Hi-Tech Trade Wars

With the global recession in full swing we see some cracks appearing within the global movement towards ‘free trade’ (the trade between nations without protective customs tariffs), and these cracks appear to be moving towards a more regulated environment. Governments are increasingly adding regulation to favor locally manufactured products as a way to support local economy growth.

This is nothing new when you look at the BAA, NAFTA, G7, and the ‘China Government Procurement Program’ as good examples of ‘free trade’ with some regulations, restrictions, or down-right favoritism. What is new is the pace at which changes are being proposed and in some cases forced upon the global enterprise in terms of compliance as a way to push for localized growth in a recessionary environment.

What does this mean for the future of compliance?

Well, we can see from our experience with materials and substance compliancy that software solutions are often needed in order to comply efficiently. The tracking of compliance to numerous and varying government mandates from different regions becomes overwhelming on an ad-hoc or manual basis. Compliancy roll-ups related to trade compliance will require the right schema, good business processes, and a scalable platform.

PLM may be the right place to start such an endeavor since the ability to manage rolled-up data from items to assemblies, and the tracking of engineered, planned, and manufactured BOMs are capabilities that already exist today.

Extensions to allow for end-to-end trade compliance tracking by country-of-origin/trade region, commodity spend and other parameters are also capabilities that fit well within the context of PLM, and allow for the possibility of a single version of the truth for trade compliance reporting and analysis.

Of course, this becomes a complex topic based upon the complexity of today’s hi-tech supply chains. One only has to ‘look under the hood’ of any mobile device or laptop to see the global nature of technologies and components that are involved in any single product.

We should all keep our eyes out on the opportunities and risks presented by the slippery slope of ‘free trade’ into ‘regulated trade’. What is clear is that the landscape is changing.

Please feel free to comment on this thread with your thoughts and opinions on trade compliance, and the opportunities and threats this topic to offers the hi-tech enterprise and supply-chain.


  • This is a very challenging topic indeed. The various new regulations continuously pose new challenges to most organizations; today it seems that adding manpower has been the way to address this. This is neither sustainable nor cost effective as a long-term solution. I think that advanced system support will be needed managing one dataset, outputting multiple compliance reports and rollups depending on specific thresholds and local regulations.

  • Louie

    This aspect is endemic within any multi-national supply chain. Regardless of the names given, be it “free trade” or something else, every country exercises some level of restriction, control, or leverage on trade. Any OEM that has to both procure across the world and sell to the world will need to pay attention to this.

  • Sreedhar

    Trade regulation pendulum is definitely swinging in the high regulation direction. This is but expected in the current recessionary economic environment where in Governments try to protect “home” businesses even when defining them precisely is very difficult. However, a contrarian view is that this is not always an impediment but offers an opportunity. Businesses realize this once they start looking at new products and services that can be offered within the new playing field or identify newly “regulated” markets where they may have competitive advantage by virtue of an existing plant, distribution center etc. For business services firms such as Consulting and Software this is definitely an opportunity.