70% companies fail to utilise FTA benefits: Global survey
MUMBAI: Even as many countries are inking more and more free trade agreements (FTAs), about 70 per cent companies are not fully utilising such pacts and are likely paying more than necessary in tariffs and duties, says an international survey.
According to the respondents, the biggest challenges they face are manual processes and disparate systems and managing complex and changing regulatory requirements.
The survey by Thomson Reuters and KPMG elicited responses from 446 corporate trade specialists in 11 countries.
"Many corporates are struggling to meet complex compliance requirements using inefficient manual processes that can expose their companies to risk, consume time and resources, and don't leave time for activities that directly impact the bottomline," says the survey.
The survey therefore notes that right technology can eliminate redundant work and empower trade teams to better compare and contrast tariff schedules between countries and take on a more strategic role in planning and operating a global supply vision for their organisations.
For 79 per cent respondents their biggest FTA roadblocks are complex rules of origin and difficulty gathering documentation and the top three drains on their time and resources are import documentation and licensing, customs broker management, and product import classification.
Import classification, documentation and licensing are seen as the trade-related activities that create that greatest risk of penalties, other government sanctions, or increased operational.
Trade specialists said their main challenges are interpreting rules across borders, changing requirements with local government agencies, and dealing with antiquated processes.
Two-thirds of the respondents expect global trade to become more complicated over the next three to five years, while 85 per cent consider product classification is problematic.
The survey results point to the changing landscape in global trade and that global supply chain is being redefined.
"The life cycle of today's products continues to shrink, the delivery of goods to customers is being redesigned and technology has the ability to further enable innovation in areas of global trade unthinkable several years ago," says the survey.