Every year, the U.S. government charges U.S. companies billions of dollars ($22 billion in 1999 alone) in customs duties on the products and raw materials they import. And every year Uncle Sam obligingly refunds several billion to those same companies when they export the goods they previously imported. It’s called duty drawback. But here’s the surprise. Even though they’re entitled to refunds, businesses are leaving billions unclaimed. Why? Proving they’re entitled to them is just too much work.

Collecting the duty drawback is contingent on documenting the link between the imported goods and their subsequent export. That’s not too hard with big-ticket items such as cranes, trains and jet airplanes. It is, however, very difficult to prove that those particular nuts and bolts from Taiwan were, in fact, the very same nuts and bolts used in assembling a specific automobile that was later shipped to Brazil.

This is where IT comes in. By deploying software systems that know the intricacies of the rules and their associated supporting documentation and that can also track products and components with sufficient granularity to prove that those Taiwanese nuts ultimately ended up in the chassis of a car sitting in a showroom in Rio, enterprises stand to recoup some not-so-small fortunes in drawback refunds. And wouldn’t it be nice if it were the CIO who could enable his enterprise to retrieve that treasure?

Regulations: A Labyrinth Inside a Maze

Right now, it’s the best of times and the worst of times for global trade.

It’s the best of times because a clutch of software companies that most CIOs have never heard of is making trading with Mongolia as straightforward as trading with Missouri.

It’s the worst of times because international terrorism has made governments acutely protective of their borders. And when governments get protective, rules proliferate.

As is, international trade is beset with tangles of tortuous regulation. Until the Customs Modernization Act of 1993, for example, vessels entering U.S. ports were obligated to report the number of cannons on board. And although that requirement is gone, reams of similarly outdated, burdensome and maddeningly abstruse rules remain.

Cut through those regulations, and rich overseas markets, profitable supply sources and cost savings propagate like Dutch tulips. The world’s top 2,000 companies could gain some $30.2 billion in savings if international trade could be made to work more efficiently, says John J. Coyle of Penn State’s center for supply chain research and emeritus professor of business administration. Excluding freight charges, duties can represent up to 75 percent of the total cost of importing goods and services. "As the largest component of importing expenses, it’s the area in which there is the most room for direct cost savings," Coyle says. He reckons that in 2001, U.S. businesses left as much as $10 billion in duty drawback on the table.