Strategies for International Organizations

Strategies For International Operations

Corporate Structuring: Tax considerations often drive the structuring of cross-border affiliations; but such affiliations can also be structured to reduce the burdens of export control compliance and even to avoid certain prohibitions on trade.

For example, an Italian branch office of a US corporation is subject to US export controls as though it were located in Dubuque. But a foreign-incorporated subsidiary of a US corporation is subject primarily to the US export controls to which all other foreign entities are subject. Such a subsidiary can even do business with Iran and Cuba, so long as no person including the US parent, itself is involved in any way.

Outsourcing: The advantages your clients hope to gain by moving operations overseas can be limited and the process itself may be forbidden by export control laws. Manufacturing in other countries, for example, usually involves disclosures of US-origin technologies to non-US persons; so clients need to consider whether export licenses may required to do so lawfully, the costs (in time and money) of obtaining such licenses, and the possibility that licenses may not be granted.

Moreover, if a foreign affiliate (including a foreign subsidiary) is itself involved in the exporting from abroad of US-origin products or technology, or of the foreign-produced direct product of US-origin technology,  it too may have to obtain licenses to re-export its products to certain destinations or disclose its technologies to nationals thereof.

Distribution Chains: Export controls can affect many facets of even the simplest distribution arrangements – from dealings with brokers and freight-forwarders to agreements with foreign and domestic distributors and VARs, to issuers of letters of credit.

The time to consider such issues is, of course, before they become problems. Export Compliance NE provides risk analysis and advice on the full range of export control issues affecting your clients’ strategic planning for international expansion.