Global trade poses significant risks for exporters due to evolving regulations, geopolitical dynamics, technological complexities, and the need for enhanced compliance tools
Both the European Union and the United States are major export economies, with the US exporting more than $1 trillion in services and $2 trillion in goods annually, according to the World Trade Organization. And while service exports — such as travel-related offerings such as hotels and airlines, as well as financial, IT, and professional services —are often overlooked in global trade disputes, they are equally important in calculating trade balances.
When examining export-related workflows, exporters typically face risks such as market access barriers, payment uncertainties, logistical challenges, and compliance with international trade regulations, including sanctions.
Further, rapid technological advancements and the proliferation of multifunctional goods are increasing the complexity and risk in global trade, according to a recent report by the World Customs Organization. This concern is echoed by the U.S. Department of Commerce’s Bureau of Industry and Security, which has introduced new export control regulations, including enhanced due diligence requirements for exporters of advanced computing integrated circuits, AI-driven technologies, and high-bandwidth semiconductor manufacturing equipment.
Recent developments in US trade policy have further added to these risks. For instance, the current administration has signed trade deals with several Middle East Gulf States, lifting the AI Diffusion Rule that previously restricted the export of AI chips to countries like Saudi Arabia and the United Arab Emirates. Additionally, the lifting of sanctions against Syria may reflect a shift in strategic priorities, as noted by Fred Kempe, president of the Atlantic Council, who suggested that Muslim fundamentalism may no longer be a barrier to pursuing trade partnerships.
In light of these geopolitical shifts, exporters must continuously monitor and adapt to changes in sanctions, export regulations, and tariff structures.
The current administration’s commitment to enforcing trade regulations is evident in recent U.S. Department of Justice guidance on white-collar crime. Priorities now include trade and customs fraud, sanctions evasion, and shadow banking. Export activities are under increased scrutiny, with greater emphasis on documentation, customs declarations, and supplier due diligence. The guidance also targets companies that use complex ownership structures to evade tariffs and sanctions.
Keeping an eye on sanctions evasion
Such evasion has significantly undermined the effectiveness of sanctions, particularly those targeting Russia. This issue is more pronounced in Europe, which maintains a higher trade volume with Russia. Goods exported from Europe are often rerouted through third countries with the intent of reaching Russia regardless of the existing sanctions.
A recent Brookings Institution study analyzed EU shipments to Central Asia and the Caucasus. The surge in exports since 2022 far exceeds local demand, suggesting these countries are being used as trans-shipment hubs. For example, Germany’s direct trade with Russia fell by 91%, while exports to Georgia and Kazakhstan rose by 92% and 136%, respectively. Indeed, exports to Kyrgyzstan jumped from under $10 million in March 2022 to $70 million just months later.
In response, the EU’s 11th sanctions package now restricts sensitive exports to high-risk third countries.
The Organized Crime and Corruption Reporting Project documented how Russia acquires critical US-made microchips: Russian importers collaborate with intermediaries in regions like Hong Kong and China; and these intermediaries purchase chips from Western distributors. These components are then passed through multiple other intermediaries before reaching Russia. Such trans-shipment risks are widespread due to the ease in routing goods through multiple jurisdictions and buyers.
How exporters should respond
The growing complexity of global trade, which is driven by geopolitical shifts, dual-use technologies, and trans-shipment risks, requires a more data- and technology-enabled approach to export compliance. Similar to the increase in risks in import workflows, exporters need to invest in a variety of tools and strategies to mitigate certain risks and comply with export regulations.
End-user verification protocols
End-user verification goes beyond the typical Know-Your-Customer procedures. For example, Know-Your-End-User procedures require the creation of end-use certificates for a variety of goods, including critical chip technology or dual-use goods. Particularly for intermediaries of distributors — not only in higher risk jurisdiction such as China or Hong Kong, but in every jurisdiction that has economic ties with sanctioned countries — end-user certificates may increase transparency of final product usage. Further, the availability of third-party screening tools and beneficial ownership information plays an important role as well.
In sanction screening, for example, ownership roles are crucial because individuals or entities with ownership stakes in sanctioned parties may also be subject to sanctions themselves, even if the entities are not directly listed. The Office of Foreign Assets Control dictates that if a sanctioned entity owns 50% or more of another party, that subsidiary party is also subject to sanctions.
AI-driven trade surveillance
AI can be used in trade surveillance effectively by monitoring and measuring trade flows between regions, cities, and even between companies. Anomalies in trade flows could be seen as spikes in trading activity occurring in traditionally low-demand regions beyond their normal demand patterns as outlined in the above-mentioned report on trans-shipments from the Brookings Institution. Also, re-export patterns can be detected by mirroring sanctioned trade routes and corresponding traffic. AI in trade surveillance can be further applied in detecting changes of ownership structures, which now can be done in real time.
Blockchain for traceability
Although not yet widely adopted by trade professionals, blockchain technology offers potential for tracking goods across supply chains. With blockchain technology, each transaction can be recorded so that the integrity of the supply chain is guaranteed, and goods reach their intended end users.
Collaborative enforcement and data sharing
Data-sharing agreements, such as those under the Wassenaar Arrangement, support the export control of dual-use goods. However, the rise of shell companies and trans-shipment hubs calls for a reassessment of these agreements, which could potentially exclude sanctioned entities from participating.
Addressing a complex environment
The integration of surveillance tools and counterparty data enables companies to embed export compliance into their governance frameworks. Appointing a dedicated export control officer can centralize responsibility for technology selection and training across the organization’s sales, logistics, and legal functions. This role is especially important for those organizations that are operating in technology sectors and deal with dual-use technologies, such as semiconductors, aerospace, and AI.
As global trade becomes more fragmented and regulatory enforcement intensifies, exporters must move beyond checkbox compliance. A proactive approach — rooted in transparency, proper use of data, and robust governance — will not only mitigate risk but also can build trust with partners and regulators.
The future of export success lies in visibility and in knowing not just where your organization’s goods are going, but who is using them and for what purpose.
In the final installment in our series, we will look at the risks inherent in today’s global supply chains.
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