How-to guide: How to supply goods internationally (USA)

Introduction

This how-to guide provides guidance on how a US-based seller can supply goods to international customers.

Contracts with an international trading element typically present additional contractual and commercial considerations and risks for commercial lawyers. This guide considers the commercial, practical, and logistical issues of trading and contracting internationally in general, with emphasis on the transport of goods overseas, insurance, and security of both performance and payment.

The guide incorporates practical tips, examples, and government guidance to aid your compliance with legislation. It is aimed at in-house lawyers and legal professionals in organizations of all sizes and all sectors in the United States.

This guide covers:

Preliminary matters
Export regulations
Joint ventures/direct investment
International standards
Data protection rules
Protecting intellectual property rights
Contacting a foreign country’s embassy in the United States or the US embassy in the foreign country

This guide can be read in conjunction with Checklist: International supply of goods contracts.

Section 1 – Preliminary matters

Before supplying goods internationally, there are several areas of importance to review and understand, including barriers to entry for goods.

For each international market your organization is entering, review the following:

language and cultural issues;
conflicting laws;
unusual risks;
methods for collecting payment;
currency and tax issues; and
available international support mechanisms.

Each of these areas is explored in more detail below.

1.1 Language and culture

When supplying goods internationally, it is important to have knowledge of the non-legal framework within which your organization will operate. This includes the use of languages other than English.

Learning the culture, language, and methods of doing business in different countries is one of the first steps to successfully doing business internationally.

There may be a language barrier when conducting business with foreign companies. The US embassy or consulate in the foreign country may be able to provide you with a list of interpreters or translators. For example, the US embassy and consulates in Italy have a list of translators by consular district for US citizens who need help translating Italian. There are also companies that offer these services. Use ISO 17100:2015 for certified translators that work within the American Society for Testing and Materials (ASTM) standard guidelines. These providers offer translation services using certified processes.

Another area to consider is culture. Communication issues may arise from cultural differences or gender biases. For example, in some countries the presentation of gifts is a business custom and it is considered a serious breach of etiquette not to present them to the appropriate people. Other countries may have a male-dominant business culture where business is not conducted with women.

1.2 Conflicting laws

When the laws of different countries on the same topic diverge, there is a conflict of laws. When this occurs, the courts must decide which law to apply in case of a disagreement. Individual contracts are becoming increasingly transnational in nature. The outcome of a dispute may differ depending on which nation’s law is applied in an international lawsuit. When contemplating international commerce, it is critical to understand the different outcomes of a potential disagreement and how it may affect the company’s bottom line. To put it another way, does the possibility of increased business justify the risks of losing an international dispute? When considering conflicting laws, you may benefit from including a choice of law provision into your agreement to mitigate the risk associated with an unfavorable forum.

1.2.1 Convention on Contracts for the International Sale of Goods

The world business community has established international uniform sales laws to help lessen conflict of law issues. The United Nations Commission on International Trade Law (UNCITRAL) created a uniform sales law called the Convention on Contracts for the International Sale of Goods (CISG), to be adopted by treaties. The CISG has been adopted by over 90 countries, including the United States, Australia, and Canada. Notably, the United Kingdom and India are among the countries that have not adopted it. This law applies to contract formation and party obligations when the parties’ businesses are in different nation states and the nation states are contracting states, or when the rules of private international law lead to the application of the law of a contracting nation state.

When drafting international contracts, your organization’s legal team should understand how they differ from domestic contracts and be sure that they are written to provide the legal protection sought. The nationality, civil character, or commercial character of the parties or of the contract is not taken into consideration when applying the CISG.

In addition, due to the supremacy clause of the US Constitution, the CISG will preempt Article 2 of the Uniform Commercial Code (contracts for the sale of goods). To opt out of the CISG, Article 6 states that the parties must explicitly state they are doing so in the contract. Simply stating which state’s law will govern a transaction does not qualify as opting out of the CISG.

When there is a conflict regarding the interpretation of a contract, CISG Article 8 uses the ‘reasonable person’ standard which considers ‘all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.’ This is different from laws in the United States where the practice is to use a state’s iteration of the parol evidence rule to interpret contracts.

1.2.2 Countries that have not adopted the CISG

For countries that have not adopted the CISG, companies must research local laws and restrictions. For example, South Africa has its own rules and regulations for creating and enforcing a contract for the sale of goods. The South African Consumer Protection Act 2008 is a domestic regulation that provides protection for consumers.

1.2.3 Uniform Foreign Country Money Judgment Recognition Act

The Uniform Foreign Country Money Judgment Recognition Act is used to enforce final and enforceable foreign country judgments that grant or deny monetary recovery. The Act delineates the circumstances under which courts in states that have adopted the Act recognize foreign country money judgments. In those circumstances where a judgment may be sought due to a legal dispute over a business transaction, legal counsel should determine whether the provisions of the Act may apply to any subsequent money judgments resulting from the action.

1.3 Risk

There are multiple risks to consider when supplying goods internationally, as described in the sections below.

1.3.1 Economic instability

Economic instability is a hazard to global trade. For example, the bankruptcy of Hanjin Shipping, South Korea’s seventh largest transportation business, resulted in a significant drop in global supply chain shipping capacity. Capacity declined by 3%, and cargo up to the value of $14 billion could not dock.

1.3.2 Political and government changes

Even if governments allow for a less restrictive approach, organizations should maintain a high level of compliance in their operations. This safeguards against the enforcement of new regulations and limits the danger of compliance infractions. Shippers should also look for carriers that are not affiliated with the governments affected by change, or ‘third parties’ who may be affiliated with a government but are technically independent, to manage their trade needs.

1.3.3 Extreme weather events

Extreme weather is one of the most serious threats to ocean freight around the world. Ocean vessels can be tossed about by tropical storms if they cross their path. Climate change may result in an increased threat of tropical storms. As extreme weather becomes more common, the risks of shipping by sea becomes greater. This may drive up the costs of shipping freight, and making it more costly to insure cargo. Alternative methods of supply or manufacture should be considered, to mitigate the risk.

1.3.4 Environmental risks

The impact of global trade on the environment is another important risk factor. The shipping industry is a major source of air pollution, and is responsible for a significant percentage of global carbon dioxide emissions. Maritime freight companies will be subject to greater scrutiny which in turn could lead to the adoption of more environmental legislation and regulation. The increased legislation and regulation could increase the cost of shipping by sea.

Manufacturers should, wherever feasible, source raw materials from reclamation facilities. Ensure that all reclaimed products meet suitable ISO requirements and comply with the sustainability requirements in the countries to which you will be sending goods, and that waste that could otherwise be recycled is not discarded.

1.3.5 Catastrophes

Human-caused disasters and natural disasters that are not weather related are classified as catastrophes. Earthquakes and starvation, for example, are two natural disasters that could disrupt global trade.

Create a solid plan for ensuring business continuity in the event of a disaster. This could entail devoting resources to maintaining operability, as well as the use of cloud-based solutions. Consider whether your insurance coverage protects you against catastrophes. Some policies may exclude ‘acts of God’ and leave you at risk of footing a heavy bill should a catastrophe occur.

1.3.6 Connectivity

Global supply chain hazards abound within the interconnected systems of manufacturers, sellers, shippers, and buyers in the 24/7 world of modern trade. Although it is a relatively easy task to integrate systems, the integration and modification of systems increases the risk of security breaches, or the risks of inefficiencies due to incompatible systems. Each change may require additional expenditures for new upgrades, and poorly linked systems may cause bottlenecks and disruptions.

Sellers should take the necessary steps to make their systems and networks secure as unauthorized releases or theft of customer data could subject a seller to financial and legal liabilities and damage its reputation. To enhance productivity and profitability, avoid unnecessary system adjustments and engage with skilled supply chain systems integrators.

1.3.7 Cyberattacks

In today’s supply chain management, cyberattacks have become a major concern as they could destroy supply chains and force freight charges to soar. For example, a July 2021 cyberattack disabled the operations of Transnet, the company responsible for managing and governing eight of South Africa’s major seaports, for several days, causing delays in shipping from South African ports.

Choose vendors to use in your supply chain who have track records of adhering to strict cybersecurity requirements, such as AES 256 encryption. Maintain robust physical security of your facilities by limiting system access to those employees needed for cargo processing. Cyberattacks can also be mitigated by penetration testing (a simulated cyberattack on a system designed to expose security weaknesses) and a robust, proactive IT team. Penetration testing should be completed on a regular basis and security measures updated in consultation with your IT department.

1.3.8 Data integrity and quality

The quality and strength of data used in supply chain management is referred to as data integrity. Shippers may experience lower profitability and risk failure if they use incorrect freight procurement data. The threat of a data breach is all-pervasive, but data integrity can be improved by sharing it with the right supply chain partners.

Validate the accuracy and timeliness of the data regarding the operation of all the parts of the supply chain. Data that is more than a year old is bad data. Real-time data monitoring systems can be critical for improving data integrity and quality. Consider using blockchain-based technologies to eliminate past erroneous data modifications. Shippers who make the switch to data collaboration can improve data accuracy while lowering ocean freight costs.

1.3.9 Supplier consistency

Only 45% of suppliers can continue to operate following a crisis. Any risk that materializes could result in a disruption in supplier consistency. Manufacturers, too, must be consistent with their suppliers. Raw and reclaimed materials are at risk of being disrupted, though these risks may be mitigated through the creation and maintenance of disaster recovery plans.

Procurement departments can improve supplier consistency by establishing a varied supply network. Increase the number of available carrier routes to accommodate changes in your suppliers.

1.3.10 Transport loss

The loss or disruption of transportation is one of the greatest risks for a seller of goods. Disruption of transport will not only affect your ability to get your goods to market, but it will also affect your ability to receive the raw materials or components that you need to produce the goods. Even carriers with robust supply chain networks can face setbacks when it comes to risk. For example, a maritime shipping company’s operation will always be vulnerable to extreme weather. Having a strategy in place to address these concerns is critical to success.

Compare ocean freight prices to see whether you are being offered a competitive price. Next, determine which carriers serve your ports, as well as alternative carrier contracts and services that can be employed if your existing carriers are unavailable. Where possible, shippers should acquire cargo or freight insurance to build a safety net. Customers or B2B partners might also be reimbursed for lost freight and missed delivery dates.

1.3.11 Payment

Depending on the method of payment, see Section 1.4, there is the obvious risk that the offshore importing company may not pay you, the seller. The difficulties of receiving payment from a buyer who is unwilling to pay are magnified when the buyer is in another country.

The goal of any export transaction is to be paid in full and on time, so an appropriate payment mechanism must be carefully chosen to minimize payment risk while also meeting the needs of the buyer. Where possible, consider background checks on any new business partners, or make enquiries of others within your industry who may have done business with them in the past.

1.4 Payment

Sellers have an interest in ensuring the certainty of payment. This interest calls for a careful consideration and review of different payment methods. Sellers should consider a variety of payment options to allow the selection of the method that best suits your needs and those of the buyer. The US International Trade Administration provides guidance on five primary payment methods for international transactions:

a letter of credit is a contract from a foreign bank to pay the seller once the goods are shipped. This method is often seen as the most secure payment instrument for US sellers of goods internationally and is recommended in high-risk situations or for new business relationships, but it can be expensive;
parties can opt for cash-in-advance which protects US sellers by providing payment before shipment. This can be done through a wire transfer, a credit card or an escrow service. Cash-in-advance payment is recommended for smaller high-risk transactions. It is more cost efficient than letters of credit;
the open account method confers payment to the seller after the goods are shipped and delivered. This is the most high-risk option, and usually used in very competitive environments where a seller may lose a sale if it does not act quickly;
consignment is like an open account and is usually used with foreign distributors. For open accounts and consignments, it is recommended that the appropriate insurance be obtained, as discussed further below; and
documentary collection requires the seller’s and importer’s banks to exchange shipping documents for payment. It is used in established trade business relationships and is also more cost efficient than letters of credit.

1.5 Currency/Taxes

When importing and exporting goods internationally, currency risk needs to be considered. Businesses should work to mitigate risks associated with differences in exchange rates and the fluctuations in the value of foreign currency. This can be done through currency convertibility. Parties can quote prices and require payment in US dollars. Although the US dollar is widely accepted, not all currencies are so easily convertible. It is important to consult an international banker for more information and advice on converting currencies.

Organizations may also have to pay taxes and fees to the United States and to other foreign countries. Businesses can be subject to Value Added Tax (VAT), which is a form of goods and services tax. There are also tariffs that may need to be paid to import or export goods. Some countries have adopted the Harmonized Commodity Description and Coding System (HCDCS) which provides a uniform tariff schedule for classifying products across countries. For countries that have not adopted the HCDCS, it is important to determine what the applicable tariff schedule will be.

VAT has four fundamental areas that impact contract terms:

nature of supply (eg, goods, services, tangible property, real property, intellectual property);
consideration paid (eg, cash or payments in kind);
place of supply (eg, domestic or foreign transaction); and
time of supply (ie, when the VAT is payable).

The seller needs to clearly understand what goods or services to supply, where to supply them and the price they will be paid. Ambiguity or absence of detail can sometimes lead to adverse VAT consequences for one of the parties. A contract should address each of these fundamental areas to avoid ambiguity and limit risk of VAT liability.

In 2017, the United States added the Base Erosion and Anti-Abuse Tax (BEAT) to its tax laws. The BEAT prevents foreign and domestic companies operating in the United States from avoiding US tax liability by shifting profits outside the country.

1.6 Incoterms®

Use of industry accepted clauses and terminology can help with the contract drafting process to bring clarity and less contractual confusion. The International Chamber of Commerce has created a list of terminologies called Incoterms®. The list is a set of widely accepted definitions of essential terms of the trade of selling goods internationally. It provides guidance when creating international contracts and disputing the interpretation of terms. These terms are universal and do not favor any one nation’s expressions, so some terms may have different meanings from those commonly used in the United States. The rules help designate the basic roles and responsibilities of seller and buyer, and delivery and risk. The rules also deal with the relationship between the Incoterms® rules and the contracts surrounding a typical contract of sale for export or import and also, where appropriate, for domestic sales.

1.7 Documents

International transportation is essential for your organization to expand into new markets and increase your market share. You must be familiar with and comprehend the norms and regulations of exporting and importing, as well as possess the necessary shipping documentation. When supplying goods internationally, there are important documents that are used in the international trade business.

A bill of lading (BOL) is a document between the owner of the goods and the carrier/transporter.
- A straight bill of lading is non-negotiable, while a shipper’s order bill of lading is negotiable and can be used to buy, sell, or trade the goods while they are being shipped. A negotiable bill of lading directs the carrier to deliver goods to anyone who has the original endorsed negotiable bill of lading.
- A non-negotiable bill of lading identifies a single consignee, receiver, or buyer to whom the items must be delivered. It does not convey ownership of the goods on its own; thus, it must be accompanied by other papers.
- A negotiable bill of lading is used when the consignee or the buyer signs and endorses the documents, delivering them to the new consignee or the third party.
The BOL is the official contract between the shipper or owner of goods and the freight carrier. As it confirms receipt of items for shipment, it can only be signed by a carrier’s authorized representative upon receipt of the goods to be shipped. The goods are not released to the carrier without a signed BOL. A BOL sets forth the goods to be shipped, their destination, and how they should be handled.
An air waybill is a detailed tracking document about the shipment. This document is non-negotiable and is used during air transportation.
A certificate of conformity is a document that certifies that the goods comply with the consumer product safety rules of the importing country.
A certificate of origin certifies that the goods were obtained, produced, manufactured, and processed in a specific country.

1.8 Exporting

Often, due to the complexities of exporting, businesses engage export intermediaries to assist with the exporting process. Intermediaries offer a variety of services for a fee, including market research, hiring and maintaining overseas distributors or commission agents, exhibiting a client’s products at international trade exhibitions, advertising, shipping, and document preparation. In other words, the intermediary can frequently assume entire responsibility for the export side of the operation, freeing the seller of all responsibilities except filling orders.

There are two types of intermediaries that a US export seller company should use to ship their goods: freight forwarders and freight brokers.

Freight forwarders offer different modes of transportation for companies with goods to export. Freight forwarders assist with the preparation of export documents, the booking of transportation for your goods, and, if necessary, customs clearance at the port of arrival. They do not move the cargo themselves but offer their contacts to move the goods for the export company. They may also store the cargo for the export company.
Freight brokers are intermediaries that facilitate communication between the export company and the shipper, so they take no responsibility for possession of the cargo. A freight broker serves as the intermediary between the export company with cargo to move and the carrier that has the means to do so.

When moving goods domestically and internationally, there are federal agencies that are responsible for regulating and securing methods of transportation. The Federal Motor Carrier Safety Administration (FMCSA) is responsible for regulating and providing safety measures for commercial motor vehicles. The Federal Maritime Commission (FMC) is responsible for regulating the US international ocean transportation system.

To determine what documents are needed for your export shipment, you should first start with your foreign customer/importer or a freight forwarder. You will need several types of documents when exporting goods internationally including: a pro forma invoice, commercial invoice, and packing list. Directions for compliance documents to accompany foreign exports can be found at the International Trade Administration’s website.

1.9 Insurance

When participating in international trade, it is important to make sure that the goods in transport are insured. There are often two types of insurance involved in the export process. Cargo insurance covers potential damage to the goods being shipped. Weather damage, poor handling by carriers, and other typical cargo concerns make export insurance a crucial safeguard for US sellers. Your shipper or freight forwarder will contract with an insurance firm to insure the items you export. A second type of insurance is also recommended to insure the sale against non-payment. Credit insurance is increasingly required by the buyer’s lender and other financial institutions listed in your selling terms to cover the risk of non-payment. Contingencies include buyer or lender default, political events, or foreign currency disasters that jeopardize your payment.

In accordance with the terms of sale, either the buyer or the seller may make insurance arrangements. If the terms of the sale state that you are liable for insurance, your company should either obtain its own coverage or pay a charge to have the cargo insured by a freight forwarder. If the terms of the sale make the foreign buyer responsible for obtaining insurance, you should not assume (or accept the buyer’s representation) that a sufficient amount of coverage has been secured. If the buyer fails to secure proper coverage, damage to the cargo can result in a significant financial loss for your organization. Marine cargo insurance protects shipments by sea. Marine cargo insurance may cover air shipments or insurance can be acquired directly from the airline. Cargo insurance protects export shipments against loss, damage, and delays in transit. Carriers’ liability is frequently limited by international agreements. Furthermore, the coverage differs significantly from that which is available in the United States. For more information, sellers can contact international insurance carriers or freight forwarders. Although sellers and buyers can agree on different components, coverage is often set at 110% of the cost, insurance, and freight (CIF) or carriage and insurance paid (CIP) value.

Marine cargo insurance – sometimes referred to as ‘ocean marine insurance,’ or ‘wet marine insurance’ – offers support for international trade travelling via the ocean. Once there is insurance on the goods, the holder receives an insurance certificate that loss or damage to the goods is covered. If a party has businesses or operates in multiple countries, international insurance can be used to protect the operations.

Conduct a full and complete review of your insurance policy to make sure there is adequate protection for the goods and potential risks involved. Insurance policies should be reviewed on an ongoing basis and, at minimum, at the time of renewal to ensure adequate protection as prices fluctuate, coverage needs change and new risks present themselves.

Section 2 – Export regulations

2.1 International trade agreements

The United States has signed trade agreements with 20 countries to facilitate the movement of goods across borders. Gaining a competitive advantage by taking advantage of free trade agreement (FTA) benefits is a win–win situation. The US Office of Trade Agreements Negotiation and Compliance (TANC) helps companies that may face technical trade hurdles including unfair testing, labeling, or certification requirements, time-consuming customs procedures, or discriminatory investment laws.

There are a multitude of other trade agreements that can be used to the advantage of parties willing to buy and supply goods internationally. For example, the World Trade Organization (WTO) agreements consist of legal structures for the 164 economies that have joined the organization. The North American Free Trade Agreement (NAFTA), now the United States–Mexico–Canada Agreement (USMCA), is an agreement between Canada, the United States, and Mexico that lays out the framework for trade between these countries. There are also bilateral investment treaties that ensure that US investors obtain national or favored treatment in the participating country. For a list of these agreements and treaties with the United States, see the TANC’s Trade and Related Agreements Database.

A comprehensive review of available trade agreements can facilitate bringing products to the international marketplace.

2.2 Check license requirements

Decide if you require any export license for the specific goods in question. A government document that approves or grants authority to perform certain export transactions is known as an export license (including the export of technology). After a thorough examination of the circumstances surrounding a given export transaction, the appropriate licensing agency issues an export license.

When supplying goods internationally, businesses must research export license requirements provided by specific US agencies. Unfortunately, there is no central export licensing bureau in the United States. For example, the US Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) makes sure that all imports and exports of agricultural products are free from pests and diseases, and that all agricultural goods meet the requirements of the United States and foreign countries. Businesses must obtain a permit with the USDA to import animals and plants into the United States. The Department of Commerce’s Bureau of Industry and Security (BIS) regulates items that fall under the Export Administration Regulations (EAR). To export regulated items to other countries, businesses must first obtain a license to do so from the BIS. The Department of State’s Directorate of Defense Trade Controls (DDTC) regulates the transnational trade in defense articles and services. These items are included in the US munitions list (USML). To export or import USML items, businesses must obtain a license or agreement from the DDTC.

Most export transactions in the United States do not necessitate explicit government permission in the form of licenses. Normally, only a small percentage of all export transactions in the United States require official approval. It is the seller’s responsibility to identify whether the goods require a license and to investigate the products’ intended use, or to undertake due diligence.

2.3 Code of Federal Regulations Title 15

The federal laws and regulations that enforce international trade are in the Code of Federal Regulations Title 15 (Commerce and Foreign Trade, 15 C.F.R. (2017)). The Code discusses import and export regulations, trade agreements, and trade standards.

2.4 Federal export control regulations

BIS imposes export controls to protect the interests and safety of the country. These regulations relate to commodities, technology, and weapons. These items are a part of the EAR. The BIS’s export administration (EA) reviews licenses for items that fall under the EAR. To obtain a license, the BIS’s EA looks at what is being exported (as classified under an export control classification number (ECCN)), where the goods are being exported, who is receiving the exports, and what is the end use of the exports.

For information on how export licensing requirements may relate to selling your items, US sellers should refer to the EAR. If necessary, a commodity classification request can be made to get help from BIS to determine how an item is governed (ie, its categorization) and the associated licensing regulation. Sellers can also ask BIS for a written advisory opinion on how the EAR should be applied in a specific case.

2.5 Bureau of customs and border protection

If manufactured goods will be leaving (and entering) US ports or locations of entry, you must check whether there are any requirements with which you must comply.

The Bureau of Customs and Border Protection (CBP) is responsible for facilitating lawful trade. This is done by ‘enabling fair, competitive and compliant trade and enforcing US laws to ensure safety, prosperity and economic security.’ CBP officers work in ports of entry and pre-clearance locations to make sure that the goods imported and exported adhere to customs laws. They will inspect the merchandise and hold what may not be legally imported.

The CBP provides additional guidance on the basics of importing and exporting through US ports of entry.

2.6 Restricted products

In the international export process, a product evaluation must be conducted to determine whether there are any prohibitions, restrictions or special licenses needed for the goods to enter the international marketplace. Knowing whether the item you want to export has a specific ECCN is crucial in establishing whether you require an export license from the Department of Commerce. The ECCN is an alphanumeric code, such as 3A001, that characterizes the item and specifies licensing criteria.

The BIS maintains a commerce control list (CCL) which indicates which products need a license before they are exported to different countries. The CCL has 10 categories numbered 0-9: nuclear materials, facilities and equipment and miscellaneous; materials, chemicals, microorganisms, and toxins; materials processing; electronics; computers; telecommunications and information security; lasers and sensors; navigation and avionics; marine; and aerospace and propulsion. There are also five product groups labeled A-E: systems, equipment, and components; test, inspection, and product equipment; materials; software; and technology.

2.7 Restricted countries

Restrictions are not only based on product specifics. You must consider whether any international marketplaces are subject to export restrictions. Parties from the United States are restricted from exporting to certain destinations. The US Department of the Treasury provides information on sanctions programs, which cover countries such as Russia, Cuba, Iran, and Libya. The BIS also has guidance on countries subject to export restrictions.

2.8 Do-not-sell list

Before supplying goods internationally, it is necessary to do your research to confirm the goods are not going to be sold to specific, prohibited individuals, organizations, or entities.

The BIS maintains lists of people and entities to whom United States parties are not permitted to sell. The BIS’s denied person list is on the BIS website. Names on the list are categorized based on the effective date, the expiration date, and the type of denial. The BIS’s entity list includes entities that threaten the US national security or foreign policy interests. A license is needed to export an item subject to the EAR to an entity on the denied persons list. To make sure that a party does not supply goods to those on the lists, the BIS suggests looking for red flags in export transactions and it provides a list of red flag indicators.

2.9 US Foreign Corrupt Practices Act

If the sale or export of the goods involves a foreign official and government, compliance with applicable federal laws is necessary.

Specifically, the US Foreign Corrupt Practices Act (FCPA) makes it ‘unlawful for a US person or company to offer, pay, or promise to pay money or anything of value to any foreign official for the purpose of obtaining or retaining business.’ The FCPA also covers foreign people and companies that commit bribery in the United States and its territories, as well as domestic and foreign companies listed on the stock exchanges or those that are required to file a report with the Securities and Exchange Commission (SEC).

All stakeholders involved with the negotiations and communications with a foreign official or government must comply with this law.

For further information, see: How-to-guide: How to protect your company from violations of the United States Foreign Corrupt Practices Act (USA).

2.10 Israel

Understanding all the parties involved in a transaction is also necessary to be certain no direct or indirect consequences arise as a result of the international transaction, specifically, when it could affect the State of Israel.

The Anti-Boycott Act of 2018 created the Office of Antiboycott Compliance within the BIS. The Act requires people from the United States to refuse to aid or assist in unsanctioned foreign boycotts, including those that boycott Israel. If a person has participated in an unsanctioned boycott, that person is required to report it. There are administrative and criminal penalties for violating the Act.

2.11 Anti-dumping

Certain market influence or behavior is prohibited when dealing with supplying goods in the international marketplace. Pricing strategies or subsidies must comply with anti-dumping laws.

Dumping is when a foreign company sells a product in a foreign market for less than it would sell it for in its home market. This creates unfair competition between the foreign company and the home companies. Dumping occurs when there is an unfair change in price, or if there are unfair subsidies given to the foreign company by its home country. All countries deal with the effects of anti-dumping violations differently. The US uses the International Trade Administration and the Department of Commerce to enforce anti-dumping policies.

Section 3 – Joint ventures/direct investment

If an organization is looking to participate in joint ventures or direct investments, there are several agreements that can support this endeavor. For example, members of the USMCA have agreed to include commitments on market access, the ‘national treatment’, and ‘most-favored nation’ principles, fair and equitable treatment, obligations with respect to workers’ rights and the environment, protections against governmental expropriation, and disputes resolution mechanisms. These are all included in Article 14 of the USMCA. In addition, the WTO Agreement on Trade Related Investment Measures (TRIMs) prohibits members from applying measures that would violate national treatment requirements and quantitative restrictions on imports or exports. The WTO website provides a list of prohibited TRIMs in the annex of the agreement. These prohibited TRIMs include the following:

measures that require the purchase or use of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production;
measures that require an enterprise’s purchases or use of imported products to be limited to an amount related to the volume or value of local products that it exports;
measures that restrict the importation by an enterprise of products used in or related to its local production generally, or to an amount related to the volume or value of local production that it exports;
measures that restrict the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise; or
measures which restrict the exportation or sale for export by an enterprise of products, whether those restrictions are set out in terms of particular products, or stated in terms of volume or value of products, or in terms of a proportion of volume or value of the enterprise's local production.

Section 4 – International standards

When developing products for sale on the international market, leading organizations provide standards, guidance, and frameworks for introducing products to the marketplace. Ensuring that your products meet some of these standards can help reduce barriers to international trade.

The WTO Agreement on Technical Barriers to Trade (TBT) was created to ensure that regulations and standards do not create unnecessary barriers to trade. There are also a few organizations that have come up with international standards that do not interfere with the TBT. The three leading organizations are the International Electrotechnical Commission (IEC), the International Organization for Standardization (ISO), and the International Telecommunication Union (ITU). For example, the ISO has created a standards catalogue with over 24,000 international standards that can help reduce barriers to trade.

Section 5 – Data protection rules

When determining which businesses to supply goods to internationally, it is important to keep in mind which countries or regions have inadequate data protection laws, and which countries or regions offer no protections for data.

5.1 European Union’s General Data Protection Regulation

Regarded as the most stringent data privacy and security law in the world, the European Union’s (EU) General Data Protection Regulation (GDPR) imposes regulations on any business or organization that collects personal data from individuals within the EU. Violations of the GDPR can lead to substantial fines. The less severe fines can reach up to €10 million or 2% of the firm’s annual revenue, whichever is higher. The more severe fines can reach up to €20 million or 4% of the firm’s annual revenue, whichever is higher.

5.2 Other international data protection laws

The GDPR has been benchmarked, in many instances, as the foundation of many other data privacy laws globally. However, a jurisdictional analysis should be conducted to determine if global markets have certain data privacy laws in play. Some countries with data privacy laws include Canada, Brazil, the United Kingdom, Japan, and Australia.

Section 6 – Protecting intellectual property rights

With the rise in piracy of intellectual property, it is important to take the necessary steps to protect any intellectual property (IP) related to your products. The Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement requires members of the World Trade Organization to adhere to certain standards for the protection of IP rights originating in other member nations. The TRIPS Agreement provides protections similar to those in the various agreements administered by the World Intellectual Property Organization (WIPO). These agreements provide for recognition and protection of rights in patents, trademarks, and copyrights.

Section 7 – Contact a foreign country’s embassy in the United States or the US embassy in the foreign country

If there are any questions or concerns with trade regulations and local laws in a country outside of the United States, you can contact the foreign country’s embassy in the United States or the US embassy in the foreign country. There also may be a trade commission office in the foreign consular office.

Additional resources

US Dept of Commerce, Int’l Trade Administration, Export Regulations, Trade Agreements
US Dept of Homeland Security, Customs and Border Patrol, Basic Importing and Exporting
US Dept of State, A Resource on Strategic Trade Management and Export Controls, Overview of U.S. Export Control System

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