How to build a resilient and modern trade compliance function

How to build a resilient and modern trade compliance function

This guest blog has been written by Dr Ted Ganten of Siemens Healthineers. Leonid first met Ted at a trade compliance summit, hosted by Novartis, where Leonid’s Jamie Browne was invited to present on trade compliance recruitment trends and challenges.  Ted has decades of experience, fulfilling a range of leadership roles including Head of legal Compliance, Division Compliance Officer, Division General Counsel and his current role, Global Head of Export Control & Customs. A regular guest speaker and thought leader, Ted is passionate about great communication, lean governance settings and strategy. He also knows more than a thing or two about building and leading successful teams. We are therefore delighted that Ted has taken the time to share his insights with us!


Brexit, the US vs China trade war and the Russian Sanctions programme have thrown trade compliance teams into a constant state of flux. And we know that this is not going to go away. Indeed, it will likely intensify with the power struggles between China and the US, continued escalation of conflicts around the world - especially in the Middle East - and the upcoming challenges posed by the BRICS alliance.

What does all of that mean for a trade compliance function in a global context, and how can it futureproof itself?  Ensuring the right priorities, the right strategic position within an organisation and having the right people in place is absolutely key.


Q&A with Dr Ted Ganten, Global Head of Export Control and Customs at Siemens Healthineers


Where should a trade compliance team sit within a business?

Quite simply put, it should be a standalone division either reporting into the General Counsel or directly to a board member. For export control purposes – at least in Germany - there needs to be a direct reporting line to a board member if the company engages in sanctioned countries. Top management attention to export control is expected by many export authorities around the world.

Trade compliance, in a stable environment, is mainly focused on efficiency. In the decade prior to 2022, seamless integration into the supply chain has been the name of the game. During these stable times, it meant that if the global trade compliance team was invisible, it was doing a great job. It’s therefore unsurprising that within many companies, this led to an integration into the Supply Chain and Logistics division.

Nowadays, however, trade compliance - more often than ever before - has to stop and control the flow of deliveries around the world. It is inappropriate to have such a function ‘controlled’ by the team responsible for logistics and the supply chain. It potentially creates a conflict of interest. Therefore, trade compliance increasingly sits outside of logistics; frequently as a separate global function, or within Legal and Compliance.

This evolution is supported by the fact that liability is increasing daily. Driven by sanction circumvention, enforcement authorities are ramping up their personnel significantly. We are seeing ever-increasing fines and criminal charges around the world in an area that until a few years ago was seen a ‘gentlemen’s’ environment’ in certain jurisdictions. If your organisation has not adapted, it is high time to reconsider your organisational set up.

What are the main priorities for trade compliance teams right now?

Trade compliance was historically very much focused on export control matters. Customs is invading the airspace rapidly.

Firstly, the export control classifications now increasingly reference tariff codes. Therefore, in no way should classifications for export control and customs be dealt with in separate organisations. They impact each other significantly and are inextricable.

Secondly, with the trade wars, the new concept of trading with friends (e.g. Free Trade Agreements), the increase in duties and the increasing importance of duty relief schemes (e.g. "exceptions to retaliative duties"), customs matters are becoming more and more compliance-relevant. Savings out of duty relief schemes have likely doubled in most enterprises. With it the risks of lacking documentation, misinterpretation of Country of Origin rules and miscalculations are increasing. The area is prone to be audited, increasing the risk of criminal charges.

Thirdly, the level on regulation is increasing by the hour. Prohibitions and restrictions are popping up everywhere in the world. A good example is India, where one surprise and requirement chases the next - or the Halla laws in Indonesia

How can trade compliance teams best respond to a crisis?

Centralisation and professionalisation are key. If you have classifiers sitting in the factories around the world each classifying with 10% of their time, how will you keep them up to date and crucially, co-ordinate an incident response? Since the Russia sanctions started, we are currently on the 13th sanction package in the EU and the 9th in the US. That means re-classification 22 times within 26 months! But that is not all. Many of these new regulations were quickly drafted and poorly executed, so much interpretational work was required, to apply the rules coherently.

It would be far easier to co-ordinate 10 full time classifiers in three regional hubs, rather than 100 part time classifiers in 35 locations around the world. This is just one example. If you are using Free Trade Agreements, it is essential  to use them correctly and have the right documentation in place. A full time professional will not just increase the usage, it will prevent failures. Speaking with one voice to authorities is critical in all areas. If only professionals out of one organisation mange the communication then irritations will be reduced, communication will be more efficient and licenses will be more quickly obtained.


How can these complex customs procedures be better streamlined?

You will need the right IT tools and a central team which has the bandwidth and know-how to make that happen. The information flow and interactions with customs and export control authorities around the world is not only increasing. The nature of communication is changing, with increased use of AI, for example. It is therefore critical to be ahead of the game. A professional, centralised team is the best way forward.

Centralisation also gives you the numbers, the critical mass and the know -how to define and drive IT implementation projects into the company. Risk management in Global Trade relies on IT. In a decentralised trade organisation, no one will want or even can drive the initiative, no one will have the oversight and motivation to build a cross-functional business case.

Last but not least, data analytics have become a key feature of trade compliance. A must-have going forward. Because having the data but not having interpreted it creates liability. I highly recommend appointing a data analyst specialised in global trade, otherwise you will miss opportunities and you will likely not be able to continuously improve the dashboards and data lakes over time. In our global trade organisation, we have two full time data analysts. However, to have data analysts focussed on the topic requires a high level of expertise around them and that again is much more efficient in a centralised function.

Therefore, the next level for the efficient and effective use of trade technology depends on centralisation. Now is the time.


How has the role of a trade compliance officer changed in recent years?

You need highly energetic communicators. Leaders that inspire. Managers that can run and focus bigger teams. People that are interested in geopolitics. Times are over when an export control and customs department could be run by highly competent introverts alone. Trade compliance teams must be visible; you have to ensure that risks and opportunities are understood across all areas of the business. Especially in times of crisis, cross-functional teamwork is vital and it should absolutely involve your senior leadership team. Trade compliance, with its complexity and new level of liability, can only be successfully managed with everyone in the organisation on board.