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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