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About the Author

J. Anthony Hardenburgh
Vice President, Global Trade Content
Amber Road


J. Anthony Hardenburgh brings over 12 years of international trade experience to Amber Road where he manages a global team of international trade professionals who monitor and maintain the company’s vast amount of trade compliance content. Prior to joining Amber Road, Anthony served as Vice President of Global Trade Content for JPMorgan Chase Vastera. During his six years with the company he managed a global team of trade professionals responsible for supporting both its software and managed services operations. Previously, Anthony served as a Director for From2, a global trade management company located in Miami, FL. Prior to From2, Anthony served as an International Trade Specialist for the US Department of Commerce. As an International Trade Specialist he was responsible for counseling small to medium size exporters on exporting their goods and services. Anthony has a Bachelor in International Business from Virginia Polytechnic Institute & State University and an MBA from Marymount University. 

For more information, please visit www.amberroad.com


Supply Chain Comment

By J. Anthony Hardenburgh, Vice President, Global Trade Content, Amber Road

November 21, 2013



Taking Advantage of the Canadian – European Union Trade Agreement

Benefits, Challenges and Best Practices of CETA


Hardenburgh Says:

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Utilizing CETA can enable you to have the ability to improve profit margins by three to seven percent on exported product.
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Canadian Prime Minister Stephen Harper bills it as bigger than NAFTA and the biggest trade deal ever made by Canada. The question is: how can you take advantage of the Canadian – European Union Trade Agreement (CETA)?

What It Is

CETA affects almost every sector of the European Union (EU) and Canadian economies and is the EU’s first major agreement with a member of the G8 group of the world’s main economies. With the EU being Canada’s second largest trading partner after the United States and Canada the EU’s 12th largest trading partner, the impact of the agreement on exporters will be substantial.

According to a joint report by the European Commission and the Government of Canada, CETA removes over 99 percent of the tariffs on goods moving between including agricultural, seafood, metals and mineral products and is expected to increase the level of bilateral trade by 23 percent, or nearly $35 billion annually. Exporters are expected to save more than $670 million annually and Canadians about $225 million annually.

Below are the benefits of utilizing CETA, potential pitfalls, and four best practices to take advantage of the agreement.

Benefits of CETA

 
 

Expands trade between the two geographies

 

 

Sets parameters and guidelines for intellectual property and copyrights

 
 

Strengthens protections for investments and property

 
 

Opens global markets, particularly for small and mid-size businesses

 
 

Improves profit margins and lowers tariffs and other barriers for exporters

 
 

Increases competitive advantage of Canadian and EU exporters

 
 

Eliminates regulations restricting international trade

 
 

Reduces transaction costs and risks

 
 

Increases trade regulation transparency

 
 

Facilitates and harmonizes customs procedures

 
 

Provides non-discriminatory access to the chance to provide goods and services

 


Challenges to Utilization

There are a number of complexities and costs associated with capturing the benefit of CETA. You need to be able to:

 

Accurately track purchased part information such as the country of origin, as well as special program or trade program indicators

 

Have tools and a system in place to obtain parts information from suppliers and collaborate with them to improve data accuracy and timeliness.

 

Collect the duty savings “post transformation” by qualifying each saleable good against the country’s rules of origin. Failure to do so can run the risk of being non-compliant and can lead to fines and other penalties.


Four best practices to take advantage of CETA


1.

Establish a Supplier Management Program


To effectively utilize CETA you need to have a supplier management program to collect information supporting a preferential status claim, such as a certificate of origin and a trade program certificate. To consistently collect this information your supplier management program should have an established communication protocol; clearly explain the reason and benefits of the program; and include training on your systemized response mechanism and format.


2.

Implement Multi-sourcing Data Visibility


Multi-sourcing data visibility is a must for your CETA qualification process. Supply chains are setup to run efficiently, meaning shorter lead times, optimal safety stock, and low cost sourcing. As a result, a company could source one product from many different countries to achieve varying degrees of each. Understanding where a part came from dictates eligibility.  You will need to keep separate information for each part and individual supplier to make sure the part is eligible for CETA.

3.

Automate the Solicitation and Qualification Process


Automating the solicitation and qualification process allows you to support high volumes of supplier solicitations, rules of origin content information, analysis and certifications without manual intervention. A campaign management tool allows you to create mass solicitations using purchased part data for many suppliers at once and for any given trade program. Your campaign management process should allow you to target the correct suppliers; request only what is relevant; streamline the response process; and check and validate responses. Automating the qualification process allows you to analyze the bill of material against the rules of origin and available certificates to determine whether the item is eligible without classifying or managing certificates for parts not affected by the qualification process.

4.

Use CETA as a Springboard to Expand your Free Trade Agreement (FTA) Portfolio

Once you have a compliance program in place for CETA, you can use it as a base for rapidly supporting other trade agreements. Often the only primary difference between FTAs is the rule of origin content - the bill of material information and supporting business data can be fully reused. Repurposing data for other FTAs allows companies to extend the qualification process across a number of FTAs with a declining margin cost per agreement.


Final Thoughts


Utilizing CETA can enable you to have the ability to improve profit margins by three to seven percent on exported product. However, capturing the full potential of this agreement requires systems and processes to identify the best sourcing strategies and synthesize the rules of origin.  By establishing a supplier management program, implementing visibility across your supply chain, automating the solicitation and qualification process you will be ready to take advantage of CETA when it is fully ratified in 2015. And by using your CETA program as a base for supporting other trade agreements you will be ready to take advantage of the anticipated European Union – United States Transatlantic Trade and Investment Partnership.


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