As an business involved in international trade training, we have spent many years educating companies about their exporting activities. The more time we spend with clients, the more we realize that it is not just the obvious physical exporters of goods who need to be concerned about compliance. It is also those that are involved in cross-border transactions but may not realize it or perhaps a company looking to acquire another company who does business internationally.
Exporting compliance is not just for exporters
The term “exporting” is often used interchangeably with the word “shipping.” This can be confusing, since many companies who don’t export think that exporting is just shipping goods overseas. Exporting is actually a process that begins when you become involved in any transaction that could result in an export—from manufacturing to distribution to sales or even simply sharing information with a foreign national. If you are involved in even one step of this chain, you need to know what you are doing and how it affects your company and its compliance obligations.
How do you know if you are exporting?
If you are selling something to someone in another country, you are exporting. If you are shipping goods out of the country and they’re going to be used or consumed, then yes: you are exporting. In some cases, even if you sell to someone in your own country, you may be involved in an exportation. It doesn’t matter if there’s an intermediary involved or not; it doesn’t matter if it’s a personal transaction or one that involves businesses; and even if no, or very little, money changes hands, those things don’t change anything. If someone from another country is buying something from yours, then yes: You’re exporting!
Why would you export if you were not exporting?
You may be exporting without knowing it. Some may not consider that if you are shipping to Canada or Mexico, an export process. It’s true, we have encountered that many times! But when we talk about exporting, what do we mean?
When most people hear “exporting,” they think of big business and huge companies like Apple and Ford who have offices all over the world. And while those companies certainly do export products and services from their business in different countries all over the world, most businesses don’t need to export like these giants do.
In fact, anyone with a product or service can be an exporter—even if that product or service is just one item being shipped overseas. Think of a shop owner on a popular internet site like Amazon, Etsy, or even a personal Shopify store. Consider one other scenario. A research organization, lets say a University, may not produce any products at all, but could be working on technology that is shared with individuals of the team involved in that research or product development. If anyone on that team is a foreign national and even if they are in the United States when they receive it, providing any data, plans, information, etc. regarding that projected will be deemed as an export.
It is worth a few minutes to achieve clarity
It is worth a few minutes to achieve clarity on any business transaction that may result in your company having an export activity. Consider the scenario when your company is looking at purchasing another company. If that company is involved in any foreign shipping activity, it is a good idea to get your trade compliance team and, in most cases, your legal counsel, involved in the due diligence process because you do not want to find out that you are involved in an exportation that suddenly costs you more than the actual purchase of that company.
It is worth a few minutes to achieve clarity on any business transaction that may result in your company having an export activity or if your partners or employees may meet the criteria for an export transaction. Exporting is a big topic and there are many resources available for businesses that want to start exporting or have found out that they have been exporting all along. Global Training Center has a number of courses that can help you understand the process.
We also recommend you take a look at these episodes of our Simply Trade podcasts where we discuss these topics related to this article. You can listen in where you get your podcasts or directly by visiting these links:
Navigating Through EAR, ITAR, and OFAC Regulations – Episode 11
Spooky Trade Compliance Stories – Part 1 – Episode 17
Spooky Trade Compliance Stories – Part 2 – Episode 18
“The Fixer” for Export Trade Compliance Problems – Part 1 – Episode 20
“The Fixer” for Export Trade Compliance Problems – Part 1 – Episode 21
Course: Exporting Procedures