The following is a guest post from J. Anthony Hardenburgh, Vice President of Global Trade Content at Amber Road.
It’s just past halftime in the first quarter of 2017, and like Superbowl LI, the global supply chain industry has seen some upsets, fierce drama and game-changing moves in a few short weeks.
From the rise of populism to the dismantling of existing trade agreements to the disposing of compliance rules, there’s a slew of changes global companies are facing. Global companies need to move at lightning speeds to keep ahead of these changes, and automating their supply chain audit procedures is one fast answer.
Unraveling the rules of globalization
Throughout Europe, populism continues to surge as a reaction to the global refugee crisis. Though the effect on global trade remains to be seen, the isolationist focus of the movement may mean pending deals such as the Transatlantic Trade and Investment Partnership (TTIP) may wind up on the chopping block. Even the EU itself may fracture further if instability continues. Meanwhile, other countries could use stepped-up enforcement efforts in the U.S. as a blueprint.
On this side of the pond, U.S. President Donald Trump plans to issue a directive targeting a Dodd-Frank rule that requires companies to disclose whether their products contain "conflict minerals" from war-torn parts of Africa.
Millions of dollars are channeled to armed rebels and insurgents every year, and the funding comes from mineral trades used in every kind of consumer goods. Now known as conflict minerals, these are mined mostly in the Democratic Republic of Congo (DRC) and surrounding nations under an illicit working economy where civilians endure harsh conditions of armed conflict and human rights abuses.
Turning a blind eye to ethical violations is not an option for brands that have the watchful eye of concerned consumers and NGOs.
J. Anthony Hardenburgh
Vice President of Global Knowledge at Amber Road
With the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, all publicly traded U.S. companies are required to disclose annually if any of the goods they sell contain any conflict minerals. As the new administration sweeps clean some “burdensome” regulations, it might widen the gap for unethical sourcing practices.
Many companies spent a lot of time, energy and money trying to comply with the ambiguous requirements in the Dodd-Frank Act. While sometimes painful, these investments have proven to be fruitful.
Pressure from the focus on conflict minerals is working to deter armed groups in the eastern Congo and surrounding regions. In 2016, the Enough Project reported positive advances corresponding to the stated purpose of Section 1502; increased security for civilians in some mining areas, a significant reduction in armed group control in 3T mining areas, improved safety and health standards for miners in some mining areas, organized local advocacy in support of reforms, in-region development initiatives, and the initial implementation of the region’s first system to assess mines and certify minerals as conflict-free.
Yet, the burden of compliance remains
Turning a blind eye to ethical violations is not an option for brands that have the watchful eye of concerned consumers and NGOs.
Although Trump signed his first legislation on February 14 scrapping the Dodd-Frank rule on oil extraction, and more of the Dodd-Frank rule may be dismantled, the EU has its own conflict minerals regulation, so companies should not stop their investigations and review activities.
Instead, global companies should reposition themselves for these shifts and new roadblocks in regulatory environments. These changes could spell new opportunities but will require increased vigilance over every aspect of their supply chain. Companies without mechanisms in place to track changes could find themselves stuck with higher-than-expected customs costs or even delivery delays and fines.
While sometimes painful, these investments have proven to be fruitful.
J. Anthony Hardenburgh
Vice President of Global Knowledge at Amber Road
Complete and thorough accountability is complex; calling for brands to track information gathered from their suppliers at every level. But deregulating would only renew hope for those conducting illicit activities. Manufacturers still need to maintain social and ethical compliance standards for other reasons, so the burden remains.
While these changes might derail progress and growth, global companies can be prepared for a range of possible outcomes, navigating the expected changes and be ready for the unexpected. Keeping pace with a rapidly-changing regulatory environment can be a compliance nightmare unless a company has the right tools to stay on top of changes.
J. Anthony Hardenburgh brings over 18 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, as a director for From2, and as an International Trade Specialist for the US Department of Commerce.
