Moving into international exports can be a tough task for any small to medium-sized business. From tariffs to export control policies, governments enforce strict trade restrictions that can make overseas business expensive, or even impossible. In fact, in 2015 alone, approximately $1.3 trillion in potential foreign exports to the U.S. were disqualified due to regulatory requirements.
Understanding and navigating these barriers is vital for ensuring the success and sustainability of your export operations. Whether you’re facing documentation hurdles, product classification issues, or end-user restrictions, compliance with export laws isn’t just about avoiding penalties—it’s about building trust, protecting your assets, and enabling long-term global growth.
What are the types of Export Control?
Export control measures come in various forms, each designed to regulate the flow of goods across borders. These controls serve both economic and strategic purposes, helping governments protect domestic industries, enforce international agreements, and maintain national security. Below are the key types of export controls businesses should be aware of:
Tariffs
In basic terms, tariffs are a tax on imported goods; these are levied with the intention of limiting the amount of foreign products in the market, thus they act as a form of protection for domestic suppliers.
Quotas
Similar to tariffs, quotas limit the amount of goods that can be exported into a country in order to reduce the competition faced by local businesses. In effect, these should increase employment and give struggling local industries a chance to grow.
Subsides
By subsidizing, local production governments can provide domestic manufacturers with a competitive advantage that allows them to sell their goods at lower rates.
What are Voluntary Export Restraints (VER)?
These are agreements between exporting and importing countries. Usually, these places a limit on the number of goods that can be shipped within a period of time. While these can provide an obstacle to trade, they do offer exporting businesses an opportunity to increase prices and gain revenue, especially if they’re shipping a unique product.
What are Burdensome Regulations?
In addition to tariffs and quotas, export control measures can include burdensome regulations that affect how and what you can ship internationally. These are legal barriers erected to control the quality and safety of imported goods. They often involve certification or testing requirements specific to foreign exporters, complex customs procedures, and standards related to pollution, manufacturing materials, and build quality.
How to Overcome Export Control and Trade Barriers?
Even as the world becomes more interconnected, export control regulations and trade barriers continue to pose significant challenges for global businesses. Tariffs may be easing in some regions, but other financial and non-financial hurdles persist. Businesses must conduct diligent research to uncover these obstacles early in the planning phase. By understanding potential restrictions and calculating the cost-benefit of market entry, companies can better assess feasibility and mitigate risks.
Strategies for Tariffs and Duties
To navigate export control challenges like tariffs and duties, some firms choose to set up a local presence in the target market. Establishing a local affiliate or partnering with a native company can help avoid direct export restrictions and streamline operations. However, this strategy must align with local laws regarding foreign entities.
Where local presence isn’t possible, compliance becomes critical. Adjust pricing models to accommodate duties, secure all required licenses and certifications, and approach new markets with a strategy tailored to their unique regulatory landscape.
Work With an Exporter of Record EOR
When faced with complex regulations and other non-tariff barriers, working with an EOR Exporter of Record can offer expertise with local customs and procedures, drastically speeding up the clearance process. They will take care of any import details, obtain all necessary permits, and handle the payment of any relevant duties. They can also offer some logistical support, helping to arrange warehousing and distribution facilities for your benefit.
