Export Licensing 2.0 – Beyond the Obvious Robert Waldrop Global Trade Practice Leader EntryPoint Consulting
Learning Points • Unlike its competitor applications, GTS gives an implementation team a great deal of flexibility on how license determination is performed. • To help you manage this flexibility properly, in the next hour, you’ll have the opportunity to learn: • Proposed best practices for deploying aspects of license determination • Real-world experiences in deploying complex legal regulations • Review of license determination features and configuration options in version 7.x. • We’ll accomplish this in a Q&A format.
EntryPoint Global Trade Practice • Our consultants have deployed GTS at two dozen clients, from version 1.0 to being a ramp-up partner for 8.0. • Beyond our GTS consultants, our practice has a team of trade compliance specialists and provide multiple offerings around GTS (managed services, test drives, performance/compliance audits and subscription-based GTS hosting). • We use a unique deployment methodology built around GTS best practices and our experience with past clients. Many of these best practices are sent out in our monthly Tips n’ Tricks Newsletter. Give me your card to subscribe.
Should I set up the licensing legal regulations for all countries in the same way? Under the US EAR, all products are controlled. Under the regulations of most other countries, only listed products are controlled for export. • Every product relevant • Control on product, Control on License Determination • Control on product, No Control on License Determination • No Control on product • Specific products relevant Decision should be based on maintenance effort, regulatory compliance, business process impact and downstream reporting.
What are my options for controlling US re-export? • Implement GTS 8.0 and define US content for each product (and product BOM). • Activate the EAR legal regulation for all countries you ship from (use of no control on products). • Create re-export legal regulation and activate for all countries besides the US. • Product-specific control • All products classified for US export get classified for US re-export (products originating at US operation) • Identify and classify products purchased independently by non-US subsidiary.
Can I block a transaction with a missing harmonized code (just like I do for a missing ECN? Yes, there are three options for doing this: • Can catch in Customs Module on creation of Customs Declaration. • Can select “import code” attribute and catch as part of existing export license determination controls. • Can create a new license determination legal regulation. Note: Can do options 2 & 3 also on import.
Should I attempt to fully define export regulations within GTS? • Maybe, but first be clear on the cost vs. benefit of doing this. • Value of thoroughness and strict adherence. • Value of simplicity • Keep in mind that anything left undefined will block, so no compliance gaps. • The more you define, the more you must maintain. Just-in-case design creates double effort • Initial deployment • Complete review when (and if) it’s first used
What’s the best way to use country groups? • Used to build license determination strategy, to activate legal regulations and for defining destination on license • For example, under the EAR, you have 11 country groups and 12 country chart groups (along with potential exclusion groups). • Have option of using just one or two groups to satisfy most licensing requirements. Make sure there’s a tangible value in any additional complexity.
When should I use Grouping and Peculiarity codes? • Grouping allows many export control classes to be treated in the same way, while peculiarity code allows a single export control class to be treated in different ways. • Grouping can greatly simplify the License Determination Strategy. • Peculiarity code can be use to control US and EU encryption product exports. • Controls review status for the US • Controls encryption level for US and EU
Is there a preferred way to use License Determination Strategies? • There are redundant controls between license master and license determination strategy. • Can apply two simple rules to help guide usage • Rule #1: Strictly model each GTS license on the license authority, as described in the regulations • Rule #2: Avoid redundancy
How do I control shipments that appear to be domestic, but result in an export? • Place end-user (or other partner besides ship-to) as first partner. • Can use for: • Ensure product is properly exported/transferred to end-user • APO/FPO addresses • Deemed exports • In-country transfers to foreign person
My shipments rarely go directly from source to end-user. How do I ensure that I control the entire movement? • Select Multiple Country Group option on license master • Will ensure product can move to and through every country represented, not just the country of the ship-to (or whichever partner is first on your Partner Function Group). • Can’t use country group on license, you must list out the countries. GTS 8.0 does expand on this with integration to TMS and control of routing.
How exactly does GTS deal with the export of US military products? • Product Classification • USML category to indicate product subject to ITAR • Coexists with ECCN classifications • Setup up individual licenses and exemptions • Control by document & product • For exports and subsequent re-transfers • Setup agreements • At product, program or agreement level • Can assign directly to transactions or as indirectly through individual license Project and BOM-level control for ITAR part of GTS 8.0
Should I be using the military/civilian use option on the license type? • Some license authorities require knowledge of entity type. • Set on GTS business partner master (3 options) or pass through from ERP customer master (2 options). • Activate attribute on license type. • Alternative would be to list permitted partners directly on license. • Less reliance on customer master maintenance process • Simpler, more easily auditable process • More data entry
Key Learnings • SAP applications provide incredible freedom and flexibility to make good or bad choices in your design. • GTS can represent the export regulations for every country in the world. • It may not be possible, feasible or valuable to exhaustively transcribe export regulations into a GTS design. • When no option appears clearly superior, lean towards the simpler one.
Any other questions? Robert Waldrop Practice Leader Global Trade 4700 Rockside Road, Suite 625 Independence, OH, USA44131-2152 +firstname.lastname@example.org www.entrypointconsulting.com
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