A good compliance program can be a competitive advantage and help you make money. Surveys of exporting companies, both large and small, show that many companies have experienced some kind of loss or customer dissatisfaction connected to export non-compliance. These issues include:
- loss of sales
- disappointed customers
- delayed shipments,
- products delivered with less capability than offered, and
- unnecessary risk because some suppliers are non-compliant.
Companies even report internal and external pressure to offer “ITAR-free” products in order to avoid compliance issues. I have personally heard reports of foreign businesses attempting to persuade buyers to forgo purchasing U.S. products because ITAR regulations will supposedly hinder sales and shipments. Luckily there is a “simple” answer! Know your products and the associated compliance obligations, and learn to manage them.
A robust and up-to-date compliance plan is imperative for every company – regardless of size. While the initial steps may seem overwhelming, the long-term benefits outweigh any short-term costs. As less cautious companies have learned, the penalties associated with export control violations not only come with a hefty price tag, but also damage an irreplaceable part of a company – its reputation.
Of course, the logistics of creating an export control compliance program differ depending on a company’s size and resources, but this does not mean that compliance can be ignored or downplayed no matter a company’s size. Large international companies are generally more visible and can present the easiest targets. Large penalties and brand recognition make for great headlines. One of the USG’s best hands to play is deterrence through fear and they capitalize on it – one of Bureau of Industry and Security’s best catch phrases is “Don’t Let This Happen to You.”
On the other hand, for a small company, the consequences of non-compliance can threaten the business’ entire existence. That’s why being proactive instead of reactive and implementing tailored compliance measures is an investment. The long term benefits, both monetary and intangible, outweigh any short term costs that may come from instituting a program or losing risky sales. On the contrary, managing export compliance risks will save money, create a positive relationship with the USG, produce happy clients, advance your reputation, and help you to get to sleep tonight.