Exporting for international business growth

When your domestic market is anemic, you might look to foreign markets for growth opportunities. Growing your business internationally involves a number of legal issues.

Exporting is a traditional and well-established method of reaching foreign markets, and involves the marketing and direct sale of domestically produced goods in another country. It can be done over your website or by individual contract, to consumers, businesses or distributors, depending on the product you have to sell.

Consider exporting to a country that has a free trade agreement (FTA) with the United States. FTAs reduce barriers to US exports, protect the intellectual property rights of U.S. exporters, and create a more stable and transparent trading and investment environment, making it easier and cheaper for U.S. companies to export their products to FTA trading partner markets. The US has 11 FTAs in force with 17 countries (including Canada, Mexico and Singapore), and several pending FTAs (including one with Korea that should be effective soon).

Several federal agencies have responsibilities for regulating exports from the United States. The Department of Commerce is responsible for controlling the export of “dual-use” goods — that is, goods that are capable of being used for commercial purposes but that also may be used for military or proliferation uses, posing foreign policy or national security concerns. The Bureau of Industry and Security (BIS) of the US Department of Commerce implements export controls through export administration regulations.

Most export transactions do not require specific approval in the form of licenses from the U.S. government. Before you export, though, you need to determine whether you need an export license, which grants permission to conduct a certain type of export transaction. Whether you need an export license is determined by what you are exporting, where you are exporting, who will receive your exported item, and what they’ll use it for.

You can contract with a licensed customs broker to handle compliance with export regulations and obtain any needed export license or other approval for you. Customs brokers are licensed, regulated and empowered by U.S. Customs and Border Protection to assist importers and exporters in meeting federal requirements governing imports and exports. You can obtain your own export license using BIS’s on-line electronic licensing system.

Exporting your product may require approval from other federal agencies. For example, export of a defense article must obtain approval of the State Department, and export of natural gas requires approval of the Department of Energy. The Drug Enforcement Administration regulates the export of controlled substances and precursor chemicals, and the Agriculture Department guides exporters in exporting meat, poultry, and egg products (including packaging, labeling and other special conditions), regulates the export of plants, and helps exporters meet the entry requirements of other countries.

Other legal areas are of concern as well. Exporters need to be aware of and comply with anti-bribery laws (such as the U.S. Foreign Corrupt Practices Act), anti-boycott regulations, anti-dumping laws, and any required standards and certifications of the target country (such as “Conformité Européenne” marking and certification required in the EU, and the CCC mark and certification required in China).

Most exporters are not themselves expert in the logistics of product movement and conformance with export procedures, but use the services of a freight forwarder or licensed customs broker to navigate the physical export of goods. For direct sales to consumers driven off your website, international shippers like FedEx and UPS are good options. Shipments of large orders to a distributor may be best handled by a licensed customs broker or freight forwarder who will handle shipping and customs issues for you.

The U.S. Commercial Service offers exporters trade counseling, business match-making, market intelligence and commercial diplomacy assistance. Contact the Boise office at http://export.gov/idaho. The USDA’s Foreign Ag Service assists U.S. food and agricultural companies with the entire exporting process, from learning the fundamentals of exporting to identifying overseas opportunities and finding potential distributors. Contact 202-690-3576 or visit http://www.fas.usda.gov/agx/counseling_advocacy/counseling_advocacy.asp.

The Idaho Department of Commerce, Division of International Business, offers helpful resources and advice to Idaho exporters. Explore their service offerings here: http://commerce.idaho.gov/international/services/. Your business lawyer can help you understand your customs broker or shipping service agreements, draft your sales contracts, and find counsel in your foreign market when necessary.

Christine Nicholas is a partner at Moffatt Thomas Barrett Rock & Fields in Boise. Her areas of specialization include business transactions, real estate and finance.

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