Export: Overview, definition, and example
What is export?
Export refers to the process of shipping goods, services, or technology from one country to another for sale, trade, or use. Exports are governed by international trade laws and regulations, which may impose restrictions, taxes, or compliance requirements depending on the type of goods or services being exported and their destination.
For example, a manufacturer in the United States might export electronics to Europe, requiring compliance with U.S. export control laws and European Union import regulations.
Why is export important?
Exports are important because they allow businesses to expand their markets, increase revenue, and access new customer bases. For SMBs, exporting can be a valuable strategy for growth and diversification, especially when domestic markets are saturated.
However, exporting also comes with regulatory and compliance obligations, including export controls, customs declarations, and documentation. A clear export clause in contracts ensures that parties understand their responsibilities and comply with relevant laws, minimizing legal and financial risks.
Understanding export through an example
Imagine an SMB in the U.S. manufactures custom software and sells it to clients worldwide. The company must comply with U.S. export control laws, which might restrict sales to certain countries or entities. A contract with a foreign client includes an export clause specifying that the client must comply with U.S. laws and ensure the software is not transferred to restricted parties.
In another scenario, a small agricultural business exports its produce to Canada. The agreement with the Canadian buyer includes an export clause stating that the seller is responsible for obtaining export permits and ensuring compliance with customs requirements.
An example of an export clause
Here’s how an export clause might appear in a contract:
“The Parties agree to comply with all applicable export control laws and regulations, including but not limited to the Export Administration Regulations (EAR) and trade sanctions administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC). The Buyer represents and warrants that it will not re-export, transfer, or use the Products in violation of applicable laws, including sales to restricted parties or destinations. Each Party shall bear its respective responsibilities for obtaining licenses, permits, or other authorizations required for export.”
Conclusion
Exporting allows businesses to expand into international markets while fostering economic growth and diversification. For SMBs, a well-drafted export clause ensures compliance with legal requirements, reduces risks, and provides clarity about the responsibilities of each party in international transactions. This provision is critical for navigating complex trade laws, ensuring smooth operations, and protecting business interests in global markets.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.