International Business Law Advisor Insights on International Litigation & Transactions

How to Import Profits Through Exports. A Primer.

Posted in Business Transactions, International Investments

Miami AttorneyThere’s never been a better time to boost profits through exports.

With the economy gaining traction, there’s been a marked increase in the number of U.S. companies looking to capture international markets through export sales.

After all, there are  billions of potential customers out there.

Just yesterday I received a call from a Miami, Florid- based manufacturer wanting more information about how to export their goods to various international markets

I’m thrilled to see increased interest in exporting U.S. made goods.

This is not only good for the economy but great for small American manufacturers, which represent 72 percent of U.S exporters.

Benefits of Exporting

A great place to learn more about exporting  is the U.S. Department of Commerce’s International Trade Administration website

As the site points out, there are may benefits to exporting:

Why Consider Exporting?

  • 95 percent of the world’s consumers live outside of the United States, so if a U.S. business is only selling domestically, it is reaching just a small share of potential customers.
  • Exporting enables companies to diversify their portfolios and to weather changes in the domestic economy.
  • Exporting helps small companies grow and become more competitive in all their markets.
  • Free trade agreements have opened up markets in Australia, Chile, Singapore, Jordan, Israel, Canada, Mexico, and Central America, creating more opportunities for U.S. businesses.

The Economic Impact of Exporting

  • In the past 25 years, U.S. exports increased five-fold from $224 billion to more than $1.1 trillion in 2004.
  • About one of every five factory jobs—or 20 percent of all jobs in America’s manufacturing sector—depends on exports. Workers in jobs supported by merchandise exports typically receive wages higher than the national average.
  • Small businesses create 70 percent of the new jobs in America.

The Number of Small Business Exporters is Growing …

  • Small and medium-sized firms account for the vast majority of growth in new exporters.
  • Small and medium-sized companies account for almost 97 percent of U.S. exporters, but still represent only about 30 percent of the total export value of U.S. goods.
  • Because nearly two-thirds of small and medium-sized exporters only sell to one foreign market, many of these firms could boost exports by expanding the number of countries they sell to.
  • More than two-thirds of exporters have fewer than 20 employees.

Export Controls: The Basic Legal Framework

To get started exporting, you’ll need to become familiar with U.S. export regulatory regime.

The United States has a comprehensive set of statutes, regulations and executive orders with respect to export controls, all of which are intended to curb the world wide proliferation of weapons to prevent certain countries from obtaining goods and technology that may contribute to their military potential.

The various sets of export controls are administered by a variety of federal agencies, particularly the Department of Commerce, the Department of State and the Department of Treasury.

Export controls can be imposed for reasons of national security, foreign policy and in cases of short supply.

The essential elements of the DOC’s export control regime are set forth in detailed Export Administration Regulations or EAR.

Do You Need An Export License? Follow the EAR Steps.

In the EAR, anything that is not prohibited specifically is permitted, meaning exports do not require a license unless the EAR expressly indicates that a license is required for the products category and destination.

Nearly 95% of all exported products do not  require a license.

The main criteria used to determine the necessity of an export license are the product, its destination, it end user and its end-use.

Asking the questions below will determine your obligations under the EAR and will be of help to

you in reviewing these steps:

  •  What is it? What an  item is, for export control purposes, depends on its classification, which is its place on the Commerce Control List (see part 774 of the EAR below).
  • Where is it going? The country of ultimate destination for an export also determines licensing requirements (see parts 738 and 774 of the EAR below).
  • Who Will receive it? The ultimate end-user of your item cannot be a bad end-user.  (see parts 744 and 764 of the EAR below).
  • What will they do with it? The ultimate end-use of your item cannot be a bad-end use. (see part 744 of the EAR below).
  • What else do they do? Conduct such as contracting, financing and freight forwarding in support of proliferation may be prohibited (see part 744 of the EAR below).

Steps for using the EAR are embedded below, for ease of reference.

Follow these steps and you’ll be well on your way to importing profits through exports.

How to Export: Steps for Using the EAR