Majority of companies not positioned to reap savings from new free trade agreements, Vastera study finds
Dulles, VA — March 22, 2005 — A large majority of U.S. exporters are not taking full advantage of duty savings associated with new preferential free trade programs such as the U.S.-Australia Free Trade Agreement, according to the results of a study conducted by global trade management (GTM) specialist Vastera.
The preferential trade agreement between the United States and Australia became effective the first of this year, yet in researching approximately 60 U.S. companies that export goods to Australia, Vastera found that, in some cases, millions of dollars worth of duty savings remain unclaimed.
One such company, a global manufacturer that has outsourced its duty minimization program, will obtain a benefit of over $3 million dollars annually by leveraging Vastera to certify its goods against the rules of origin and properly qualify for the U.S.-Australia Free Trade Agreement, the solution provider said.
"The complexity associated with understanding and leveraging free trade agreements is beyond the scope of many companies because they either lack the expertise, resources, technology or all of the above to do it efficiently and cost-effectively," said Adrian Gonzalez, director of the Logistics Executive Council at ARC Advisory Group. "Many companies eventually come to a decision point: either invest internally or outsource to a provider such as Vastera."
The reasons cited by companies for not taking better advantage of new free trade agreements include:
According to the Port Import Export Reporting Service (PIERS), the top U.S. exports to Australia include paper products, tires, hardware, automotive parts, and lawn mowers and garden equipment.
Additional Articles of Interest
Imminent terrorist attacks or no, your competitive advantage demands that you secure your company's supply chain. Read more in "Supply Chain Security: Is Your Company Complacent or Engaged?," in the August/September 2004 issue of Supply & Demand Chain Executive.
For a look at how Tyco Fire & Security is tackling trade compliance issues in its global supply chain, see "Turning Global Trade Compliance Into a Competitive Advantage," in the August/September 2004 issue of Supply & Demand Chain Executive.
For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:
Dulles, VA — March 22, 2005 — A large majority of U.S. exporters are not taking full advantage of duty savings associated with new preferential free trade programs such as the U.S.-Australia Free Trade Agreement, according to the results of a study conducted by global trade management (GTM) specialist Vastera.
The preferential trade agreement between the United States and Australia became effective the first of this year, yet in researching approximately 60 U.S. companies that export goods to Australia, Vastera found that, in some cases, millions of dollars worth of duty savings remain unclaimed.
One such company, a global manufacturer that has outsourced its duty minimization program, will obtain a benefit of over $3 million dollars annually by leveraging Vastera to certify its goods against the rules of origin and properly qualify for the U.S.-Australia Free Trade Agreement, the solution provider said.
"The complexity associated with understanding and leveraging free trade agreements is beyond the scope of many companies because they either lack the expertise, resources, technology or all of the above to do it efficiently and cost-effectively," said Adrian Gonzalez, director of the Logistics Executive Council at ARC Advisory Group. "Many companies eventually come to a decision point: either invest internally or outsource to a provider such as Vastera."
The reasons cited by companies for not taking better advantage of new free trade agreements include:
- The proliferation of free trade agreements. Today, more than 300 trade programs exist around the world, and more are being developed. The U.S.-Australia Free Trade Agreement went into effect in January of this year, while the new Mexico-Japan trade program is expected to take effect in April. Some companies are still struggling to maximize fully older programs like NAFTA and are unable to keep up with the growing number of programs being enacted.
- Bandwidth. In many cases, the logistics or global trade departments at companies are too stretched to handle the complexity and detail associated with participation in numerous free trade programs. The infrastructure and support to leverage these programs simply does not exist.
- Lack of in-house expertise. Global trade management is a niche market that requires experts with deep knowledge. Many companies do not have the in-house experience required to manage such programs effectively.
According to the Port Import Export Reporting Service (PIERS), the top U.S. exports to Australia include paper products, tires, hardware, automotive parts, and lawn mowers and garden equipment.
Additional Articles of Interest
Imminent terrorist attacks or no, your competitive advantage demands that you secure your company's supply chain. Read more in "Supply Chain Security: Is Your Company Complacent or Engaged?," in the August/September 2004 issue of Supply & Demand Chain Executive.
For a look at how Tyco Fire & Security is tackling trade compliance issues in its global supply chain, see "Turning Global Trade Compliance Into a Competitive Advantage," in the August/September 2004 issue of Supply & Demand Chain Executive.
For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:
- Making Global Supply Chains Work Supply and demand chain practitioners take on the challenges and opportunities of world marketplace.
- The Hidden Costs of a Global Supply & Demand Chain - Veteran industry observers warn of potential hidden costs of offshoring.
- Mastering the Complexity Challenge in the Global Supply Chain - While many companies are acting globally, they are still thinking locally.
- Ensuring Security of Supply in the Lean Supply Chain - Balancing the demands of security with the requirements of today's lean supply chains
- The World Is Enough - Making the global high-tech supply chain more accessible.
- More articles about Vastera.
