While you must be aware of laws when operating any type of business, the lay of the land is bit more varied when dealing with businesses that transact across borders. There is a wide variation in state laws, various national laws and even international treaties that carry the full force and effect of law that must be taken into account. Penalties for violating some of these laws can range from monetary fines to actual jail time. Some examples of these laws include
- While some states do not stringently regulate the tourism industry, there are some states that require the establishment of trust accounts and/or the maintenance of surety bonds for these types of businesses (sellers of travel). You will want to make sure to carefully research your state’s requirements for operating your business.
- The U.S. has imposed economic sanctions (also known as embargoes) on a number of countries and entities (individuals, organizations and companies). This means that there are severe limitations, and in some cases outright prohibitions, on doing any type of business (exports, imports or transactions) with these countries or entities. For more information on U.S. economic sanctions, visit the U.S. Treasury Department's Office of Foreign Assets Control's website.
- The Department of Commerce requires that any U.S.-origin item (products, services or data) that has the potential to be used for both commercial and military purposes be licensed by the Department before the export occurs. There are a number of exceptions to this requirement and there can also be somewhat broad applications of the term “export”. For more information on Department of Commerce’s Export Administration Regulations, visit the Bureau for Industry and Security's website.
- The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention) is an international treaty that provides for the enforcement of foreign arbitration awards in member countries. Business disputes are an unfortunate and natural part of doing business and arbitration is common in the international business context. Find out more information about arbitration and judgments by visiting the U.S. State Department's website.
There are a few very common pitfalls that are associated with doing business abroad and, more often than not, these issues arise because individuals are not sure how to balance U.S. laws, foreign laws and the customs of the local economy. Some of the more common obstacles include
- Employment laws, wage standards and working conditions
- Anti-corruption laws
- Human rights
- Environmental practices
- Dispute resolution
An integral, and perhaps overwhelming, part of planning for your international business’ success is making sure you have anticipated some of these problems. These types of issues are more likely to sink your business than a poor product or inadequate marketing plan. “Failing to plan is planning to fail.”