University of Maryland Robert H. Smith School of Business Distinguished Speaker Series: AI and the Global Supply Chain
On September 29, 2019, expert panelists were brought together as part of the University of Maryland's Robert H. Smith School of Business Distinguished Speaker Series to discuss the complexities that business and policy leaders must consider when global supply chains integrate artificial intelligence and its effect on international trade and the global economy.
A new study from Business Roundtable - an associated an association of CEOs of America’s leading companies – finds that international trade supports 742,800 jobs in Maryland, representing more than one out of every five jobs in the state. Trade with Canada and Mexico alone supports 235,900 jobs in Maryland, highlighting the need to preserve and strengthen the North American trading relationship by passing the United States-Mexico-Canada Agreement (USMCA) this year.
The study also reveals:
The study – prepared by Trade Partnership Worldwide with the latest-available employment data from 2017 – examines the net impacts of both exports and imports of goods and services on U.S. jobs in all 50 states. It also compared 2017 data to pre-NAFTA data from 1992.
A summary of Maryland data can be found here. The full study can be found here.
A summary of data on Maryland’s trade with Canada and Mexico can be found here.
BALTIMORE, MD (April 2019) – A week-long trade and diplomatic mission to India, Bangladesh, and Sri Lanka led by the U.S. Secretary of Commerce will feature fourteen Maryland-based firms. The Trade Winds Indo-Pacific trade mission focuses on building business connections between U.S. and Indian firms and increasing investment between the two countries. Participating companies also have the opportunity to travel to Bangladesh and Sri Lanka to expand their connections and sales in the broader Indo-Pacific Region. Commerce Assistant Secretary for Global Markets Ian Steff and Commerce Assistant Secretary for Legislative and Intergovernmental Affairs will accompany the delegation.
“It’s always exciting to have the opportunity to showcase Maryland’s diverse and talented companies on an international level,” said Colleen Fisher, Director of U.S. Commercial Service Baltimore. “Events like Trade Winds allow our team to put Maryland on display and show how our advanced companies – which sell products ranging from environmental solutions to defense technologies –provide solutions across the globe.”
The fourteen Maryland companies traveling to Trade Winds are:
“The potential for growth in U.S.-India trade is enormous given the size of our economies,” said Kenneth I. Juster, U.S. Ambassador to India. “Exports of U.S. goods and services to India reached $58.9 billion in 2018. I look forward to hearing of future successes from the companies taking part in Trade Winds.”
The Maryland companies will also meet with U.S. commercial diplomats from throughout the Indo-Pacific region to develop a strategy to penetrate the broader Asian markets. Several of the companies attending Trade Winds were awarded ExportMD grants from Maryland Commerce.
About the International Trade Administration
The International Trade Administration (ITA) is the premier resource for American companies competing in the global marketplace. ITA has 2,100 employees assisting U.S. exporters in more than 100 U.S. cities and 75 markets worldwide. For more information on ITA visit www.trade.gov.
Although Europe’s General Data Protection Regulation (GDPR) was a hot topic last year, many Americans might not fully understand its impact and how to navigate it when conducting business overseas. The GDPR is the new data privacy law of the European Union and several other countries, whose reach stretches well beyond Europe. The law is comprehensive and consists of ninety-nine articles, and is supplemented by two dozen national laws.
The goal of this blog post is to help companies outside the EU determine if they should look at the GDPR more closely. The flowchart below is a good starting point to begin to evaluate if the GDPR applies to your business operations. In short, if you have a business presence in the EU (plus Norway, Iceland, and Liechtenstein), provide data processing services to such businesses, offer your goods or services to EU residents, or “monitor” behavior of EU residents, then the GDPR applies. Even if GPDR does not apply to your Company’s operations, pay close attention to privacy laws in other countries because numerous jurisdictions have adopted, or are considering adopting, laws similar to the GDPR.
If the GDPR is triggered, you should ensure that any processing of personal data about EU residents is GDPR-compliant because the potential maximum penalties for violating this law are steep: up to €20 million ($22.5 million) per violation in fines, plus the threat of civil lawsuits, and even jail time in certain countries.
In some circumstances, U.S. businesses may be able to avail themselves of the much simpler set of rules under the EU-U.S. Privacy Shield Framework, to meet their data protection obligations.
The GDPR is a big deal in Europe because the Europeans treat the individuals’ rights to control their personal information and have it protected as fundamental human rights. This is similar to how we view “life, liberty, and the pursuit of happiness” as inalienable rights of all Americans.
Illya Antonenko is Data Protection Officer and Counsel for TRACE, a globally recognized anti-bribery business organization. Prior to joining TRACE, Mr. Antonenko practiced law for fifteen years in a number of leading U.S. law firms and in-house. His practice included assisting clients with FCPA compliance matters and investigations, cross-border transactions, and general corporate issues.
Frequent travelers know the value of pre-trip research. Having a good country guide—whether personal or paperback—can be the difference between enjoying the finest a region has to offer and getting caught in a tourist trap.
The TRACE Bribery Risk Matrix aims to be such a guide—not for restaurants and historical sights, but for the corruption risks you’re likely to face when doing business abroad.
At the most basic level, each country has a risk score between 1 and 100. The bigger the score, the more caution is warranted.
But just as savvy vacationers review a range of details about their destination, ethical entrepreneurs should understand the different factors that can make a country more or less bribery-prone. The Matrix therefore includes sub-scores to tell you how well or poorly each country maintains the conditions for discouraging bribery demands:
Robert Clark is the Manager of Legal Research at TRACE, a globally recognized anti-bribery business organization headquartered in Annapolis, Maryland. He has been responsible for the ongoing development of the TRACE Bribery Risk Matrix following its original publication in 2014, and is the chief designer of the Matrix Data Browser.
Local agents and intermediaries are essential for most companies that want to break into new foreign markets. They can help to navigate bureaucratic mazes, understand regional customs, and secure introductions to important decision-makers. It’s important to realize that the qualities that make an intermediary attractive to a company often are the same as those that make the relationship risky.
You know about bribery risk—the serious harm that can follow from an intermediary’s use of corrupt means to pursue a company’s goals. Consequently you need to conduct due diligence on your third parties. But the reality is that not all companies have the same resources available for the task.
The categories of information collected during a due diligence review, and the level of scrutiny and detail required, will vary depending on the risk level of the relationship. But due diligence can be streamlined and shared. All due diligence reports have similar baseline components: beneficial ownership, qualifications, ties to the government and reputational screening. Also, most commercial intermediaries work with several multinational companies. Third parties are often willing to undergo--at their own cost--a single due diligence review that meets international requirements. They can then choose to share the report with all of their business partners, avoiding the wasted effort of duplicative due diligence reviews.
TRACEcertification is an enhanced due diligence review that provides detailed and actionable insights into a candidate’s business operations, reputation and beneficial ownership. In addition, TRACEcertification requires candidates to complete anti-bribery training and adopt a Code of Conduct addressing bribery, if one is not already in place.
The TRACE Intermediary Directory is a free, publicly searchable database of these pre-vetted and trained small- and medium-sized enterprises worldwide. All companies listed in the Intermediary Directory have completed the TRACEcertification review or renewed their verified report within the last year. The intermediaries own their due diligence reports and can share them with all of their business partners. You may request and obtain TRACE Certified Due Diligence reports in the Intermediary Directory at no cost.
There is no such thing as “fool-proof” due diligence. While robust due diligence can help companies understand the level of risk that a third party is likely to bring, a clean past is no guarantee against future misconduct. Relationships have to be managed and suspicious conduct audited. Due diligence is a process, not an event, but a TRACEcertification report is a robust first step relied upon by hundreds of multinatationals.
Pia Vining is Senior Director of Due Diligence at TRACE, a globally recognized anti-bribery business organization. Prior to joining TRACE, Ms. Vining was a litigation specialist in the tax department of a major U.S. law firm. She graduated from the University of Helsinki, Faculty of Law, and holds an LL.M. degree from The George Washington University Law School.
Cross-border business is ripe for corruption. The best way to address corruption issues is to be prepared in advance. Put in place a robust anti-bribery policy and procedures, set clear expectations for personnel, and remove or minimize perverse incentives. Let employees and representatives know that your company really means what the policy says, and give them direct access to compliance professionals. Become aware of local laws, regulations, and business environment. Find local trusted compliance champions to help navigate the complexities of foreign markets.
If you do receive a bribe request, follow a STAR approach:
STOP. Don’t agree to a bribe: even small bribes tend to snowball. Don’t make hasty decisions or seek shortcuts. If a bribe has already been offered, take steps to stop it. Give the bribe taker an opportunity to stop and reconsider (“Are you asking me for a bribe?” or “I’ll have to discuss this with my management”).
THINK …TALK. Consult company policy and procedures. Involve your management, legal and compliance departments. When unclear, determine whether the request is indeed legal and appropriate. Strategize on the best approach.
ACT. Say “No.” Ask to speak to their manager or supervisor. Make it relatable (“I will lose my job” or “U.S. companies are under a microscope from U.S. authorities for overseas bribes”). Be clear that you can only resolve the issue through legal and ethical means. Explain why the bribe taker should care – mention aggressive enforcement by U.S. and local authorities, scrutiny by the media, large fines and prison terms. Deflect – blame strict internal controls, lawyers, internal audit, your boss, etc. for your inflexible no-bribes stance. Seek help from the local American Chamber of Commerce, Business Ombudsman, U.S. Commercial Service, or local government hotlines or law enforcement.
REFLECT. Keep detailed records and supporting documentation. Draw lessons from the incident to avoid similar requests in the future.
Illya Antonenko, Data Protection Officer and Counsel for TRACE, a globally recognized anti-bribery business organization. Prior to joining TRACE, Mr. Antonenko practiced law for fifteen years in a number of leading U.S. law firms and in-house. His practice included assisting clients with FCPA compliance matters and investigations, cross-border transactions, and general corporate issues.
Expanding business into international markets is often key to a successful growth strategy for both small businesses and large enterprises. While going global presents endless possibilities for growth, it also raises serious compliance risks that if overlooked, can quickly offset the benefits of reaching new customers.
One of the biggest, and less obvious, challenges of doing business overseas, particularly in emerging markets, is corruption. U.S. companies doing business abroad must comply with the U.S. Foreign Corrupt Practices Act (FCPA) which prohibits companies or individuals from paying bribes to foreign government officials to obtain or retain business. FCPA violations can lead to significant corporate penalties, reputational damage and jail time for individuals involved in the misconduct.
Any company, regardless of size, sector or business model, will at some point need to engage with foreign officials when establishing operations overseas. Such business interactions raise the possibility of being asked for a bribe. Before you take the leap into new markets, you should be sure your company is prepared to manage bribery risks and ask yourself the following compliance questions:
Addressing these questions at the same time that you make the business decision to enter a new market may ultimately be the difference between success and failure. If you don’t know where to get started, there are several resources and organizations including TRACE that can help.
Virna Di Palma is Senior Director of Global Strategy & Communications at TRACE, a globally recognized anti-bribery business organization. Prior to joining TRACE, Ms. Di Palma produced international trade and anti-bribery compliance conferences worldwide and was also a researcher on counter-terrorism strategies for a London-based think tank.
The International Trade Administration (ITA) has released their new Market Diversification Tool (MDT) that can help you identify potential new export markets using your current trade patterns.
Just enter what products you make and the markets to which you currently export and the MDT crunches the numbers to rank potential markets you may want to consider. It brings together a host of product-specific trade and tariff data and economy-level macroeconomic and governance data to provide a picture of which markets make sense for further market research.
MDT takes basic information from exporters and uses 11 different indicators to run calculations on those inputs in order to produce a ranked list of recommended markets with scores for each country. The ranked list can prepare exporters for more in-depth research and find partners in new markets.
Visit https://www.export.gov/marketdiversification to access the tool and sign up for a free webinar on how to use it. For additional information, please e-mail firstname.lastname@example.org.
Congratulations, you’ve made your first international sale. Now what should you be concerned with? Well not to scare you, but your primary focus should be on getting paid and how you go about that depends not only on you, but the buyer as well.
For example, let’s pretend for a minute that you’ve met a buyer online and they have agreed to purchase $500,000 of services or equipment from you. You’re excited because your average domestic sale is $25,000 and this represents a huge win for you and your company. The overseas buyer expresses to you that they would like to pay you 60 days after they have received the services or equipment from you and they have promised you much more business in the immediate future.
Before you commit to such a buyer, you should be stepping back and asking yourself the following questions:
Making your next sale is critical, but getting paid is key to your export growth!
-Scott Forster, DEC Member/ Treasurer Emeritus
Contributors and Writers are members and associates of the MD/ DC District Export Council. The views expressed do not necessarily represent the opinions of the MD/DC DEC.