Legal Issues in the Import and Export Business
Doing business with an import or export partner abroad? Here are some of the most common issues you may face.
Reciprocity of international contracts
When you have a contract in place with a business based abroad, it is a good idea to check if there is a reciprocity treaty between the United States/Florida and that country. In other words, does that other country enforce contracts signed between its citizens and the citizens of the United States/residents of Florida? If the answer is yes, then there is said to be reciprocity between your jurisdiction and the jurisdiction of your foreign business partner.
As an example, if you are doing business with an Irish counterpart who does not fulfill his obligations, you may take legal action in an American court that will be considered effective for enforcement purposes in Ireland. Likewise, an Irish company may seek redress in a local court against you and those decisions will be considered enforceable in the State of Florida.
It is worth saying that international litigation can take much longer and cost considerably more than domestic litigation. Therefore in addition to ensuring that you do business with countries with legal reciprocity, it is wise to investigate your foreign business partner before entering into a business contract with them.
If you are interested in forming an international business relationship then it is essential that you retain a competent business attorney with experience in the import-export practice area and international business law.
The background of your business counterpart
Investigating the background of your foreign business partner is an important step in the vetting process that can prevent trouble down the line. Often, many businesses simply do not check the backgrounds of the foreigners they do business with often because they perceive it as a difficult thing to do. However, international business is risky by nature and businesses should always approach each deal with caution. To reduce risk, it is advisable to conduct a simple investigation that would answer key questions about your counterpart such as:
Do they have the capacity to deliver the promised goods and services?
Are they financially viable and do they have decent business credit?
Are they adequately insured and licensed to perform their portion of the contract
Are they entangled (or have they been party to) any legal issues?
What is their local/international reputation?
Knowing the answers to the key questions can significantly reduce your risk for becoming a victim of fraud, overpromising or other dubious business practices. An attorney with a background in international business can help you identify the right investigation vehicle for the country in question and then help you interpret the findings in the report.
Import and export regulations
In addition to the general risks involved with international business, those who are moving goods across borders may encounter complications related to customs and other government agencies. If you are importing goods to the US, you need to be aware of the role of customs in this country. US Customs and Border Protection enforces a myriad of laws and regulations that can affect whether the products you are importing makes it to your business. Because these laws and regulations can be complex, it is important that you involve a customs broker who can help you navigate them. Even so, the paperwork and compliance remain your responsibility – not the brokers. A good business attorney with experience in import and export law can ensure that your bases are covered.
“… international business is risky by nature and businesses should always approach each deal with caution.”
Ethical production standards
Section 307 of the Tariff Act of 1930 prohibits Americans from importing material into the United States if it has been “mined, produced or manufactured, wholly or in part”, by slave, prison or child labor. Countries known for producing goods and commodities in poor working conditions including slave, prison or child labor number in the dozens. Not only is there an ethical dilemma doing business with these foreign actors – it is against the law. In addition to managing an investigation agency in conducting a background check, your business lawyer will be able to help determine whether your business faces possible legal liability for dealing with a specific producer abroad.
Finally, but not least of all, the costs associated with the import-export can be prohibitive for many small and medium-sized businesses. These include the inevitable cost of transport and storage. Costs that might also be incurred include tariffs, fines, extra inspections and prolonged storage while a customs audit takes place. While no expert can guarantee that these latter charges can be avoided, be sure to hire experts such as a customs broker and an experienced business lawyer to improve your chances of avoiding complications and disappointment.
Proactively handle these issues with South Florida Law
If you are a Florida business looking to import or export goods and services, the legal professionals of South Florida law can help you to make the right decisions. From company formation to product liability, to vetting business partners, to contract drafting and review we know what needs to be done at every step along the way. Contact us today via our contact form or by calling (954) 900-8885.