In the intricate realm of international business, maintaining export control compliance is a multifaceted task. It becomes especially challenging when companies operate within the frameworks of multiple jurisdictions, each with its own set of rules. To effectively navigate this complex landscape, organizations often rely on Trade Management Systems (TMS). In this article, we will delve into the concept of a Trade Management System, explore its functionalities, and address some of the challenges it encounters.

A Trade Management System (TMS) serves as a centralized hub for crucial information related to export control compliance. For businesses that need to comply with Export Control regulations like the International Traffic in Arms Regulations (ITAR), a TMS is indispensable. It acts as a repository for license information, approved distribution lists, embargo checks, national jurisdiction regulations, and more. Moreover, these systems automate compliance checks against these records when export transactions are initiated.

SAP Global Trade Services (SAP GTS) is among the leading solutions renowned for its capacity to handle these complexities. SAP GTS not only assists in determining the regulatory applicability of products but also provides guidance on the legal basis for compliant shipments. Its versatility extends to accommodating the diverse trade and product regulations of various countries and governmental agencies.

For our discussion, we will primarily focus on the International Traffic in Arms Regulations (ITAR) of the United States, with the understanding that many of the principles apply universally.

SAP GTS is designed to ensure the lawful movement of goods, specifically in the following scenarios:

• Export from the United States.
• Transfers within the United States to foreign entities (with a particular emphasis on technical data, as the physical border crossing is not a prerequisite for an export under ITAR).
• Re-transfers outside the United States, which encompass modifications to the end-user or destination not initially specified in the license.

SAP GTS accomplishes these tasks by providing support for product export classification, down to the finest sub-category of the US Munitions List, including the identification of Significant Military Equipment.

One of its key features is its ability to manage shipments as either commercial products (utilizing an Export Control Classification Number or ECCN) or ITAR-regulated military products. Additionally, it captures and stores audit support information while coexisting seamlessly with non-US export control numbers.

Among its array of functions, SAP GTS shines in its ability to prevent illegal or inadequately documented shipments from leaving a company’s premises. It achieves this by cross-referencing the physical export of goods with existing agreements and licenses, ultimately making informed decisions to allow or deny shipments.

Before diving further into the intricacies of export management, it is essential to understand why this endeavour is fraught with challenges. The primary reason is the unique regulatory landscape in each national jurisdiction.

Key complexities include:

• A Roster of Proscribed Countries: ITAR designates certain countries as off-limits for business transactions. This list is extensive and appears in various sections of the regulations.
• Diverse License Authorities: Export control encompasses various types of licenses, including individual licenses (DSP licenses) for permanent or temporary exports, classified or unclassified products. Moreover, Non-License Required (NLR) scenarios are a crucial consideration when goods remain within US territories.
• Exemptions and Agreements: Organizations must navigate through a web of exemptions, exceptions, and agreements that are often product-specific, order-specific, or country-specific. Examples include low-value transactions, repairs, spare parts, and trade shows. The three primary agreement types—Manufacturing Licensing Agreement (MLA), Technical Assistance Agreement (TAA), and Warehouse and Distribution Agreement (WDS)—further complicate the landscape.

Given the encompassing nature of export compliance, most existing Trade Management Systems encounter limitations that hinder their effectiveness in meeting contemporary export requirements.

A common limitation is the narrow data scope: some systems, such as SAP GTS, primarily manage licenses for physical goods. However, export regulations, including ITAR, also necessitate safeguards against unauthorized access to technical data, a facet often overlooked.

Additionally, many Trade Management Systems generate records solely for export events occurring within a single application or system. As export regulations extend to cover technical data alongside physical goods, businesses must address data transfer across systems, transcending the scope controlled by a single Trade Management System.

To learn more on how to automate technical data export compliance, read 4 Steps to Automate Technical Data Export Compliance blog.