A US-China Trade War Timeline12 July 2021
Everything you need to know about the US-China trade war. From a timeline of events to its unintended consequences on trade and industry around the world.
Global trade is never easy. However, some destinations make importing even more challenging than usual. What makes importing into these countries so tricky? Is it the global trade compliance intricacies? The duties and tax structures or country-specific legislation? The fact is, it’s a combination of all these factors along with some social, political, and cultural considerations which all mingle to make importing into these countries such a steep challenge.
These dilemmas are further compounded by the fact that the Tech space is highly regulated worldwide, especially when equipment is moving between borders. The reason for this regulation is multi-faceted, but a contributor is a fact that a large proportion of tech property is considered dual-use. This means that along with its intended benign use, the product has the potential to be used to cause harm.
Trade compliance is one of the key factors in determining how easy it is to ship to a foreign destination. Typically, the more difficult import lanes, such as the ones mentioned in the list below, are laden with intensive and bureaucratic compliance parameters. Product permits, origin certificates, licenses, declarations, permission letters, label photographs, test reports, and contracts are just a few examples of the compliance hurdles that will need to be overcome in order to import into these destinations.
Another factor that is common across many more challenging lanes is their tariff structures. Duty and tax structures in the more difficult import regions are often designed to disincentivize importing, to protect local markets. Coupled with legal, social, economic, religious, and political agendas, the import process can be a minefield for international trade.
Let’s explore the intricacies of each of the top five most challenging destinations and tap into why can be difficult for potential shippers.
Russia’s sheer expanse is one of the country’s leading trade constraints, with varied markets spanning eleven time zones, administrative processes can be slow and are hard felt through the value chain. Russian import compliance regulations are also among the most stringent and extensive globally. These challenges are compounded by a highly changeable political situation, language barriers, and a severe lack of transparency.
Shipments of commercial goods and electronics can be particularly challenging to clear as Russia has a long list of restricted and prohibited items, including major brands like Cisco. If any of the extensive lists of compliance is missed or wrongly completed, the resultant delays can be lengthy, and the penalties expensive.
Since Russia has several brand restrictions which are based on political and trade agreements importing certain Tech goods into the region is virtually impossible. Ultimately, there are only a handful of importers and IORs worldwide who can import brands like Cisco, Apple, and HPE into the country, with TecEx being one of them.
Cultural, political and bureaucratic limitations tend to compound the already difficult import process in Russia, earning it a notorious reputation as one of the world’s most challenging import destinations and a prime spot on our list.
Saudi Arabia is a highly complex country for importers for several reasons. For starters, the Saudi government is known for demanding extensive compliance work and is influenced by political factors, religious law, and bureaucratic parameters that are not typical of international shipping.
Not only is the importing process complex in this region, but it is also lengthy, particularly when it comes to approval times for compliance documents. Furthermore, Saudi Arabia’s exclusion of specific international technical standards of regulation can create significant market access restrictions for industrial and consumer products. Also fairly unique to this region is the need for photos of products, regardless of their HS code or country of origin, which also happens to be another complication importers face. Political factors such as the Arab League Boycott have contributed to difficult country of origin rules.
In addition to compliance-related hurdles, the list of prohibited items in the country is extensive and stringent. Heavily regulated products include medical devices, pharmaceuticals, wireless equipment, and other dual-use goods. These restrictions and a low tolerance for non-compliance intensify the frustration often faced by importers. Saudi traditions, customs, and strict observances of the Islamic faith strongly influence the import process and are distinctive and stringent features of trade in the region.
In conclusion, these combined factors contribute towards a cumulative set of import hazards that make a trade into the area administratively tricky and time-consuming, ultimately landing Saudi Arabia on this list.
This may seem like a surprising addition to the list, but the region has earned its place for a few key reasons. Primarily, Hong Kong is considered a free port, meaning there are no taxes or duties on imported items. This makes it a popular destination with high import traffic moving through this relatively small region. The vast amount of traffic means delays are expected, and keeping track of your goods can become difficult.
Hong Kong’s open trade and investment climate and its geographic proximity to many major Asian markets mean the region is particularly mindful of diversions risks. Trade diversion is when exporters of highly regulated items use robust trade agreements and infrastructure to route trade to more restricted or expensive destinations. To mitigate these risks, import countries will typically adopt a range of strict border control measures. These measures affect the administrative burden and the efficiency of the import process into Hong Kong.
As a result, extensive administration and compliance work is needed for trade into Hong Kong, particularly for encrypted goods. Customs compliance requirements are extremely time-consuming in this region, with approval taking up to 20 business days in some instances.
As a result, Hong Kong earns its spot on this list thanks to its “hub status” and the high volumes of shipments that move through the relatively small port. The region’s tendency for significant time and compliance delays further solidifies this popular destinations’ spot.
India is another country where time delays contribute significantly to its complexity. For starters, extensive administration requirements result in long lead times before your consignment can even be shipped. At the same time, infrastructure limitations often result in delays once your goods have arrived at customs despite trade being a fundamental function of its ecosystem.
When dealing with large-scale compliance, errors are common. Unfortunately, in India, the repercussions for even the slightest mistake can be extreme and include seizure of goods and return of improperly imported items. Improper compliance is a roadblock often faced by importers in this region, particularly of Tech goods. Ultimately, these kinds of delays not only have a significant impact on timelines but also carry hefty financial penalties.
Financial risk is another hurdle to overcome when importing into India, not just for the aforementioned reasons. You can also expect high import duty charges on many items due to policies intended to protect local industry. It is also difficult to predict these costs upfront as goods are subject to revaluation at the discretion of customs. These evaluations often result in changing costs and occasionally fines, which can have dire consequences for profit margins. Additional features such as non-transparent and often unpredictable regulatory and tariff regimes further complicate trade into India.
India’s position as a time-consuming import destination, its huge volumes of compliance work, and significant financial risk cement its position as the third most challenging destination on this list.
Shipping to Argentina is a long and expensive venture sharing many of the complexities with its South American neighbors, such as Brazil. Other challenges for importers include general corruption, limitations in regulatory coherence, inefficient customs, legal processes, poor infrastructure, and high labor costs.
As is the trend across the region, duties and taxes, especially on IT hardware, are notoriously high and somewhat unpredictable at times. This is to balance out the trade deficit felt by the country and try and boost local businesses. Years of economic troubles have also forced Argentina to seek alternate sources of funding resulting in further duty and tax hikes on imports.
There also exists a high degree of corruption amongst Argentinian politicians and government officials. This impacts importers as it often trickles down to customs officials, contributing to limitations in regulatory coherence. Furthermore, high crime rates in the area make comprehensive liability cover essential as well as landing Argentina on this list.
Partnering with an IOR and compliance specialist is a fundamental tool in the arsenal of companies doing business across foreign borders. TecEx provides bespoke Importer of Record and compliance solutions in even the most complex destinations around the globe to guarantee first-time customs clearance, even in these extremely challenging destinations. Contact Us to find out more about our services.