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To
hear local importers and exporters tell it, engaging in international
trade is similar to climbing a mountain. The rewards at the top
are great but getting there is a difficult uphill trek through
boulder fields that can seem impassable, across rushing streams
powerful enough to flush you back down the mountainside and along
seemingly endless switchbacks that make for slow progress.
The view from the top, though, can be an inspiring sight for business
persons who make the ascent. Exports can mean greater profits,
reduced unit costs and more competitive selling prices as global
market share increases. Fully 30 percent of U.S. growth is attributable
to imports, and ninety-six percent of all customers live outside
our borders.
Yet, companies engaged in international trade can easily lose
sight of the trail even within the U.S. Government agencies with
jurisdiction over international trade include the Office of the
United States Trade Representative, the Department of Commerce,
the Department of Agriculture, the Department of the Treasury,
the U.S. International Trade Commission, and the Export-Import
Bank of the U.S.
International bodies with ongoing oversight of international trade
include the Organization for Economic Cooperation and Development
(OECD), the United Nations Conference on Trade and Development,
the European Union, and the General Agreement on Tariffs and Trade
(GATT) begun in 1947.
And, of course, all individual governments to some extent erect
barriers to free trade in order to produce revenue and protect
their national producers. Governments may establish tariffs, require
import licenses, set quotas, apply product and safety standards,
subsidize exports, require licenses to obtain currency, and otherwise
impose conditions on foreign producers.
Tadd Fowler, a partner with the International Tax Group of Price-waterhouseCoopers
in St. Louis, says any company that wants to move to an import/export
foundation should plan its activities in advance. “It’s a lot
easier to structure than to restructure,” Fowler says.
Thomas H. Bottini, a partner with the law firm of Armstrong Teasdale
LLP, suggests businesses develop a checklist of details affecting
their trade. A checklist, Bottini says, might include needs in
the areas of organizational structure, contracts and documents
to be employed, credit and payment terms and mechanisms, dispute
resolution, customs classifications, taxes, insurance, and a review
of pertinent trade treaties. Fowler adds to the list mechanisms
for tax planning and tax-efficient financing for operations, third-party
debt issues, and currencies for lending and borrowing.
One experienced exporter of capital goods advises that issues
relating to organizational structure, taxes, insurance, financing,
payment, and customs are too daunting and risky for the average
small- to medium-sized business to tackle on its own.
“There’s no magic bullet to doing business overseas,” says Rudi
Roeslein, founder of Roeslein & Associates, a St. Louis-based
systems integrator specializing in the design-build of food and
beverage can manufacturing lines, PET bottle manufacturing lines
and filling systems for packaging industries worldwide. “You need
to look at your strengths and leverage off those strengths. I
think you should begin by working with an existing U.S. customer
who can help you into international markets. Work with someone
you know and trust. It makes foreign entry a heck of a lot less
risky.”
J. Robert Fry, chairman of Select Artificials, Inc. and who has
been importing and exporting for 35 years, making 78 business
trips to Asia and Europe, says businesses that wish to launch
import/export components can “learn by doing” but warns inexperienced
business persons to “be very careful” and secure knowledgeable
outside counsel when necessary.
Fry launched downtown-based Select Artificials more than 36 years
ago after working for a similar company that imported artificial
roses from Portugal but balked at his vision to import a wider
assortment of quality artificials from other countries. Initially,
Fry says he worked with agents in other countries to identify
manufacturers and assist with the import process. The company
now works with some 25 manufacturers primarily in China, Hong
Kong and Thailand and sells quality silk flowers, silk plants
and Christmas decor to 27,000 customers in all 50 states and 12
foreign countries in Europe, South America, North America and
Asia.
Roeslein began exporting after building manufacturing lines for
large U.S. customers which, in turn, had foreign licensees that
wanted Roeslein’s innovative preassembled lines.
“We developed relationships with those licensees and, at first,
began working with import and export freight forwarders to get
things done overseas and to work with foreign governments.”
Although Bottini heads a 20-person international law department
with clients headquartered in various parts of the U.S., he emphasizes
that a company does not necessarily need an attorney to engage
in import/export. “A lot of international trade happens on its
own. You don’t need lawyers as much as you need to structure international
transactions,” he says.
That structure, Bottini says, must take into account the formal
organization of the domestic company; the type of entity, if any,
to be used in other countries, and the various documents that
govern transactions. The key document for exporters, Bottini adds,
is the sales contract stipulating payment terms, warranties, dispute
resolution, insurance, and other important areas.
Roeslein, for instance, developed a standard document of terms
and conditions that outline his company’s responsibilities and
a matrix that details the responsibilities of customers. In the
case of disputes, Roeslein’s standard contract stipulates binding
arbitration, which attorney Bottini strongly recommends.
“It’s really critical in international matters that arbitration
be specified to resolve a dispute,” says Bottini who also teaches
“Trade Block Strategies” at Washington University.
Roeslein adds, “One of the most important issues regarding arbitration
is that it is to your advantage to have the arbitration heard
in your country, or a neutral country like Austria but never in
the country of the company you are doing business with. That eliminates
a big risk that should be avoided even if it means turning down
the business.”
Reliable information on a broad range of issues relating to international
trade and commercial law is available on the Internet at <>.
Created in 1993 by the Law Faculty of the University of Tromsø
in northern Norway, the comprehensive site was originally known
as the International Trade Law Monitor. Lex Mercatoria provides
the text of some of the more important trade treaties, conventions,
model laws and rules and sets links to other international commerce
sites. Subjects include customs, contracts, carriage of goods,
dispute settlement, payment mechanisms/guarantees, e-commerce,
insurance, protection of intellectual property, jurisdiction and
enforcement, applicable laws, and more. Links are provided to
sites on banking, finance, insurance, taxation, and international
affairs. Lex Mercatoria also is a large depository of e-commerce
information covering areas including electronic payments, digital
signatures, electronic data interchange, various resource sites
and the UNCITRAL Model Law on Electronic Commerce.
A second web site recommended by experts is <>. This
Hieros Gamos (hg) site, also known as the Comprehensive Law and
Government Portal, has more than 200,000 listings and 100,000
links to financial services, management consultants, financial
consultants, and more.
Other resources are available locally. The World Trade Center
of St. Louis is a treasure trove of international trade information.
Bottini says the center “is an underutilized resource” that can
also help a company develop an international trade marketing plan
and provide other valuable nuts and bolts services at little or
no cost. The center routinely hosts seminars of interest to businesses
engaged in or considering international trade.
William V. Poe is principal of Poe Communications, a St. Louis
advertising and marketing communications firm.
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