Finding your way through the Shifting Rules of Global Trade and Tech

Today, we're diving into international trade in goods and technology. Specifically, we're exploring the evolving regulatory landscape businesses must operate in. We'll examine key regulatory tools like tariffs, export controls, sanctions, and investment restrictions, and how they affect global supply chains and business goals.  

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International Trade in Goods and Technology: An Ever-Changing Regulatory Landscape

About the authors
Dan Joyner
Scott A. Jones*

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

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Today, we're diving into international trade in goods and technology. Specifically, we're exploring the evolving regulatory landscape businesses must operate in. We'll examine key regulatory tools like tariffs, export controls, sanctions, and investment restrictions, and how they affect global supply chains and business goals.  

So, why do governments regulate trade in goods, technology, and investments? It primarily boils down to three objectives – revenue generation, guiding economic policy, and ensuring national security. 

Regulatory tools like tariffs and sanctions are more than just taxes or punishments. For example, tariffs are leveraged to make imported goods more expensive, incentivizing local production. Investment controls and export restrictions help prevent sensitive technologies or data from falling into the wrong hands, safeguarding national interests.  

The tools available to regulators are varied, with some of the most significant including tariffs, import/export controls, sanctions, antidumping and countervailing duties, and subsidies  

While these measures aim to balance economic and political goals, they have a direct impact on global supply chains and businesses worldwide. Companies must adopt robust compliance mechanisms to ensure they stay on the right side of the law.  

We'll explore real-world examples of these tools later in the episode, but first, let's understand how tariffs shape the U.S. trade environment.

Tariffs are one of the oldest tools in trade regulation. At their core, they're taxes imposed on goods as they cross international borders. While the World Trade Organization works to standardize tariffs globally, the U.S. has increasingly used them as a policy tool.  

For instance, we’ve recently seen specialized tariffs implemented for foreign policy and national security purposes. These include duties on steel and aluminum imports targeting specific countries. While these moves aim to protect domestic industries, they also create challenges for U.S. companies dependent on imported materials.  

Then, we have unfair trade remedies like antidumping and countervailing duties, which address predatory pricing tactics and illegal subsidies. These remedies aim to create a level playing field but can lead to significant cost increases for importers.  

What does this mean for businesses? Simply put, tariffs are no longer predictable baseline costs. They require careful analysis and planning to mitigate rising expenses and supply chain disruptions.  

Export controls have taken center stage in international trade over the past few years. The Export Control Reform Act of 2018 and its implementing regulations oversee dual-use technologies vital to national security.  

Under the Export Administration Regulations, critical technologies like biotechnology, artificial intelligence, and advanced computing and robotics are tightly regulated. Businesses exporting these technologies need to ensure proper licensing and compliance to avoid severe penalties.

But export controls don't stop there. Defense-related goods and technologies fall under the International Traffic in Arms Regulations. This is governed by the Department of State, with a focus on restricting the spread of munitions, defense services, and equipment to unauthorized users.  

Noncompliance in this domain isn’t just a risk to your bottom line; it’s a national security violation with serious criminal repercussions. Businesses navigating these regulations must ensure they're working with compliance experts.

Beyond export controls, sanctions are another critical tool in trade policy. These can include financial and trade restrictions aimed at influencing international actors. Administered by bodies like the Treasury’s Office of Foreign Assets Control, these sanctions are increasingly being used to address global conflicts and threats.  

Exporters must understand lists like the Specially Designated Nationals and Consolidated Sanctions List to ensure transactions comply with these restrictions. 

On a related note, investment controls through the Committee on Foreign Investment in the United States have also evolved. The 2018 FIRRMA Act expanded CFIUS jurisdiction to include real estate and minority stake investments tied to sensitive industries. Companies seeking foreign investors must exercise due diligence to avoid triggering regulatory blockages.

As businesses face this ever-changing regulatory landscape, one thing is clear – having a robust Internal Compliance Program is no longer optional. An effective program ensures your company stays informed, adapts quickly, and avoids costly penalties.  

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

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