How legislation affects overseas trade for UK companies
18 July 2018 - Author: Sonia Kisbee | B2B data, Data, Trade Barriers, better SEO, how to export, global ready, export strategy, export controls, export licencing, export legislation, avoid bribery & corruption
Your guide to legislation when trading overseas
There is no single piece of legislation covering the export of goods. All goods manufactured in the UK, whether destined for the home market or overseas, have to comply with the same laws governing health and safety, decency, employment rights, qualifications of personnel, environmental protection etc. There are also legal requirements to complete certain export and shipping documents and to keep records.
Of course as a result of the Brexit, the distinction between how exports inside and outside the EU are handled, will undoubtedly undergo significant changes. However the existing regulations will continue to apply until trade negotiations have been completed with individual countries and the UK has formally left the EU.
As well as complying with UK laws, as an exporter you will need to comply with the legislation relating to the regulations, standards, certification requirements and codes in the country you are selling to. Some legislation may be mandatory and may not always be imposed on a national level, but can apply at a state or regional level, e.g. in the US different tax laws apply within different states.
What are dispatches & third countries?
As an existing member of the EU, most goods sold to other countries within the EU are in free circulation; known as 'dispatches', they can be freely moved from the UK to other EU countries without customs controls or charges. For many products & services the same regulation and product compliance standards also apply across all EU countries.
Exports to countries outside the EU are called exports to 'third countries' and for these you need to submit an export declaration. In addition, you may need an export licence and have to pay custom duties and taxes in the destination country. See our quick guide to the do's & don'ts of applying for export licences.
You need to be mindful of bribery & corruption
The Bribery Act 2010 was introduced to update and enhance UK law on bribery including foreign bribery and is now among the strictest legislation internationally on bribery. Notably, it introduces a new strict liability offence for companies and partnerships of failing to prevent bribery, by placing a burden of proof on companies to show they have adequate procedures in place to prevent bribery.
Understanding the effect of trade barriers, tariffs & quotas
Trade barriers in the form of tariffs are in place throughout the world to a greater or lesser degree and most work on the principle - to impose a cost on trade that raises the price of the traded products. Quotas are in place to limit how much of a product can be imported into a country and are designed to protect domestic producers from too much competition. These along with foreign currency fluctuations, resulting in a stronger £sterling value, will all affect the cost of imports, making your products less competitive.
Make sure you meet the standards of certification
Whilst independent third-party certifications, such as the Kitemark in the UK is not always a legal requirement, they are sometimes a commercial necessity. As an exporter you will need to establish whether your target market has any other technical requirements - perhaps goods having to be sold in specified quantities and units, the qualifications of personnel involved in the manufacturing process, warranty procedures or product liability issues.
Many countries adopt UK standards and specifications, but others may specify their own. Not all will be produced by a national standards centre such as the British Standards Institute (BSI), but instead by industry bodies, public sector companies, insurance companies and trade unions etc. The BSI can advise you on the product & service certifications you need throughout the global marketplace.
Get your documentation right
Accurate paperwork helps to avoid problems or delays so having the right documentation in place is essential. Specific documents may be needed to get goods through customs in the UK and their destination country, to work out the right duty and the relevant taxation charges.
Market Access Database – The European Commission operates a website providing detailed information on the documents required for exporting to sixty countries outside of the European Union. The site provides a useful guide to the typical range of documents required for specific commodities.
Export Management Software – A number of companies can be found online that offer export management software and many will include the rights under licence to print out all required documents for export transactions.
Trade Tariff – It’s important you classify all goods so any import VAT, duty, excise or levies due on them under UK and European law are collected. You can use this online tool to search for import and export commodity codes and for tax, duty and licenses that apply to your goods.
Documentation Advice – You can also contact your Local Chamber of Commerce if you need guidance about export documentation and finance.
Safeguard your company against the legal pitfalls
There are a number of possible issues that could arise as a result of trading internationally, so it is vital that you safeguard your company, by managing these accordingly:
International Trading Contract – You must ensure that a proper contract is in place, whether trading directly or via a third party. Distribution agreements are commonly used as they allow stock to be held locally. Ideally contracts should be drawn up under the laws of England and Wales, this will mean that agreements are outlined that you are familiar with and understand. Make sure you include your customer performance requirements and outline clear payment terms.
Product Liability – Make sure you have international cover and meet the standards required in each country of trade. You should establish what insurance your distributors might have and whether they can deal with the regulatory requirements locally.
Insurance – it may be necessary to insure the goods and you may be required to provide proof of insurances, particularly if passing any costs onto the customer. Any documentation required should be discussed with your customer and your insurer.
Protecting your IP abroad – Because IP (Intellectual property) rights are territorial, they only give protection in the countries where they are granted or registered. So if you only have UK protection, others may be allowed to use your IP abroad without infringing your rights. Therefore if you are thinking about trading abroad then you should consider registering your IP rights abroad, especially before contacting any potential distributors.
Some countries may allow you to extend your UK protection, and accept it as protected in that country after completing certain local formalities. The World Intellectual Property Office provides a list of all national IP offices where you can get more advice and information. Remember that trademarks can be a logo, a shape, a word, a style or a colour so keep in mind the diverse ways in which your product or service might be identified as yours internationally. This useful video may help to answer any questions you might have about protecting your IP abroad.
Get Help & Advice from the Experts!
To summarise, when trading overseas, it is imperative that you make sure your company complies with the relevant legislation, so it goes without saying that you should always seek expert guidance from the relevant authorities. This will be especially important in the light of Brexit and the impact this will have on both European and global trading markets for UK exporters.
– Use Kompass Business Data to research and find contacts in your target markets.
– COBCOE helps businesses by promoting international trade across Europe.
– Your Local Chamber of Commerce can help with export documentation and finance.
– UK Export Finance provides trade finance and insurance for exporting.
– The Institute of Export gives advice, guidance, offers courses and qualifications.
– Build your brand & global online presence with Kompass Digital Marketing solutions.
At Kompass we have more than 60 years experience, helping businesses grow – providing our customers with business data to help improve the results of their sales and marketing activity and driving relevant enquiries through globally optimised company profiles from more than 7.5M Kompass users. Contact us to find out more about how we can help you as you plan your export strategy.
Our Kompass Export Zone builds on our business information expertise, by giving access to straightforward guidance on some of the key factors to consider when exporting, research advice and country specific market information. For more advice on getting started on your export journey, see our 8 Top Tips on How to Get Paid When Exporting.
Disclaimer: Please note that this blog only contains general information and insights about legal matters. The information is not advice, and should not be treated as such. Kompass.com