Act Globally: How To Navigate Today's Hidden Trade Barriers
"The Fortune 200 companies in the United States
now find that most of their revenue is coming from foreign
sales," says Rob Portman, who served as the U.S. trade
representative in the current administration and is now of counsel
to Squire, Sanders & Dempsey L.L.P. "This demonstrates the
growing importance of the global marketplace for large U.S.
companies and their workers. And, increasingly, many small and
mid-size companies are experiencing sales growth beyond our
borders. This means U.S. companies need to be more sophisticated
about foreign markets and international remedies."
In the old days, international trade was pretty simple: You
manufactured products in country A and sold them in country B. If
you encountered trade barriers, they were typically straight
tariffs at the border. Things are a little more complex today.
"Historically companies have been restricted in global
markets by barriers that were fairly obvious," says Shanker
Singham, a partner at Squire Sanders whose practice focus is
international trade. "Now they are adversely affected more by
behind-the-border measures. These things are hard to identify and
even harder to deal with."
In today's world of competing global supply chains, market
distortions and anticompetitive restrictions are both subtle and
pervasive. To change them, companies have to push for a unified
trade policy that takes into account the de facto barriers they
encounter in markets around the world. "We need a trade policy
that ensures that restrictions at the border aren't replaced by
restrictions inside the border," Singham says.
Behind The Border
Hidden trade barriers occur all over the world, although they
are most prevalent in countries that are transitioning from command
economies, such as post-communist states, or countries that are
moving away from import substitution economics, as seen in much of
Latin America and parts of Asia. These restrictions can take many
forms.
"For example, many countries have laws that protect local
distributors," Singham explains. "Foreign suppliers can
get their products to market, no problem, but they often find they
can't terminate their relationship with a local distributor. In
order to get out, they may have to pay a termination indemnity of
millions and millions of dollars. It's also bad for consumers
in those countries, because it drives prices up. It's bad for
everybody but the local distributors."
But how do you change the system? It can be a daunting
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