U.S. companies must follow export regulations.
Exports and imports drive a country's economy. However, businesses in the United States must follow trading guidelines set up by the federal government. The laws are enforced by the United States Customs and Border Protection, or CBP. The CBP monitors all exports leaving the United States and ensures they are exported to all international trade standards and federal regulations. Businesses and individuals must follow all export regulations or they can face serious federal penalties.
Tariffs
A tariff is a trading tax on a good. If a firm is exporting a good to a market, the firm pays a tax to that country. So, if a country has a 1 percent tariff on computer software, the firm pays that country a tax from the total trade. Although the United States does not enforce other countries tariffs, government organizations, such as the Department of Commerce, inform companies about a country's tariff before trading.
Export License
Any firm or individual trading with a foreign body needs to know if it requires an export license. An export license grants the firm federal permission to trade its good to a foreign body. Different government agencies regulate certain goods in international trade. For example, the U.S. State Department regulates any firm that trades military technology to other countries. Another example is the U.S. Drug Enforcement Administration, which regulates all trades of controlled substances to foreign bodies. Also, all goods that are agricultural-based are regulated by the Department of Agriculture. These departments inform a firm if the good it wants to export requires licenses. Companies are given discretion to communicate with the government on an export license issue.
Import Certification
A firm can easily forget it is trading to a foreign body and that the foreign body has its own rules and regulations for accepting imports. A firm should know the market it is trading with and what policies it has against the goods. The European Union, China and other foreign bodies demand their imports meet certain standards. Firms should be cognizant of these standards before trading. The U.S. Department of Commerce can inform companies about specific markets' trade regulations.
Economic Sanctions
All exporters must respect the economic sanctions the United States government levies against national groups, individuals and countries. The Office of Foreign Assets Control regulates the sanctions and constantly updates the public on what countries or foreign bodies American companies cannot trade with. Any economic sanction could last for any amount of time. On the U.S. Treasury Department's website, there is a database of nation-states that the United States sanctions. For example, Cuba has had economic sanctions against it since the 1960s. However, many sanctions are short term and may change over time. It is important that businesses check the database to keep abreast of changes. Penalties can be harsh if a company is caught trading with a country, foreign national or group listed with economic sanctions. For example, the criminal penalties for a firm or individual trading with the Democratic Republic of Congo can range from $250,000 to $1,000,000, and 20 years in prison.
