APHIS and NOAA forms are among some of the documents that may be submitted during the first phase of the DIS testing.

As such systems strengthen border security and enact more efficient trade practices—replacing the paper trail with a digitized, always traceable trail—they also cut down on manual labor and consolidate numerous processes into one automated method for added cost savings.

“The perception is that the VUCEM portal will increase business in Mexico,” said Lalo Solorzano, Director of Global Solutions, Integration Point. “Now, you no longer have to run through the red tape of putting together an invoice and a Certificate of Origin and a permit and all the stacks of papers you need to physically enter and exit Mexico. Instead of having so many people doing one process, for example the solicitation of documentation from their suppliers, they have one person breaking down the process of a Bill of Material to figure out what makes it qualify or not qualify for an FTA.”

Industry impacts

And while any industry can benefit not only from FTAs but electronic documentation, the ones that will be impacted the most are the high-volume shippers “because of the time it takes for them to present physical paper work versus electronically,” Solorzano explained. Industries such as automotive or ones moving a large range of electronic parts and components require product classification which generates a high volume of invoices—an area which is a key target for electronic documentation. In fact, according to a recent mid-market report from Amber Road, 97 percent of survey respondents perform some type of product classification. And while two thirds of those approximate 150 respondents did indicate that they continue to use manual processes—such as paper manuals or Web-based research—59 percent agreed that they need to do more with their existing export compliance program or need to initiate a program.

And the more progressive companies will realize that just as FTAs help them, so too will they realize that automation helps them generate added cost savings, according to Anthony Hardenburgh, Vice President, Global Trade Content for Amber Road and former International Trade Specialist for the U.S. Department of Commerce.

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