The Ultimate Guide to 45 Minute Trade Compliance Training

What if you only had 1 hour to teach your employees about trade compliance?

I usually reserve at least 25% of the time for questions and conversation, so now you're down to 45 minutes. 

Given the complexity of trade compliance regulations, it's not immediately apparent which topics corporate counsel should include in their legal training presentation. Let's assume you have 45 minutes. How do you decide what to present? Aren't all the topics equally important? 

In order to answer these questions, corporate counsel need to get back to basics. What do employees at your company need to know? And when do they just need to spot a red flag and report back? 

Think about it, do employees really need to know the nitty gritty details? Will they remember difficult legal principles the minute they walk out of the training room? (no, they absolutely will not)

Corporate counsel and compliance teams need to focus on teaching employees to (1) spot red flags and (2) respond appropriately in risky situations. By focusing on these 2 principles, you will give employees the confidence to identify trade compliance risks, avoid problematic behavior and refer any issues to the legal department for a more detailed analysis. 

Which employees should get trade compliance training?

Let's start with the policy (and you should have a trade compliance policy). Whenever the company has a complex policy in place, all employees should receive at least enough training to understand its general prohibitions. So in short, all your employees should receive some training to understand your policy. Even the new hire in customer service.

But there are 3 functional groups (in addition to executive officers) who need to receive most of your focus for this training: import/export compliance staff, salespeople (and any support staff which help export your company's products or information) and supply chain employees (including employees who import parts, products or information). These are the 3 highest risk groups for potential trade compliance issues, and each will need specialized training (detailed below).

Resources & Notes

Attempting to create legal training following these guidelines, I vetted a large number of resources to create the following Ultimate Guide. No doubt, there are areas of trade compliance that affect companies differently, and corporate counsel will need to adapt the guide accordingly. 

Please note: where a specific trade compliance topic only impacts one department, you may need to schedule follow-up training with a smaller group. I will note where this is most likely to occur throughout the guide.  

Also please note: I'm not going to go deep into each trade compliance concept. This is a Training Guide - I'm going to give you the training structure, timing and the most important points you need for effective training. That said, I am going to link to resources to help you with the content

Roadmap

  1. Trade compliance rules exist to provide national security and protect people
  2. What are the big risks employees need to know
  3. What groups need specialty training on advanced topics (and what topics)?
  4. Questions & answers

Without further ado, here are the most important topics to focus on during trade compliance training, presented in order

1. Trade compliance rules exist to provide national security and protect people. 

The power of "because" is uncanny. Research shows that giving people a reason (nay any reason) they need to follow a certain rule will make them more likely to comply. 

Because of this (no pun intended), it's important for corporate counsel to tell employees why trade compliance regulations exist. Without getting into a political discussion, it's as simple as showing employees how trade compliance regulations can (1) protect people by preventing dangerous or harmful goods from entering the company and (2) prevent bad actors from using products made in your country.

Additionally, I've found that when employees understand why the laws exist, they're more likely to understand what conduct is appropriate under the circumstances.

Suggested time: 5 minutes - 1 slide

2. What are the big risks employees need to know?

Here's where the rubber really meets the road. Can you design your training so employees know how to identify the "red flags" and react appropriately during those risky situations that can come up in a second - like if they're asked to provide sensitive data to a foreign citizen. 

Here are the "big risks" that all employees should know:

A. No doing business  with embargoed countries

Employees should know the countries where US companies are absolutely not allowed to do business. As of the date of this article, that includes Crimea (in Ukraine), Cuba, Iran, North Korea, Sudan and Syria. Although there are some minor exceptions to these embargoes, you should advise a blanket prohibition on doing any business with parties in these countries in order to get the training done in 45 minutes.

Training is generally not the time to present nuanced approaches. If there is a business question about whether one of these exceptions applies to you, handle it with a small group of employees after the training. Your general audience should simply understand that they can't do business with parties in embargoed countries. 

Suggested time: 10 minutes - 1-2 slides

B. No doing business with denied parties

Similar to the embargoed countries discussion, employees should be aware that many countries (including the United States) maintain lists of denied parties. Denied parties are individuals or entities who US companies may not do business with. 

Employees should understand (1) that these lists exist and (2) how to follow your company's current import/export trade screening process to clear potential business partners. Ultimately, all companies should have some process to clear parties. Your employees simply need to understand their part in that process. 

Suggested time: 10 minutes - 1-2 slides

C. Don't circumvent company import/export processes

The company should have compliance processes in place for employees to follow. Certain employees will need to be trained on the entire process (see Section 3 below), but others only work within a part of the process. Ultimately, it is difficult to create training to address all of these issues. 

Accordingly, you should train employees to understand that (1) these processes exist, (2) they should never circumvent these processes to do something unethical or illegal and (3) there are people who can help them through any questions or concerns. 

Suggested time: 10 minutes - 1-2 slides

D. Be careful with confidential information and avoid deemed exports

It's natural for most employees to think of trade compliance as dealing with physical goods. However, it's important to train employees to understand that it is just as important to know when it's okay to import or export information

This can happen in 1 of 2 ways for US companies - (1) employees literally send confidential information out of the country or (2) employees send certain national security information to foreign citizens (inside or outside the US) - called a "deemed export".

During training, emphasize practical ways to keep your company's confidential information secure and company processes for sending information outside of the company (your company should have a process in place to segregate information if you have controlled technology). 

Suggested time: 10 minutes - 1-2 slides

3. What groups need specialty training on advanced topics?

Training all employees on the basics of trade compliance is important. However, this is an area where the risk is highly concentrated in a few departments. Typically our guides have focused on providing training where risk is highly concentrated, but trade compliance is special since it is highly customized to an individual company (more so than topics like anti-corruption and advertising law). For this reason, I don't get into too many specifics. 

(If you want to discuss how to train employees on these specifics, but don't have a ton of time, click here for more details on our Custom Training Services!)

For these departments you'll want to consider addressing the following topics:

A. Import / Export Group (or equivalent)

This is the most important group for targeted training. Some companies have trade compliance groups, some simply have supply chain, operations and sales support handling the compliance, and a lot are everywhere in between. 

Providing training on the following topics becomes more critical if you have a less formal trade compliance group in place. Training should focus on:

Classifications & Duties, Customs Valuation (you may also want to include accounting personnel on this one), Country of Origin, Free Trade Agreements, Export Control & Screening Processes (detail each employee's role in your company's restricted party / politically-exposed-person screening process), Export Licenses, Record Keeping, Foreign Trade Zone (if applicable).

B. Salespeople 

Salespeople (and support staff) will encounter trade compliance issues when doing business with foreign customers. Training should focus on:

Customs Valuation, Free Trade Agreements, Export Control & Screening, Export Licenses

C. Supply Chain Employees

Supply chain employees will encounter trade compliance issues when doing business with foreign suppliers and importing goods into the US (or another country where the company does business). Training should focus on:

Customs Valuation, Free Trade Agreements, Country of Origin, Record Keeping

Ultimately, counsel will need to be familiar with the topics and risks unique to the company in order to create effective training.

4. Questions & Answers

Even though I've placed questions and answers at the end of the outline, making your trade compliance training interactive is extremely important. If your audience is not engaged, you might as well not do the training. Remember, the federal sentencing guidelines require compliance programs to be "effective". 

In order to do this, I encourage you to allow Q&A throughout the training presentation. Let employees interrupt you when they don't understand a concept. I realize this makes staying on schedule much more difficult, but it's important to make sure concepts are understood before you move on. You may never get another chance as I'm sure most of your employees aren't writing down a list of questions to ask you at the end. 

If your training is done online, make sure to provide employees a contact for following-up with questions. 

Conclusion

This is obviously not the end of trade compliance training. Nor is it the complete picture. Trade compliance is incredibly complicated, but so is employee training. The goal of this training guide is to allow you to focus on what employees truly need to know about trade compliance regulations. Where they don't need to know the law, teach them the red flags so the legal department or compliance team can do the analysis. 

Let me know in the comments what other areas compliance counsel should address!