Navigating the complexities of international trade requires a keen understanding of regional trade agreements, import-export controls, quotas and embargoes, intellectual property rights protections, customs procedures and tax implications. Conducting regular research and establishing a compliance framework are invaluable for small businesses navigating global markets successfully.
In this episode of Beyond the Box podcast, our panel explores how best to address the almost 3,000 foreign trade regulations the IMF estimates exist worldwide.
Import and Export Controls
Small businesses can expand both revenues and employment by exporting. To realize their full exporting potential, however, they must abide by trade regulations to maximize this growth potential.
Regulations that restrict shipment, transfer and disclosure of items and information based on their origin or destination can have a substantial effect on whether a company can export. This applies regardless of whether an item crosses borders. The Commerce Department’s Bureau of Industry and Security (BIS) oversees most commercial items through the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), while simultaneously administering sanctions programs against countries, entities and individuals who threaten U.S. national security interests.
Regional trade agreements form the basis of cross-border economic relationships and offer numerous advantages such as lower tariffs and streamlined customs procedures. Rectifying these agreements on a regular basis with assistance from experienced trade advisors ensures compliance with these rules while optimizing foreign market trading potential. Moreover, these professionals can conduct training sessions that increase employee awareness about them.
Customs Procedures
As your business expands into international trade, the customs regulations of each country you export and import from will become increasingly important to understand. Their policies could significantly impede or enable you to reach new markets or boost sales.
Customs procedures vary across countries. To avoid delays and penalties, it’s wise to become familiar with documentation requirements and valuation methods; working with a customs broker or trade consultant is also advisable in ensuring compliance.
Engaging the services of an expert to assist with these processes can lower shipping costs and speed and accuracy of customs clearance, but many SMEs lack the capital to invest in this expertise – leading to significant barriers to trade – top answers given by current traders including high shipping costs (61%), losses and delays during transit (54%), and lack of guidance (36%).
Tariffs and Duties
Trade is the lifeblood of our economy and a source of job and growth for small businesses, yet too many barriers stand in its way. To maximize our success we require an expansive trade agenda that promotes fair rules for all while eliminating tariffs and other obstacles that exclude U.S. farmers, ranchers, manufacturers and service providers of all sizes from foreign trade agreements.
Tariffs and duties are fees charged by countries on imported products entering their territory; these acts as financial checkpoints that can affect shipping costs. They serve several functions including raising revenue for government coffers, regulating trade activity, protecting domestic industries and raising revenues for their governmental partners.
The Chamber is strongly against tariffs that harm American consumers, threaten our economy, or put American jobs at risk. We strongly advise policymakers to use their 301 authority sparingly and negotiate modern trade agreements to open markets to American exports ranging from apples and airplanes to zucchini and X-ray equipment – while using Customs Info database as an effective duty and tax lookup tool that covers over 170 markets.
Regional Trade Agreements
With globalization comes trade agreements to deepen integration and reduce costs, often called mega-regionals. They affect significant proportions of world trade and foreign direct investment (FDI). Mega-regionals may contain rules beyond tariffs or border measures that go further behind-the-border, such as competition policy, government procurement procedures, intellectual property rights or labor standards.
Regional trade agreements that include provisions designed to support small businesses can offer benefits such as reduced or eliminated tariffs and simplified customs procedures, helping your company save both time and money when international shipping. This can substantially lower shipping costs.
But research indicates that most small businesses remain unaware of their RTA’s small business provisions and how to take advantage of them. To address this challenge, the Department of Commerce’s Office of Small Business Market Access and Industrial Competitiveness conducts outreach initiatives as well as supports industry trade advocacy through Industry Trade Advisory Committees – visit this page for more information.