US businesses compete within an increasingly global economy where large corporations operate from two or three different nations, with complex import export laws governing all transactions. When a company has one location overseas that manufactures an item, another location in another country that assembles the item with corporate offices located in yet another country, the topic of International Trade Law immediately becomes a priority for businesses in that marketplace. In spite of a major trade deficit with most of the world, the United States continues to play a very important role as both a world importer and exporter. To understand the laws and regulations regulating import-export trade, it is important to have a firm grasp of the mechanics and the players involved.
Most companies involved in the manufacture and export of goods must first select a shipping company. The choice is based not only on rates but also on a number of other factors, including specialization in the shipping of certain items. Although most cargo now travels on board containers which are uniform in size and shape, certain types of cargo require special arrangements. When cargo arrives at a foreign port of destination it must normally clear customs. The shipping company does not deal with customs procedures and delegates the task to a customs broker who can also be completely independent of the company. The shipper can select its own customs broker, though it is often the shipping company that selects one.
For the shipment of certain types of cargo and restricted items, a whole set of laws comes into play relating to export controls. The purpose of export controls is to deny actual and potential enemies access to technologies which are likely to increase their military threat. Although after the end of the Cold War some controls are being relaxed, there are still some which remain in place. Among the relevant laws are the Arms Export Control Act and the Export Administration Act, as amended. In addition to specific U.S. regulations, there are also laws which were drafted by Western nations in order to implement a common defense policy. Among them are the COCOM Procedures (Coordinating Committee on Multilateral Export Controls). The main difference between COCOM controls and U.S. export controls is that the American ones are more comprehensive, more likely to be vigorously enforced and involve more severe penalties for infringement.
In many cases, an American company wishing to export to a country where import restrictions and high duty rates apply or where market penetration is particularly difficult, may wish to work with a company in that country or even the government. Cooperation with a local company or the local government can take different forms. The most common device is to form a joint venture. Another option is to form a subsidiary of the American company in the country concerned. Other forms of corporate arrangements such as the sale of stock can also be available.
In order to better do business in a foreign country, in addition to forming alliances with foreign entities, the American company should also certainly be familiar with the laws and regulations of that country. Among the issues to consider are general restrictions on imports, specific quality and safety requirements, origin of components for duty and tariffs purposes, copyright and patent rights, and others. When a third country is involved in the transactions (i.e. when a semifinished product is shipped to one country for final assembly and then reshipped to another for distribution and sale), many of the same issues come into play several times over. In conducting international trade, it is often necessary to study the laws and regulations of several countries before even completing the business plan.
What has been said about exporting goods and services overseas is also true for importing goods and services into the United States. In fact, while the U.S. raises very few barriers to trade and is a very efficient place to conduct business in, it has many laws and regulations in place regarding safety and quality controls that do not exist in other countries. Take, for example, unique copyright infringement and software distribution laws governing US transactions. Also of concern are the same type of customs regulations faced in the foreign market, but now subject to regulation by US Customs itself.
Dealing with import export laws and international trade of goods is often one of the first steps for a growing, worldwide business. While United States business law actively encourages growth, there are complex legal issues that must be considered before entering the global marketplace. Consult the international law attorneys of Knox, Johnson, Rockwell & Babbitt for assistance in these and other trade matters.
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