This is part three in a series of Political Risk Management and Trade Development blogs illustrating how current events impact your business and its future.
We’ll discuss:

• Doing more with Less – Maybe not the time to implement new automation, but you can still streamline the supply-chain process.
• Historically – what’s worked in the past?
• Opportunity - to come out on top
• Disaster Recovery

Doing more with less –
A couple years ago I published a short blog about Lean Logistics - seeing things in a different light - and suggested companies focus on their logistics/supply chain functions and map out their value process. In case LEAN is new for you, check out this 10-Step process available on Amazon it’s a really great read focused on LEAN in the Supply Chain.
You’ve no doubt been looking at your budget and shrinking checkbook for any available funds to keep the lights on rather than implementing that automated process you’ve been saving years for. Reviewing your logistics/supply chain functions to find extra sources of income or create extra sources of income may be exactly the remedy your business needs.
Small and mid-sized businesses may not garner the huge freight discounts larger companies do, however the other side of this pandemic will have carriers, forwarders and 3pl’s blowing up your phone offering what they can to get you, or keep you in their book of business. 
So here are some key points for negotiation to keep in mind when leaning up your supply chain:

• Packaging Supplies

Many companies will offer free of charge boxes and cushioning materials for your products. UPS and Fed Ex will provide thermal labels and a printer for your shipping needs.

• Free analytic software

Many forwarders and 3pl’s have developed robust software that not only tells you where your freight is and when it will get there, but also includes specialized information on target countries you are interested in exporting to. I have seen some analytic software also include denied party screening and hazardous materials regulations.

• Fixed rates

I have a few small clients who import roughly 100 containers a year and have been highly successful negotiating carriage rates that are fixed for the entire year without a contract.  Fixed costs are an excellent tool especially when you consider market fluctuations, peak season surcharges and the like.
Historically? –
My favorite topic! Like really? We have been through a pandemic before in the modern time?
Bottom line, there is nothing in our recent history that we can rely on to get out of the situation we are in now, probably why many in the media refer this period as “challenging”.
One thing we all know for sure is that a recession will immediately follow this pandemic and we are well versed and arguably well-positioned as a country to emerge right where we left off. 
There have been more than 40 recorded recessions in the United States, and each is unique. Some last for months; others last years. The Great Depression was the worst in U.S. history. The financial crisis of 2007-2009 was the worst of many of our lifetimes. Each happened for different reasons, and are typically difficult to predict, except for this one... you know it’s coming, so perhaps its time to move from risk management to disaster recovery.
Disaster Recovery –
When disaster hits, your first concern is likely how to keep your business running as normal as possible. You’re likely doing that now. 
Recessions, the key to surviving them is by reducing your expenses, working hard and above all… stay calm. History has taught us that preparation was the key to survive a recession, for many there simply is no contingency plan. My last two installments in this Risk Management series allude to analyzing alternative scenarios encompassing the crystal ball’s  view into players like President Trump, the Democratic alternative (it is an election year), and China who arguably is set to profit from this global pandemic.
The underlying message here is that you are about to enter into a high-pressure exercise in change management.  You’ll need to be flexible and ready to adjust to come out on top. Many financial advisors will tell you to get rid of personal guarantees, accumulate cash, make sure to pay your taxes and downsize everything… now! Other economists will tell you that with or without the pandemic, a financial recession was coming anyway… Covid-19 just brought it here faster.  Personally, I do not believe we were heading to a recession, but that’s for another conversation.
Factors to consider:

• Donald Trump’s economy
• Democratic nominee (remember it’s an election year)
• China

President Trump’s administration has arguably created a robust economy, can he do it again? It’s an election year and the Democratic leadership longs for a continuation of the Obama-era policies. China… the 300lb elephant in the room. China has for decades worked to position themselves as an economic leader and by all measures is eating our lunch. Is your business poised to compete head to head with a Chinese competitor?
These are all factors to discuss. My company employs this very same forensic approach for its clients in order to anticipate issues before they become issues. How can we help you?

This is part two in a series of Political Risk Management and Trade Development blogs illustrating how current events impact your business and its future.  We’ll discuss the Coronavirus, Brexit and Locusts!
Now that we have been totally consumed by the Coronavirus, how has your business responded?  Is it in denial, or is it paralyzed?  What’s your plan to emerge?  These questions could be asked of any of today’s topics. 
For those of you who read part one, “Political Risk Management,” my view into the crystal ball has always asked a simple question, what happens before the unexpected occurs? 
None of us could have ever imagined that a global pandemic would have put businesses around the world at a complete stop.  Like most of you, I too want to know what the end of this scenario looks like.  Politically we know that at least in the U.S. we shouldn’t expect President Trump to offer an FDR-style recovery.  War with China isn’t a likely outcome either… Wars are usually zero endgame situations anyway.
Put aside President Trump’s dislike of China for a moment and recall that American businesses had been operating on the thought that integration of global markets would promote political cooperation and a leveling of those so-called “rules of the game” around the world… for the most part it did however, China didn’t play by the rules. 
For decades, the two countries have had a basic bargain: the US invents, China builds, everybody wins. But there's a growing view among politicians in the US that, rightly or wrongly, this bargain is [a] bad one. Sure, it's given Americans access to cheaper imported consumer goods, they say, but it's also cost millions of US manufacturing jobs and strengthened a strategic adversary that doesn't share American values. At the same time, they say there are national security concerns about Chinese firms supplying technology to US critical infrastructure, including the 5G data networks that will power the next phase of the digital revolution. (GZERO Media, 2019)
This could be your first clue that the winds of change are soon to blow harder.  Thus, you have a choice: keep your dependence on China or find an alternative strategy.  Is President Trump’s nostalgia for a 1950’s USA complete with Mom, Baseball and Apple Pie our future?  Are you ready if in fact it does come to fruition? 
How you are positioned at the end of this crisis will ultimately dictate your future success. 
Perhaps start your research with a review of one of my favorite videos from the 1980’s, Back to the Future!  Available here at Amazon just in case you didn’t have a copy. www.amazon.com/gp/product/B00498XR9U/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B00498XR9U&linkCode=as2&tag=maplecreek-20&linkId=bd856204076792742ea9ae50ef60babf
What about British Prime Minister Boris Johnson’s battle with the virus?  He’s now been moved to an Intensive Care Unit… what does BREXIT without Boris Johnson look like? 
We wish Mr. Johnson a speedy recovery.
Locusts!  This year’s swarm of locusts in East Africa are literally as widespread and, dare I say it… of biblical proportions which all but guarantee a humanitarian crisis that will far outweigh the current Coronavirus pandemic. 
Some of you may remember famine relief fundraisers in the 1980’s, perhaps most famously was Live Aid, the impact of which became center of foreign policy for many western governments. 
All of these situations will affect your business even if you don’t “do” business in Africa.
Political Risk Management and Trade Development run hand in hand which brings me to restate the point of this blog - successful companies are prepared, they anticipate threats and plan for all eventualities.  My 30+ years in supply chain management have taught me a couple critical skills… anticipate the impact of the weather, illness, labor unrest and public discord. It didn’t prepare me for a global pandemic, but the recovery skills are the same.
So, what does the end of this pandemic look like and how do we emerge? 
Take a step back…  Look around… Here’s a chance to reestablish or reinvent your business. Even the fortune 500 will come out the other end differently.  Is the opportunity manufacturing consumer goods?  If it is, will they satisfy the appetite created by China’s low-cost production?  Is producing that consumer good in Mexico a better alternative? After all Mexico is a party to the new USMCA where your product could be imported into the US duty free.  What about this fourth industrial revolution and its promise to improve the quality of life throughout the world?  Seems to me that improving the world’s quality of life is overdue and perhaps profitable.
One thing for sure is that the world’s economy will revive.  Nationalism will continue build in the US, however the dependence on China’s support for many poor countries will likely be hard to overcome.  You may need to rethink your positions in Africa and Central America where contracts and product specifications are tailored to Chinese products.
My company, Maple Creek International Trade provides Political Risk Management, Trade Development and Trade Compliance tools to navigate your business through these murky times by anticipating issues before they become issues.

The two topics are woefully intertwined yet many managers continue to view these as separate issues.  I first saw this in the 1980’s… the NIMBY syndrome… you know, Not In My Back Yard… was the view of the world from many managers who failed to see the political events that eventually harpooned their international development ambitions.

Maple Creek employs a forensic approach to Trade Development anticipating issues before they become an issue by answering this simple question: “what happens before the unexpected occurs?”

Economic and geopolitical volatility create uncertainties. So, too, do changes in the deep-seated assumptions that drive business strategies. But what happens when the truly unexpected occurs? When political factors affect business? And when models, simulations, and forecasting all fail critically?

Typically, one of two things: Denial or paralysis. Both are understandable, but they do nothing to help an organization maintain or gain competitive advantage. There is a potential upside, however, for organizations with the foresight to mobilize in light of disruptive scenarios—and respond in a way that ultimately powers their performance.

Take for example Brexit and the 2016 election. 

With Brexit the impact was immediate as the pound sterling lost roughly 16% of its value against the U.S. Dollar.  Now what remains after all of this back and forth squabbling in the UK parliament is an unknown landscape.  Those that recognize the complex geopolitical variables and develop a plan of attack for political risk management should be better positioned in the evolving UK and EU marketplace. Others that sit on the sidelines may see opportunity pass them by.  So, how are you prepared?

In 2016 media outlets had already given the election to Clinton and many in the business world were prepared for another four years of the same.  Enter Donald Trump.  It has been repeated many times after the election’s autopsy that you should have been drowning out the noise and listening to what Mr. Trump was saying… who he disliked… who he thought treated the U.S. economy unfairly and what his ambitions were.  All that is happening in today's economy was foretold, but were you prepared?  I don’t think anyone could have been.

Political risk is not a new concept, rather the context has changed.  Typical political risk analysis tends to be long on information about events but short on strategic advice. And when advice is offered, it’s often reactive and addresses individual risk. 

So how does this relate to Trade Development?  After all I did say the two were intertwined. 

It would seem that since the 1970’s and maybe earlier, American businesses had been operating on the thought that integration of global markets would promote political cooperation and a leveling of those so-called “rules of the game” around the world… for the most part it did.  Cars as an example no longer contained parts from one country, rather were a combination of parts produced in many countries and merely assembled in another.  A car parts manufacturer who anticipated this globalization of the automotive industry would have taken advantage of this and expanded their sales in foreign markets… same for raw materials producers and so on. 

Fast forward to today and the Trump administration’s highly publicized efforts to reduce the trade deficit with China.  The original goal was a gradual opening of China’s political system… Turns out they had different plans and now the U.S. faces a strategic competitor who not only challenges our global dominance, but whose political vision and ideology may end up challenging its own.

In case you missed it, the U.S. position of global dominance is eroding, in part due to globalization’s success.  China as an example, now has an economic middle-class and now threatens to challenge the U.S. tech market through creation of its own standards.

This doesn’t mean that Trade Development opportunities have gone the way of the 8-Track, rather for the savvy trader the political landscape offers a pro-trade and pro-investment flavor. 

Many outlets have trumpeted this Fourth Industrial Revolution where trust and credibility are fast emerging as the key competitive differentiators for organizations around the world.  Perhaps it’s something Generation X demands… Transparency after all… as we typically trust no one.

For those of you just hearing about this, the Fourth Industrial Revolution is a way of describing the blurring of boundaries between the physical, digital, and biological worlds. It’s a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.

The promise of this revolution is the potential to improve the quality of life throughout the world.  The peril may be the segregation in the job market typically low-skill/low-pay versus high-skill/high-pay and its this type of risk that could both make trade development a success and failure.

Political Risk Management and Trade Development run hand in hand which brings me to restate the point of this blog - successful companies are prepared, they anticipate threats and plan for all eventualities.  My 30+ years in supply chain management have taught me a couple critical skills… anticipate the impact of the weather, illness, labor unrest and public discord. 

Maple Creek employs a forensic, hands-on, comprehensive approach to international trade development ultimately providing you the opportunity to anticipate legal issues before they become an issue. Global trade compliance is strategic, we help our clients assess areas of vulnerability, remove avoidable costs, minimize risk and foster international trade development.  See our blog on Reasonable Care and let us know how we can help.

Ever have the misfortune of violating someone’s trademark?  U.S. Customs is on guard to protect the intellectual property rights of U.S. companies, and for that we should be thankful.  But what happens when you’ve made a simple mistake? 
Unfortunately, Customs only sees in black and white, meaning it’s either a violation of someone’s rights or it isn’t and its left to you to plead your case to the Trademark owners Brand Protection Manager for cooperation and release of your goods.
I recently came across a story that involves what some may call an over-protective, perhaps overzealous Brand Protection Manager and a chain of errors by a well-meaning importer trying to keep up with a myriad of product labeling requirements.
A cautionary tale –
The importer was in the midst of a product label change due to the requirement of a California product warning, Proposition-65.  Thinking it was a good idea, the importer utilized a sample label that not only included product information, barcodes and the California warning but also included UL, CE, and WEEE graphics. This sample was intended to be an illustration to the vendor on the proper way to create a product’s label.  The Importer sent this new label to all of their vendors in China.  As you can image, the Chinese vendor took the label change for gospel and dutifully printed and labeled the product’s shipping box with these newly minted product labels.

• The vendor did not question the change and the importer’s staff did not realize the label now included additional graphics.
  

 
As luck would have it, Customs randomly selected the importer’s shipment and found the graphics on the product to be ‘confusingly similar’ to graphics Customs has on file for the trademark holder and thus reported the infraction… things progressively went downhill in a hurry.
In the end, products from three individual shipments were eventually seized by Customs.  The trademark holder’s no-tolerance policy in this instance claimed an unintended victim.  The Brand Protection Manager, unwavering, assured the importer that their policies were not intended to cause them harm, however their inaction and unwillingness to forgive the importer’s mistake eventually cost the importer over six-figures in product and potential sales.
Let this be a warning, I guess… to dot those i’s and cross those t’s.
Maple Creek’s expertise in Trade and Product compliance may have helped to avoid this costly situation, after all our mantra is to anticipate legal issues before they become legal issues.  How can we help you?

​Sec 301 Tariffs –
You are undoubtedly behind the eight-ball if you are just starting your mitigation efforts, but it’s never too late. 
So far there are three tranches of the Section 301 Tariffs and a rumored 4th.  The first two offered opportunities for companies to file a request for exclusion of their goods, and there will be a third exclusion process you can take advantage of.  By doing so, you’ve got nothing to lose.  Make your voice heard! Remember though, the number one reason exclusion requests fail is because the petitioner failed to show that the product under consideration could only be procured from China.  Specifically, the petitioner failed to show that the product couldn’t be made elsewhere.
The administration likely doesn’t care that you’re heavily invested in China.  Their unrealistic expectation that you would just stop doing business there was just that… unrealistic.  Business is like a huge cargo ship… It doesn’t stop and turn on a dime.
So now you’re left holding the bag… How are you going to mitigate these tariffs?  You could tool-up in another country and avoid them altogether, but many of your hardcore products likely require trained workers to assemble your products and training new workers takes time and investment.  You could wait it out, but the experts simply just don’t know when these tariffs will end.
So, what mitigation weapons remain at this point?

• HTS re-classification is likely your best strategy.  Keep in mind that at the end of the day you will have to articulate your decision to lawfully reclassify just in case Customs questions you.  Enter reasonable care!  Get an opinion from your lawyer, or your expert trade consultant prior to reclassifying your products.
• Third-country manufacturing is an option for some of your lesser involved products, however that too may involve retooling or moving technology; beware of import quotas.
• Raising prices is better than margin erosion, but many times price is what separates you from your competition. 
• Duty drawback – This could be a windfall if done correctly, but the cost of set up and maintenance costs may outstrip any savings.  Remember, they are not available for the sec. 232 Tariffs.
• Bonded Warehouse – not Free Trade Zones… FTZ’s were poisoned by the administration - If you import anything into a FTZ those goods must be imported with privileged foreign status. Thus, locking in the 301 or 232 tariffs at the time the goods were entered versus using a regular old bonded warehouse, you don’t pay any duties until you withdraw the goods.  If the 232 or 301 tariffs are rescinded at the time you withdraw, then you are safe.
• Post Entry Amendment – After you’ve completed your classification analysis and lawfully reclassified, was your item hit by the 301 duties?  You may be in line for a refund of duties.  While this move is rather bold, keep in mind reasonable care, which as mentioned above is your responsibility under the MOD act. 

There are many strategies a company can employ to mitigate their exposure to these tariffs.  The important part to remember is exercise reasonable care.
Maple Creek employs a forensic, hands-on, comprehensive approach to international trade development ultimately providing you the opportunity to anticipate legal issues before they become an issue. Global trade compliance is strategic, we help our clients assess areas of vulnerability, remove avoidable costs, minimize risk and foster international trade development.  See our blog on Reasonable Care and let us know how we can help.

​Global Trade Management is the practice of streamlining the entire lifecycle of global trade with the end goal of improving your cash flow.
The term “compliance” gets thrown around often in the global trade management world; however, few entities take the time to understand how global trade compliance affects daily operations.
Complying to the rules and regulations in one jurisdiction can vary dramatically from compliance to local statutes in another. Unfortunately, globalization within the supply chain has led to even more complex and esoteric factors to consider, in global trade compliance terms, thus ultimately ensuring compliance to all rules and regulations near-impossible; however, compliance must be present in all aspects of your supply chain.
As your world grows, so too have the opportunities for risk. Prior to engaging in international trade, management must ensure all global trade management expectations are meet for all political and geographic areas. This requires extensive research and monitoring of political climates on a global scale… daily… Unfortunately, small to medium, if not some large, businesses rarely have the resources necessary to ensure adherence to international trade laws. Furthermore, political actions in one country can directly impact how business is conducted with another country.
So where do you find relief?  Is it with someone who holds 2-3 years-experience? 
What's a partner really got to have?
1. Reliability. It isn’t enough to mean well, to want to be top-notch; hope is not a business model.
2. Excellence. Their motto should be: we do everything with excellence.
3. Value. Qualitatively and quantitatively, what does your potential partner bring to the relationship?
4. Expertise. If your partner doesn’t know your business as well as you, should he or she be your partner?
5. Problem-solving skills. You need a take-charge partner, not one looking to you for the answers.
6. Continuous improvement. Your partner must value ongoing education for his/her team.
7. Support. What after-sales or post-implementation support is your partner able and willing to give?
8. Positive attitude. You need a partner who sees challenges as opportunities.
9. Global reach. Does your partner’s reach match yours? Stay-at-home partners need not apply.
10. Strong leadership. Is your partner reading the manual on leadership — or writing one?
Maple Creek employs a forensic, hands-on, comprehensive approach which provides you the opportunity to anticipate legal issues before they become an issue. Global trade compliance is strategic.