SAP Global Trade Services — Part 2: Customs Execution, Special Procedures & Preference Management

By Sajiv Francis · July 2025

Executive Summary

Part 1 established SAP GTS as a compliance hub — every S/4HANA document flows through it before proceeding, blocked synchronously at the document save event. Part 2 covers what GTS does after a document clears compliance: it executes. That means filing customs declarations with national authorities, managing the duty lifecycle from valuation through payment, operating duty-suspension regimes that defer or eliminate duty in exchange for inventory traceability obligations, and running Preference Management to determine whether a shipment qualifies for zero duty under a Free Trade Agreement.

Three interlocking execution layers are covered: Customs Management — the declaration lifecycle, duty calculation framework, and electronic filing infrastructure; Special Customs Procedures — Bonded Warehouse, Inward Processing Relief, Foreign Trade Zone, and Processing Trade Regime; and Preference Management — the end-to-end process from supplier Long-Term Supplier Declarations through Rules of Origin determination to preference certificate issuance. Part 2 closes with the reporting architecture and the open financial accounting questions that Part 3 resolves.

Picking Up Where Part 1 Left Off

Part 1 established GTS as a compliance hub. The compliance engines block the OTC chain upstream. What Part 1 left open was the downstream half: once a document clears compliance, what does GTS actually do with it at the border?

The answer is three interlocking execution layers:

Customs Management — declaration lifecycle, duty calculation, e-filing to authorities
Special Customs Procedures — duty suspension regimes (BWH, IPR, OPR, FTZ, PTR) that defer or eliminate duty at the cost of inventory traceability obligations
Preference Management — Free Trade Agreement qualification that converts “duty owed” into “duty eliminated” by proving origin

Each layer feeds the next. A customs declaration references the special procedure authorisation (if applicable) and the preference status (if applicable). The combination determines the actual duty liability — the number that eventually posts to FI-CO, which is the subject of Part 3.

The Customs Declaration: Structure and Lifecycle

Every customs document in GTS — import, export, transit, EMCS — shares the same structural skeleton. This is not cosmetic: the same defaulting logic, the same incompleteness check framework, and the same IDoc structure apply across all declaration types.

flowchart TD
    classDef source fill:#fff3e0,stroke:#e65100
    classDef integration fill:#e8f5e9,stroke:#2e7d32
    classDef target fill:#e3f2fd,stroke:#1565c0
    classDef reporting fill:#f3e5f5,stroke:#6a1b9a

    subgraph HEADER["Header Level — One per Declaration"]
        H1["Item Overview"]
        H2["Communication<br>(M / I messages)"]
        H3["Partners<br>(FTO, customs office,<br>freight forwarder)"]
        H4["Geography<br>(departure / destination)"]
        H5["Transportation<br>(mode, dates, MRN)"]
        H6["Logistics Costs<br>(CIF, FOB values)"]
        H7["Status / Document Flow"]
        H8["References<br>(feeder system link)"]
    end

    subgraph ITEM["Item Level — One per Material Line"]
        I1["General Data<br>(product, HS code,<br>weight, origin)"]
        I2["Customs Value<br>(duty calculation)"]
        I3["Placement<br>(special procedure ref)"]
        I4["Documents<br>(BTI, permits)"]
        I5["Preference Tab<br>(FTA eligibility flag)"]
        I6["Closing Portion<br>(special procedure)"]
        I7["Control<br>(legal regulation,<br>license assignment)"]
        I8["Status"]
    end

    subgraph FEEDER["Feeder System Source"]
        SD0C["Pro Forma Invoice<br>(SD0C) → Export"]
        MM0C["Goods Receipt<br>(MM0C) → Import"]
    end

    SD0C -->|"auto-creates"| HEADER
    MM0C -->|"auto-creates"| HEADER
    HEADER --> ITEM

    class HEADER,H1,H2,H3,H4,H5,H6,H7,H8 target
    class ITEM,I1,I2,I3,I4,I5,I6,I7,I8 integration
    class FEEDER,SD0C,MM0C source

Three fields fail silently if absent at e-filing time. The commodity code is required on every item and blocks transmission if missing. The customs value is required for duty calculation and must match the declared invoice value within tolerance. The Movement Reference Number is issued by authorities after submission and is required before goods can move — GTS holds the goods issue until the MRN is received inbound via I-message.

Export Process: The Standard Declaration Lifecycle

The export process in GTS is triggered by the pro forma invoice (SD0C document type) created in S/4HANA. The pro forma carries pricing, quantity, and partner data that GTS needs to construct a compliant export declaration.

<?xml version="1.0" encoding="UTF-8"?>
<bpmn:definitions xmlns:bpmn="http://www.omg.org/spec/BPMN/20100524/MODEL"
                  xmlns:bpmndi="http://www.omg.org/spec/BPMN/20100524/DI"
                  xmlns:dc="http://www.omg.org/spec/DD/20100524/DC"
                  xmlns:di="http://www.omg.org/spec/DD/20100524/DI"
                  id="export_process"
                  targetNamespace="http://gts.series.part2.export">

  <bpmn:process id="GTS_Export_Process" isExecutable="false">

    <bpmn:startEvent id="start_export" name="Sales Order Created and Compliance Cleared">
      <bpmn:outgoing>flow_so_del</bpmn:outgoing>
    </bpmn:startEvent>

    <bpmn:task id="outbound_del" name="Create Outbound Delivery (VL01N / SD0B)">
      <bpmn:incoming>flow_so_del</bpmn:incoming>
      <bpmn:outgoing>flow_del_pick</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="pick_pack" name="Pick and Pack Goods">
      <bpmn:incoming>flow_del_pick</bpmn:incoming>
      <bpmn:outgoing>flow_pick_proforma</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="proforma" name="Create Pro Forma Invoice (SD0C) — Triggers GTS">
      <bpmn:incoming>flow_pick_proforma</bpmn:incoming>
      <bpmn:outgoing>flow_pf_expdec</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="export_dec" name="GTS Auto-Creates Export Declaration">
      <bpmn:incoming>flow_pf_expdec</bpmn:incoming>
      <bpmn:outgoing>flow_ed_complete</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="complete_check" name="GTS Incompleteness Check and Defaulting">
      <bpmn:incoming>flow_ed_complete</bpmn:incoming>
      <bpmn:outgoing>flow_complete_gw</bpmn:outgoing>
    </bpmn:task>

    <bpmn:exclusiveGateway id="gw_complete" name="Declaration Complete?">
      <bpmn:incoming>flow_complete_gw</bpmn:incoming>
      <bpmn:outgoing>flow_incomplete</bpmn:outgoing>
      <bpmn:outgoing>flow_complete</bpmn:outgoing>
    </bpmn:exclusiveGateway>

    <bpmn:task id="manual_complete" name="Customs Specialist: Complete Missing Fields">
      <bpmn:incoming>flow_incomplete</bpmn:incoming>
      <bpmn:outgoing>flow_manual_back</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="efile_customs" name="GTS: E-File Export Declaration to Customs Authority">
      <bpmn:incoming>flow_complete</bpmn:incoming>
      <bpmn:incoming>flow_manual_back</bpmn:incoming>
      <bpmn:outgoing>flow_auth_response</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="auth_response" name="GTS Receives MRN via I-Message (Inbound IDoc)">
      <bpmn:incoming>flow_auth_response</bpmn:incoming>
      <bpmn:outgoing>flow_mrn_gw</bpmn:outgoing>
    </bpmn:task>

    <bpmn:exclusiveGateway id="gw_mrn" name="MRN Received?">
      <bpmn:incoming>flow_mrn_gw</bpmn:incoming>
      <bpmn:outgoing>flow_mrn_rejected</bpmn:outgoing>
      <bpmn:outgoing>flow_mrn_ok</bpmn:outgoing>
    </bpmn:exclusiveGateway>

    <bpmn:task id="amend_refile" name="Amend Declaration and Refile">
      <bpmn:incoming>flow_mrn_rejected</bpmn:incoming>
      <bpmn:outgoing>flow_amend_back</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="goods_issue" name="Post Goods Issue (VL02N) — Print EAD">
      <bpmn:incoming>flow_mrn_ok</bpmn:incoming>
      <bpmn:incoming>flow_amend_back</bpmn:incoming>
      <bpmn:outgoing>flow_gi_exit</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="exit_confirm" name="GTS: Receive Exit Confirmation (I-Message)">
      <bpmn:incoming>flow_gi_exit</bpmn:incoming>
      <bpmn:outgoing>flow_exit_close</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="close_declaration" name="GTS: Close Export Declaration — Archive EAD">
      <bpmn:incoming>flow_exit_close</bpmn:incoming>
      <bpmn:outgoing>flow_billing</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="commercial_invoice" name="Create Commercial Invoice in S/4HANA (FI Posting)">
      <bpmn:incoming>flow_billing</bpmn:incoming>
      <bpmn:outgoing>flow_end_export</bpmn:outgoing>
    </bpmn:task>

    <bpmn:endEvent id="end_export" name="Export Complete — Revenue and Duty Costs in FI">
      <bpmn:incoming>flow_end_export</bpmn:incoming>
    </bpmn:endEvent>

    <bpmn:sequenceFlow id="flow_so_del" sourceRef="start_export" targetRef="outbound_del"/>
    <bpmn:sequenceFlow id="flow_del_pick" sourceRef="outbound_del" targetRef="pick_pack"/>
    <bpmn:sequenceFlow id="flow_pick_proforma" sourceRef="pick_pack" targetRef="proforma"/>
    <bpmn:sequenceFlow id="flow_pf_expdec" sourceRef="proforma" targetRef="export_dec"/>
    <bpmn:sequenceFlow id="flow_ed_complete" sourceRef="export_dec" targetRef="complete_check"/>
    <bpmn:sequenceFlow id="flow_complete_gw" sourceRef="complete_check" targetRef="gw_complete"/>
    <bpmn:sequenceFlow id="flow_incomplete" name="Fields Missing" sourceRef="gw_complete" targetRef="manual_complete"/>
    <bpmn:sequenceFlow id="flow_complete" name="Complete" sourceRef="gw_complete" targetRef="efile_customs"/>
    <bpmn:sequenceFlow id="flow_manual_back" sourceRef="manual_complete" targetRef="efile_customs"/>
    <bpmn:sequenceFlow id="flow_auth_response" sourceRef="efile_customs" targetRef="auth_response"/>
    <bpmn:sequenceFlow id="flow_mrn_gw" sourceRef="auth_response" targetRef="gw_mrn"/>
    <bpmn:sequenceFlow id="flow_mrn_rejected" name="Rejected" sourceRef="gw_mrn" targetRef="amend_refile"/>
    <bpmn:sequenceFlow id="flow_mrn_ok" name="MRN Issued" sourceRef="gw_mrn" targetRef="goods_issue"/>
    <bpmn:sequenceFlow id="flow_amend_back" sourceRef="amend_refile" targetRef="goods_issue"/>
    <bpmn:sequenceFlow id="flow_gi_exit" sourceRef="goods_issue" targetRef="exit_confirm"/>
    <bpmn:sequenceFlow id="flow_exit_close" sourceRef="exit_confirm" targetRef="close_declaration"/>
    <bpmn:sequenceFlow id="flow_billing" sourceRef="close_declaration" targetRef="commercial_invoice"/>
    <bpmn:sequenceFlow id="flow_end_export" sourceRef="commercial_invoice" targetRef="end_export"/>

  </bpmn:process>
</bpmn:definitions>

Import Process: The Duty Calculation Layer

The import process is triggered by the goods receipt (MM0C) — or, for pre-clearance scenarios, by a manual declaration created before the GR posts. Two timing variants are available:

Variant	When Declaration Created	Use Case
Before GR	Declaration submitted before goods arrive	Most EU import regimes; requires waybill reference
After GR	Declaration created post-receipt	US self-filing ABI; simpler flow but duty risk window

The duty calculation framework layers four components in sequence. Transaction value plus transport costs plus insurance yields the customs value. The applicable duty rate — sourced from a tariff content provider or manually entered — is applied to the customs value to produce the duty amount. The VAT base is the customs value plus duty, to which the import VAT rate is applied. These three outputs — customs value, duty amount, and import VAT — are the numbers that flow to FI-CO, which Part 3 addresses in full.

flowchart TD
    classDef source fill:#fff3e0,stroke:#e65100
    classDef integration fill:#e8f5e9,stroke:#2e7d32
    classDef target fill:#e3f2fd,stroke:#1565c0
    classDef reporting fill:#f3e5f5,stroke:#6a1b9a

    subgraph VALUATION["Customs Value Build-Up"]
        TV["Transaction Value<br>(invoice price FOB/CIF)"]
        TC["+ Transport Costs"]
        INS["+ Insurance"]
        CV["= Customs Value"]
    end

    subgraph DUTY_CALC["Duty Framework"]
        DT["Duty Type<br>(third-country / anti-dumping)"]
        DC["Duty Category<br>(T0: IUT / NT: IUT-EU)"]
        DR["Duty Rate<br>(from tariff number upload)"]
        DA["= Duty Amount"]
    end

    subgraph VAT_CALC["VAT Base"]
        VB["Customs Value<br>+ Duty Amount"]
        VR["VAT Rate<br>(per duty category)"]
        VA["= Import VAT"]
    end

    subgraph FI_POSTING["FI Posting (Part 3)"]
        GRN["Goods Receipt<br>Accrual (MIGO)"]
        DUP["Duty Payable<br>(customs liability)"]
        VAP["VAT Payable<br>(deductible input tax)"]
    end

    TV --> TC --> INS --> CV
    CV --> DT --> DC --> DR --> DA
    CV --> VB
    DA --> VB
    VB --> VR --> VA

    DA --> DUP
    VA --> VAP
    CV --> GRN

    DUP --> FI_POSTING
    VAP --> FI_POSTING
    GRN --> FI_POSTING

    class TV,TC,INS,CV source
    class DT,DC,DR,DA integration
    class VB,VR,VA target
    class GRN,DUP,VAP,FI_POSTING reporting

The duty type is the configurator’s primary lever. It defines whether duty is calculated from a tariff content provider’s published rate, entered manually, or calculated via an alternative framework. The T0: Import Turnover Tax (TTE) duty category — previously common in EU implementations — is deprecated in GTS 2023 and replaced by NT: Import Turnover Tax for EU. Implementations upgrading from GTS 11.0 must remediate all affected duty framework configurations before go-live.

Special Customs Procedures: The Duty Suspension Toolkit

Special customs procedures represent legally-defined duty suspension regimes. The company imports goods without paying duty upfront, in exchange for strict inventory traceability and settlement obligations with customs authorities. GTS supports six regimes.

Regime	Code	Duty Benefit	Settlement Trigger
Bonded Warehouse	BWH	Full duty suspension on storage	Removal from warehouse
Inward Processing Relief	IPR	Duty suspension on components for re-export	Re-export or settlement run
Outward Processing Relief	OPR	Reduced duty on reimport of processed goods	Reimport
Production Under Customs Control	PUCC	Reduced duty rate on finished goods	Goods release
Foreign Trade Zone	FTZ	US-specific; inverted tariff + zone status	Entry for consumption / re-export
Processing Trade Regime	PTR	China-specific; duty suspension on components	Settlement per e-manual

All six require a Customs ID added to the GTS organisational structure. Without it, the special procedure screens do not appear and the relevant declaration types cannot be created.

Bonded Warehouse

BWH is the entry point for most implementations. Goods enter the warehouse duty-suspended, inventory is tracked in GTS separately from S/4HANA WM, and duty is triggered only on removal. On removal, two paths diverge: re-export to a foreign customer generates a re-export declaration with zero duty; release to the domestic market generates a free circulation declaration and triggers the duty calculation and FI posting.

<?xml version="1.0" encoding="UTF-8"?>
<bpmn:definitions xmlns:bpmn="http://www.omg.org/spec/BPMN/20100524/MODEL"
                  xmlns:bpmndi="http://www.omg.org/spec/BPMN/20100524/DI"
                  xmlns:dc="http://www.omg.org/spec/DD/20100524/DC"
                  xmlns:di="http://www.omg.org/spec/DD/20100524/DI"
                  id="bwh_process"
                  targetNamespace="http://gts.series.part2.bwh">

  <bpmn:process id="BWH_Process" isExecutable="false">

    <bpmn:startEvent id="start_bwh" name="Purchase Order Created for Non-EU Vendor">
      <bpmn:outgoing>flow_po_inbdel</bpmn:outgoing>
    </bpmn:startEvent>

    <bpmn:task id="inbound_del" name="Create Inbound Delivery (VL31N / MM0B)">
      <bpmn:incoming>flow_po_inbdel</bpmn:incoming>
      <bpmn:outgoing>flow_del_waybill</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="waybill" name="Create Customs Waybill in GTS">
      <bpmn:incoming>flow_del_waybill</bpmn:incoming>
      <bpmn:outgoing>flow_waybill_admn</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="admission" name="GTS: Create BWH Admission Declaration">
      <bpmn:incoming>flow_waybill_admn</bpmn:incoming>
      <bpmn:outgoing>flow_admn_transit</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="transit_in" name="GTS: Open Transit Procedure (T1 — Inbound)">
      <bpmn:incoming>flow_admn_transit</bpmn:incoming>
      <bpmn:outgoing>flow_transit_gr</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="goods_receipt" name="Post Goods Receipt in S/4HANA (MIGO / MM0C)">
      <bpmn:incoming>flow_transit_gr</bpmn:incoming>
      <bpmn:outgoing>flow_gr_stockpost</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="stock_post" name="GTS Background Job: Post Duty-Suspended Stock to BWH">
      <bpmn:incoming>flow_gr_stockpost</bpmn:incoming>
      <bpmn:outgoing>flow_stock_storage</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="storage" name="Goods Stored in BWH — Duty-Suspended Inventory in GTS">
      <bpmn:incoming>flow_stock_storage</bpmn:incoming>
      <bpmn:outgoing>flow_storage_removal</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="removal_trigger" name="Business Event: Customer Order or Production Need">
      <bpmn:incoming>flow_storage_removal</bpmn:incoming>
      <bpmn:outgoing>flow_removal_gw</bpmn:outgoing>
    </bpmn:task>

    <bpmn:exclusiveGateway id="gw_removal" name="Removal Destination?">
      <bpmn:incoming>flow_removal_gw</bpmn:incoming>
      <bpmn:outgoing>flow_reexport</bpmn:outgoing>
      <bpmn:outgoing>flow_freecirculation</bpmn:outgoing>
    </bpmn:exclusiveGateway>

    <bpmn:task id="reexport_dec" name="GTS: Create Re-Export Declaration — No Duty Due">
      <bpmn:incoming>flow_reexport</bpmn:incoming>
      <bpmn:outgoing>flow_end_reexport</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="freecirculation_dec" name="GTS: Create Free Circulation Declaration — Duty Triggered">
      <bpmn:incoming>flow_freecirculation</bpmn:incoming>
      <bpmn:outgoing>flow_duty_post</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="duty_post" name="Duty Calculated and Posted to FI (Part 3)">
      <bpmn:incoming>flow_duty_post</bpmn:incoming>
      <bpmn:outgoing>flow_end_domestic</bpmn:outgoing>
    </bpmn:task>

    <bpmn:endEvent id="end_reexport" name="Re-Export Complete — Zero Duty">
      <bpmn:incoming>flow_end_reexport</bpmn:incoming>
    </bpmn:endEvent>

    <bpmn:endEvent id="end_domestic" name="Domestic Release — Duty Paid">
      <bpmn:incoming>flow_end_domestic</bpmn:incoming>
    </bpmn:endEvent>

    <bpmn:sequenceFlow id="flow_po_inbdel" sourceRef="start_bwh" targetRef="inbound_del"/>
    <bpmn:sequenceFlow id="flow_del_waybill" sourceRef="inbound_del" targetRef="waybill"/>
    <bpmn:sequenceFlow id="flow_waybill_admn" sourceRef="waybill" targetRef="admission"/>
    <bpmn:sequenceFlow id="flow_admn_transit" sourceRef="admission" targetRef="transit_in"/>
    <bpmn:sequenceFlow id="flow_transit_gr" sourceRef="transit_in" targetRef="goods_receipt"/>
    <bpmn:sequenceFlow id="flow_gr_stockpost" sourceRef="goods_receipt" targetRef="stock_post"/>
    <bpmn:sequenceFlow id="flow_stock_storage" sourceRef="stock_post" targetRef="storage"/>
    <bpmn:sequenceFlow id="flow_storage_removal" sourceRef="storage" targetRef="removal_trigger"/>
    <bpmn:sequenceFlow id="flow_removal_gw" sourceRef="removal_trigger" targetRef="gw_removal"/>
    <bpmn:sequenceFlow id="flow_reexport" name="Foreign Customer" sourceRef="gw_removal" targetRef="reexport_dec"/>
    <bpmn:sequenceFlow id="flow_freecirculation" name="Domestic Market" sourceRef="gw_removal" targetRef="freecirculation_dec"/>
    <bpmn:sequenceFlow id="flow_end_reexport" sourceRef="reexport_dec" targetRef="end_reexport"/>
    <bpmn:sequenceFlow id="flow_duty_post" sourceRef="freecirculation_dec" targetRef="duty_post"/>
    <bpmn:sequenceFlow id="flow_end_domestic" sourceRef="duty_post" targetRef="end_domestic"/>

  </bpmn:process>
</bpmn:definitions>

Foreign Trade Zone: The US Inverted Tariff Mechanism

The FTZ is the US equivalent of the bonded warehouse with one critical addition: the inverted tariff mechanism. When a finished product carries a lower duty rate than its components, a company can elect to pay duty on the finished goods rate (Privileged Foreign status) rather than the component rate. This is a material cash flow advantage in manufacturing-intensive industries.

Two zone statuses govern every piece of FTZ inventory. Privileged Foreign status locks the duty rate at the time of admission and applies when finished goods duty is lower than component duty. Non-Privileged Foreign status assesses duty at the rate applicable at the time of transfer to US commerce. GTS enforces FIFO for FTZ inventory consumption — this is a regulatory requirement, not a configuration choice. The date goods entered the zone determines which lot is consumed first, regardless of duty status.

flowchart TD
    classDef source fill:#fff3e0,stroke:#e65100
    classDef integration fill:#e8f5e9,stroke:#2e7d32
    classDef target fill:#e3f2fd,stroke:#1565c0
    classDef reporting fill:#f3e5f5,stroke:#6a1b9a

    subgraph INBOUND["FTZ Inbound"]
        PO["Purchase Order<br>(ME21N)"]
        IDL["Inbound Delivery<br>(VL31N)"]
        WB["Customs Waybill"]
        ADM["Admission Declaration<br>(CBFP 214)"]
        PTT["Permit to Transfer<br>(PTT Filing)"]
        GR["Goods Receipt<br>(MIGO)"]
        BG1["Background Job:<br>Process Stock Receipts"]
        BG2["Background Job:<br>Post Stock to FTZ"]
    end

    subgraph INVENTORY["FTZ Stock Tracking (GTS)"]
        PF_STK["PF Stock<br>(Privileged Foreign)"]
        NPF_STK["NPF Stock<br>(Non-Privileged Foreign)"]
        WIP["WIP Stock<br>(in production)"]
        BOM_FTZ["BOM — FTZ Specific<br>(in GTS product master)"]
    end

    subgraph OUTBOUND["FTZ Outbound"]
        SO["Sales Order<br>(VA01)"]
        OBD["Outbound Delivery"]
        PFI["Pro Forma Invoice<br>(triggers GTS)"]
        direction1{"Destination?"}
        RE["Re-Export Declaration<br>(Foreign Customer)"]
        WE["Weekly Entry Summary<br>(US Domestic Customer)"]
        FC["FTZ Forecast<br>(CBP pre-approval)"]
        ITC["Internal Transaction<br>Document (Duty-Paid)"]
    end

    subgraph REPORTING["FTZ Reports"]
        AR["Annual Reconciliation<br>Report"]
        ABR["Annual Board Report"]
        HMF["HMF Quarterly<br>Summary (CBP Form 349)"]
    end

    PO --> IDL --> WB --> ADM --> PTT --> GR --> BG1 --> BG2
    BG2 --> PF_STK & NPF_STK
    BOM_FTZ -.->|"FIFO rule"| WIP
    PF_STK & NPF_STK -->|"FIFO consumption"| WIP
    WIP -->|"production complete"| SO

    SO --> OBD --> PFI --> direction1
    direction1 -->|"Foreign"| RE
    direction1 -->|"US Domestic"| FC --> WE
    direction1 -->|"Duty-Paid Stock"| ITC

    RE & WE & ITC --> REPORTING

    class PO,IDL source
    class WB,ADM,PTT,GR,BG1,BG2 integration
    class PF_STK,NPF_STK,WIP,BOM_FTZ target
    class SO,OBD,PFI,RE,WE,FC,ITC,AR,ABR,HMF reporting

Four implementation requirements for FTZ are non-negotiable: the Customs ID must include both the FIRMS code and the FTZ ID assigned by CBP; two background jobs — Process Stock Receipts Into Foreign-Trade Zone and Post Stock To FTZ — must be scheduled explicitly; the GTS BOM for FTZ is maintained separately from the S/4HANA production BOM and linked to the Customs ID; and duty-paid stock movements out of FTZ use an internal transaction document, not an entry summary.

Processing Trade Regime: China Localisation

PTR is China’s duty suspension mechanism for export-oriented manufacturing. Before production begins, two authorisations are required. The Enterprise Qualification Application is registered per company and lists all permitted components and finished goods. The e-manual is registered per manufacturing contract and contains the production BOM with theoretical quantities, validity period, value and quantity limits, and closing portion timing. The e-manual is the operational controller — it drives stock calculations, closing portion determination, and settlement.

<?xml version="1.0" encoding="UTF-8"?>
<bpmn:definitions xmlns:bpmn="http://www.omg.org/spec/BPMN/20100524/MODEL"
                  xmlns:bpmndi="http://www.omg.org/spec/BPMN/20100524/DI"
                  xmlns:dc="http://www.omg.org/spec/DD/20100524/DC"
                  xmlns:di="http://www.omg.org/spec/DD/20100524/DI"
                  id="ptr_process"
                  targetNamespace="http://gts.series.part2.ptr">

  <bpmn:process id="PTR_Process" isExecutable="false">

    <bpmn:startEvent id="start_ptr" name="PTR Contract Registered with China Customs">
      <bpmn:outgoing>flow_ptr_eqa</bpmn:outgoing>
    </bpmn:startEvent>

    <bpmn:task id="eqa" name="Create and Approve EQA in GTS">
      <bpmn:incoming>flow_ptr_eqa</bpmn:incoming>
      <bpmn:outgoing>flow_eqa_emanual</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="emanual" name="Create and Approve E-Manual in GTS">
      <bpmn:incoming>flow_eqa_emanual</bpmn:incoming>
      <bpmn:outgoing>flow_emanual_po</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="po_create" name="Create Purchase Order for Foreign Components (ME21N)">
      <bpmn:incoming>flow_emanual_po</bpmn:incoming>
      <bpmn:outgoing>flow_po_entry</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="ptr_entry" name="GTS: Create PTR Entry Declaration at Chinese Border">
      <bpmn:incoming>flow_po_entry</bpmn:incoming>
      <bpmn:outgoing>flow_entry_gr</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="goods_receipt_ptr" name="Post Goods Receipt (MIGO) — Component Stock Updated in GTS">
      <bpmn:incoming>flow_entry_gr</bpmn:incoming>
      <bpmn:outgoing>flow_gr_production</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="production" name="Manufacturing at Processing Trade Warehouse">
      <bpmn:incoming>flow_gr_production</bpmn:incoming>
      <bpmn:outgoing>flow_prod_salesorder</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="sales_order_ptr" name="Create Sales Order and Outbound Delivery">
      <bpmn:incoming>flow_prod_salesorder</bpmn:incoming>
      <bpmn:outgoing>flow_so_gw</bpmn:outgoing>
    </bpmn:task>

    <bpmn:exclusiveGateway id="gw_ptr_dest" name="Customer Destination?">
      <bpmn:incoming>flow_so_gw</bpmn:incoming>
      <bpmn:outgoing>flow_foreign_customer</bpmn:outgoing>
      <bpmn:outgoing>flow_domestic_customer</bpmn:outgoing>
    </bpmn:exclusiveGateway>

    <bpmn:task id="reexport_ptr" name="GTS: Create Re-Export Declaration — BOM Closing Portions">
      <bpmn:incoming>flow_foreign_customer</bpmn:incoming>
      <bpmn:outgoing>flow_reexport_settle</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="domestic_ptr" name="GTS: Domestic Issue — Pay Previously Suspended Duties">
      <bpmn:incoming>flow_domestic_customer</bpmn:incoming>
      <bpmn:outgoing>flow_domestic_settle</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="presettlement" name="PTR Pre-Settlement: Submit Import/Export List to Authorities">
      <bpmn:incoming>flow_reexport_settle</bpmn:incoming>
      <bpmn:incoming>flow_domestic_settle</bpmn:incoming>
      <bpmn:outgoing>flow_pre_settlement</bpmn:outgoing>
    </bpmn:task>

    <bpmn:task id="settlement" name="PTR Settlement: Reconcile Actual vs Theoretical BOM — Correction if Needed">
      <bpmn:incoming>flow_pre_settlement</bpmn:incoming>
      <bpmn:outgoing>flow_end_ptr</bpmn:outgoing>
    </bpmn:task>

    <bpmn:endEvent id="end_ptr" name="E-Manual Closed — PTR Contract Settled">
      <bpmn:incoming>flow_end_ptr</bpmn:incoming>
    </bpmn:endEvent>

    <bpmn:sequenceFlow id="flow_ptr_eqa" sourceRef="start_ptr" targetRef="eqa"/>
    <bpmn:sequenceFlow id="flow_eqa_emanual" sourceRef="eqa" targetRef="emanual"/>
    <bpmn:sequenceFlow id="flow_emanual_po" sourceRef="emanual" targetRef="po_create"/>
    <bpmn:sequenceFlow id="flow_po_entry" sourceRef="po_create" targetRef="ptr_entry"/>
    <bpmn:sequenceFlow id="flow_entry_gr" sourceRef="ptr_entry" targetRef="goods_receipt_ptr"/>
    <bpmn:sequenceFlow id="flow_gr_production" sourceRef="goods_receipt_ptr" targetRef="production"/>
    <bpmn:sequenceFlow id="flow_prod_salesorder" sourceRef="production" targetRef="sales_order_ptr"/>
    <bpmn:sequenceFlow id="flow_so_gw" sourceRef="sales_order_ptr" targetRef="gw_ptr_dest"/>
    <bpmn:sequenceFlow id="flow_foreign_customer" name="Foreign Customer" sourceRef="gw_ptr_dest" targetRef="reexport_ptr"/>
    <bpmn:sequenceFlow id="flow_domestic_customer" name="Domestic Customer" sourceRef="gw_ptr_dest" targetRef="domestic_ptr"/>
    <bpmn:sequenceFlow id="flow_reexport_settle" sourceRef="reexport_ptr" targetRef="presettlement"/>
    <bpmn:sequenceFlow id="flow_domestic_settle" sourceRef="domestic_ptr" targetRef="presettlement"/>
    <bpmn:sequenceFlow id="flow_pre_settlement" sourceRef="presettlement" targetRef="settlement"/>
    <bpmn:sequenceFlow id="flow_end_ptr" sourceRef="settlement" targetRef="end_ptr"/>

  </bpmn:process>
</bpmn:definitions>

Electronic Communication Architecture: The IDoc-to-Authority Pipeline

The e-filing infrastructure transforms GTS from a compliance record-keeper into a real-time customs execution system. The communication flow has four layers: GTS generates an outbound IDoc (M-message) from a complete declaration; the conversion provider translates it into the country-specific authority format; the authority processes and responds; GTS receives the inbound IDoc (I-message) and updates the declaration status.

flowchart TD
    classDef source fill:#fff3e0,stroke:#e65100
    classDef integration fill:#e8f5e9,stroke:#2e7d32
    classDef target fill:#e3f2fd,stroke:#1565c0
    classDef reporting fill:#f3e5f5,stroke:#6a1b9a

    subgraph GTS_INT["GTS Internal"]
        DEC["Customs Declaration<br>(complete)"]
        MSG["Communication Process<br>(M-Message generated)"]
        IDOC_OUT["Outbound IDoc<br>(WE05 / BD87)"]
    end

    subgraph CONV["Conversion Layer"]
        CP["Conversion Provider<br>(e.g. SEEBURGER)"]
        FMT["Country-Specific Format<br>Translation"]
    end

    subgraph AUTH["Customs Authorities"]
        ATLAS["ATLAS<br>(Germany)"]
        AES["AES / ACE<br>(United States)"]
        NCTS["NCTS<br>(EU Transit)"]
        EMCS_A["EMCS<br>(EU Excise)"]
        OTHER["Other Localised<br>Systems"]
    end

    subgraph GTS_IN["GTS Inbound"]
        I_MSG["I-Message Received<br>(MRN / ARC / Approval)"]
        IDOC_IN["Inbound IDoc<br>(status update)"]
        DEC_UPD["Declaration Status<br>Updated"]
    end

    subgraph BROKER["Alternative: Broker Enablement"]
        MB001["MB001 Outbound<br>(ImportDeclarationRequest_Out)"]
        IB001["IB001 Inbound<br>(ImportDeclarationNotification_In)"]
        IB002["IB002 Tax Assessment<br>(ImportTaxAssessmentNotification_In)"]
        MB010["MB010 Export<br>(ExportDeclarationRequest_Out)"]
        IB010["IB010 Export Notify<br>(ExportDeclarationNotification_In)"]
        IB015["IB015 Exit Confirm<br>(ExportDeclarationExitNotification_In)"]
    end

    DEC --> MSG --> IDOC_OUT
    IDOC_OUT --> CP --> FMT
    FMT --> ATLAS & AES & NCTS & EMCS_A & OTHER
    ATLAS & AES & NCTS & EMCS_A & OTHER --> IDOC_IN
    IDOC_IN --> I_MSG --> DEC_UPD

    DEC --> MB001 & MB010
    MB001 -->|"web service"| IB001 & IB002
    MB010 -->|"web service"| IB010 & IB015

    class DEC,MSG,IDOC_OUT source
    class CP,FMT integration
    class ATLAS,AES,NCTS,EMCS_A,OTHER target
    class IDOC_IN,I_MSG,DEC_UPD,MB001,IB001,IB002,MB010,IB010,IB015 reporting

The standard broker enablement uses XML web services rather than IDoc and supports three integration scenarios. In the broker-centric import scenario, the broker initiates the declaration and the importer receives a copy after clearance. In the importer-centric import scenario, the importer initiates via MB001 and the broker clears and returns status via IB001 and a tax assessment via IB002 — the broker cannot add or remove line items. For export, the exporter initiates via MB010 and receives clearance confirmation via IB010 and exit confirmation via IB015.

The operations monitoring transaction set covers: WE05 for IDoc list by time range, WE09 for single IDoc lookup, WE07 for all IDocs in error status, BD87 for error root cause detail, and /SAPSLL/ECC_EDI_MES for EDI message file assignment.

Preference Management: Converting FTA Law into System Logic

Preference Management is where the legal text of Free Trade Agreements gets operationalised. Customs Management asks how much duty is owed. Preference Management asks whether the shipment qualifies to pay zero. The answer requires three sequential determinations — and GTS automates all three at scale.

The Three-Step Determination Chain

flowchart LR
    classDef source fill:#fff3e0,stroke:#e65100
    classDef integration fill:#e8f5e9,stroke:#2e7d32
    classDef target fill:#e3f2fd,stroke:#1565c0
    classDef reporting fill:#f3e5f5,stroke:#6a1b9a

    subgraph STEP1["Step 1 — Inbound: Supplier Origin"]
        LTSD_REQ["LTSD Request<br>to Suppliers"]
        SUP_RESP["Supplier Response<br>Maintained in GTS"]
        AGG["Aggregation<br>(Worst-Case Principle)"]
        LTSD_REQ --> SUP_RESP --> AGG
    end

    subgraph STEP2["Step 2 — Determination: Is the Product Preferential?"]
        BOM_EXP["BOM Explosion<br>(Top-Down or Bottom-Up)"]
        ROO["Rules of Origin<br>(Tariff Shift / RVC / Specific)"]
        CALC["Preference Calculation<br>(Net Cost / TXN Value / Build-Up)"]
        STATUS["Preference Status:<br>Always / Threshold / Never"]
        BOM_EXP --> ROO --> CALC --> STATUS
    end

    subgraph STEP3["Step 3 — Outbound: Issue Proof of Origin"]
        CERT["Certificate of Origin<br>or Customer LTSD"]
        REVOKE["Revoke and Reissue<br>on Status Change"]
        INTERCO["Intercompany LTSD<br>Exchange between AUs"]
        CERT --> REVOKE
        CERT --> INTERCO
    end

    AGG -->|"Component<br>preference data"| BOM_EXP
    STATUS -->|"Preferential?"| CERT

    class LTSD_REQ,SUP_RESP,AGG source
    class BOM_EXP,ROO,CALC,STATUS integration
    class CERT,REVOKE,INTERCO target

Rules of Origin: Seven Comparison Methods

The rules of origin are the legal eligibility criteria. GTS translates them into seven comparison methods:

RoO Type	GTS Method	Logic
Tariff Shift	Method 3	HS code of non-originating components must differ from finished goods HS at chapter/heading/subheading level
RVC — Transaction Value	Method 1	Non-originating content ≤ X% of FOB/EXW transaction value
RVC — Net Cost	Method 2	Non-originating content ≤ X% of net cost (excluding marketing, shipping)
RVC — Build-Up	Method 4	Originating content ≥ X% of FOB adjusted value
RVC — Build-Down	Method 5	Non-originating content ≤ X% of FOB adjusted value
RVC — Transaction Value (Min Orig.)	Method 6	Originating content ≥ X% of transaction value
External / Manual	Method 0	Preference status aggregated from supplier LTSDs or manually maintained

The de minimis tolerance rule — typically 7 to 10 percent of finished goods value — acts as a safety net. If the tariff shift test fails but the total non-originating, non-shifting component value falls below the de minimis threshold, the product still qualifies under most FTAs.

BOM Explosion: Top-Down vs. Bottom-Up

This is the most consequential preference configuration decision in any implementation. The difference is in how subassembly value is treated. Top-down considers all lowest-level components directly against the finished goods rules. Bottom-up first determines whether a subassembly is itself originating, then carries its full value as originating into the parent calculation. Bottom-up favours RVC rules because subassembly transformation adds originating value. Top-down favours tariff shift rules because lowest-level components are more likely to change HS code than subassemblies.

For USMCA implementations, both methods are legally permitted. GTS supports running both and selecting the more favourable result — a configuration choice with direct impact on how much of the product portfolio qualifies for zero duty.

The Aggregation Problem: Worst-Case and the Goods Retention Period

The worst-case aggregation principle is the most common preference determination failure mode in multisourced manufacturing. When a component is purchased from both a preferential and a non-preferential source, GTS marks it non-preferential for the entire goods retention period — the commercially conservative but legally correct interpretation.

GTS provides a mitigation hierarchy. The goods retention period can be configured at four levels, each overriding the one above: Administrative Unit default, then supplier or product level, then supplier and product combined, then individual material document via transaction /SAPSLL/RET_PERI_UPD. The structural solution available from GTS 2023 is the Management of Preference Data for Product Identifiers — batch-level preference tracking that eliminates the worst-case problem entirely. When the preference status travels with the batch rather than the material number, a Mexico-sourced batch and a Peru-sourced batch of the same component carry separate statuses, and GTS can direct each to the appropriate customer based on FTA eligibility.

After determination, GTS stores three possible outcomes in the product master. “Always preferential” means the product qualifies at any price point. “Threshold-dependent” means it qualifies above a calculated sales price threshold and requires per-transaction comparison at invoicing. “Never preferential” means no sales price makes it qualify under the relevant FTA — a signal to either renegotiate sourcing or accept MFN duty as a cost of goods.

Supported Country Coverage

GTS 2023 provides localised e-filing support across 13 countries and territories. Germany and the United States have the broadest coverage, supporting import/export, transit, EMCS (Germany), and FTZ/Reconciliation (United States). Major EU trading nations — France, Netherlands, Belgium, Austria, Spain, Denmark, Sweden — support import/export and transit declarations, with Belgium and Netherlands also supporting EMCS. Switzerland supports import/export and transit. New Zealand and Australia support export-only declarations. All country coverage is maintained through SAP’s legal update delivery, which is one of the primary arguments for keeping GTS on current support.

Reporting Architecture: Operational vs. Analytical

GTS 2023 has shifted all operational reporting from ALV-based SAP GUI to Fiori embedded analytics, with strategic analytics available through SAP BW/4HANA and SAP Datasphere.

flowchart TD
    classDef source fill:#fff3e0,stroke:#e65100
    classDef integration fill:#e8f5e9,stroke:#2e7d32
    classDef target fill:#e3f2fd,stroke:#1565c0
    classDef reporting fill:#f3e5f5,stroke:#6a1b9a

    subgraph OPERATIONAL["Operational Reporting — Real-Time (Embedded Analytics)"]
        EA_C["Compliance:<br>Blocked Partners,<br>Audit Trail, Reasons<br>for Release"]
        EA_CUS["Customs:<br>Export/Import Declarations,<br>Special Procedure Stock,<br>IDoc Monitoring"]
        EA_PM["Preference:<br>LTSD Worklists,<br>Determination Logs,<br>Product Data"]
    end

    subgraph ANALYTICAL["Analytical Reporting — Strategic (Data Warehouse)"]
        BW4["SAP BW/4HANA<br>(22 standard queries)"]
        DS2["SAP Datasphere<br>(12 standard CDS views)"]
        HANA_SQL["SAP HANA SQL<br>Data Warehousing"]
    end

    subgraph QUERIES["Key BW/4HANA Queries"]
        Q1["Export by product<br>(invoice net amount)"]
        Q2["Import by country<br>(duties paid)"]
        Q3["SPL screening<br>results by FTO"]
        Q4["License usage<br>by document"]
        Q5["Preference status<br>vs threshold delta"]
    end

    subgraph CDS_VIEWS["Key Datasphere CDS Views"]
        C1["C_ExportDeclarationItemDEX"]
        C2["C_ImportDeclarationItemDEX"]
        C3["C_LegalControlLicenseDEX"]
        C4["C_SPLScrngPartAddrChkResultDEX"]
        C5["C_TransitDeclarationItemDEX"]
    end

    EA_C & EA_CUS & EA_PM -->|"real-time<br>SAP HANA"| OPERATIONAL
    OPERATIONAL -->|"ETL / delta extract"| BW4
    OPERATIONAL -->|"CDS virtualisation"| DS2
    BW4 --> QUERIES
    DS2 --> CDS_VIEWS

    class EA_C,EA_CUS,EA_PM source
    class BW4,DS2,HANA_SQL integration
    class QUERIES,Q1,Q2,Q3,Q4,Q5 target
    class CDS_VIEWS,C1,C2,C3,C4,C5 reporting

The distinction between operational and analytical reporting matters for implementation scoping. Operational reports are real-time queries against the GTS HANA database — they surface blocked documents, incomplete declarations, and IDoc errors that need same-day action. Analytical reports aggregate trade data across periods for management review — duties paid by country, license consumption rates, preference qualification rates by product family. The 22 standard BW/4HANA queries and 12 Datasphere CDS views cover the most common KPI requirements without custom development.

Conclusion: What Part 2 Leaves Open for Part 3

Part 2 has covered the full operational execution layer. Declarations are filed. Duties are calculated. Special procedures defer or eliminate those duties in exchange for inventory traceability. Preference Management determines whether a shipment qualifies for zero duty under an applicable Free Trade Agreement. The reporting layer makes all of it visible to operations teams in real time and to finance and trade leadership in aggregate.

What remains unresolved — and what Part 3 addresses directly — is the financial accounting consequence of all of the above.

Import duty accruals calculated in GTS must post to the right GL accounts, cost elements, and profit centers in FI-CO. The accounting treatment differs materially between duty that is a product cost (capitalized into inventory via MIGO) and duty that is a period expense (posted directly to a cost center). Preference savings — the delta between MFN duty that would have been paid and the zero-duty outcome of a valid FTA certificate — do not automatically surface in management accounting without deliberate CO configuration. Export license drawdowns create audit obligations that require reconciliation between the GTS license ledger and the FI billing document stream.

Beyond the financial close mechanics, Part 3 will cover the migration program from GTS 11.0 to GTS 2023 — the project reality for most existing GTS customers. The choice between brownfield (system conversion with XPRA data migration) and greenfield (clean installation with historical data archival) has consequences that extend across Basis, functional configuration, custom code, and the legal update backlog. And Part 3 will close with SAP’s forward roadmap for GTS: where AI-assisted classification, origin management automation, and SAP BTP integration services are headed, and what that means for the architecture described across these articles.