Checklist of Issues for International Trade Deals

  1. Does the deal involve a banned product, country, company or individual? Check U.S. Bureau of Industry and Security Have your banker check bank’s flagged persons/entity list.
  2. What licenses are required?
    1. Local: A new business will need to secure a local business or privilege license from the appropriate N.C. municipality.
    2. State (N.C.): A new business will need to comply with NCDOR regulations on sales taxes and have an appropriate N.C. Tax ID number.
    3. Federal (USA)
      1. 2,500.00 worth of one item triggers Shippers Export Declaration (“SED”).
      2. Need Tax ID number.
      3. Is a U.S. export license required?
        1. Check the BIS Export Administration Regulations (“EAR”) for most commercial items.
        2. However, another U.S. agency may have jurisdiction over the export of that item type. For example, the Department of State has jurisdiction over defense-related exports (including some intangibles, like software code and intelligence services), for which the International Traffic in Arms (“ITAR”) regulations control.
        3. Rules of other federal agencies, like FDA, DEA, and DOE control for some exports.
        4. Good resources: and your local U.S. Export Assistance Center
    4. International: Are any licenses required from other countries involved in the deal? Do you need to engage local counsel in a foreign country?
  3. Customs
    1. Identify U.S. Schedule B product classification number when exporting –
    2. Identify U.S. Harmonized Tariff System (“HTS”) code for import – NOTE: The first six digits of the ten digit harmonized code are the same for all products in all countries.
    3. Identify any applicable product standard or inspection regulations in the countries of export and import.
  4. Identify risks
    1. Risk of the product quality/performance;
    2. Risk of loss/insurance and transportation-related issues;
    3. Risk of payment (address with letter of credit or performance bond);
    4. Each deal has hidden risks. Find them! Provide for appropriate remedies in the contract.
  5. Consider all costs. Costs may include, without limitation, product costs, insurance costs, freight, import duty, warehousing, terminal handling charges, custom brokerage fee, bank costs, state or local taxes, governmental regulations, and other informal or non-tariff barriers.
  6. Get it in writing and remember that a deal is only as good as the parties to it!
  7. The FTPC Executive Committee and Board members can assist in your legal issues in going global