What to Expect When You're Exporting - Challenges to the new exporter entering emerging markets

While exporting to developed economies such as the European Union or NAFTA markets comes with different rules and regulations that you may not face when selling in the United States, trade rules are generally transparent and designed to facilitate trade.  When exporting to emerging markets, US companies may face limited government capacity in customs and regulatory agencies, and as such, normal problems encountered at the border are magnified. It is important for small business exporters to understand that exporting to an emerging market comes with its own unique challenges that can be overcome with thorough trade intelligence, onsite understanding, and preparation. 

TradeMoves frequently assists clients in navigating through these issues so they can get their export shipments efficiently to their foreign customers without any surprises. These are just some of the issues we have encountered and overcome through our policy, customs, and regulatory analyses.

1. Lack of transparency and information:  It is one thing to hear about other countries’ lack of transparency in the news; it is another to try to trade with countries who are not clear about what they require. Oftentimes, regulations and procedures are not available online and can only be accessed in-country by an importer.  These policies range from sanitary and phytosanitary requirements for food, to the amount of other custom fees and taxes levied on top of the import tariff. If your business is unfamiliar with a country’s policies and does not have a presence in-country, it can be extremely difficult to know where to go to obtain the right information.  You may also be required to pay for standards, provide certificates of compliance, and/or use only government-approved inspectors to meet standards.  If your products do not meet these obscure standards, you may have your cargo detained at the border.
2. Unclear chain of responsibility and accountability:  Like the United States, different government agencies oversee different areas of trade regulation and the chain of command is not always clear. Exporters of agricultural products may need to consult not only with customs authorities, but also with the Ministry of Agriculture, Ministry of Health, Ministry of Finance, and other agencies to obtain appropriate documentation. Cases can be even more extreme depending on regulatory changes at the time. In Russia, the customs agency subscribes to three different regulation regimes; the brand new Eurasian Economic Union, the laws of the preceding Trilateral Customs Union, and their own national regulations.  These overlapping regimes may mean some import requirements could be overlooked. 
3. Inconsistent enforcement of regulations:  While many emerging markets view US products as meeting their internal standards, this is oftentimes not the case, especially for sensitive agricultural commodities. Exporters need to be aware that an importing country’s trade regulations can change frequently and interpretation of those regulations can be inconsistent if under development. While many custom authorities are more forgiving at the border and allow corrective action onsite, exporters have reported that other agencies, such as those in Brazil and Guatemala, will delay goods at the border and charge additional fees for errors and inaccuracies in documentation.
4. Unexpected fees can cut into your costs:  The experienced exporter knows that all countries have varied import tariffs, custom fees, and taxes. Identifying all cross-border fees can be complicated even with the most transparent regulated market such as the European Union. However, add in a foreign language, policies such as price bands or environmental levies, and additional fees for economic development fund, or not being able to identify fees that can increase your landed cost can cut into profit margins.

Many exporters are able to overcome these obstacles through trade professionals that have experience with your prospective market, whether it be a broker, experienced importer, lawyer, or a trade adviser like the TradeMoves team.

If you are considering exporting to an emerging market, we encourage you to contact us. Our expertise can help you optimize your exporting strategy to minimize costly pitfalls and maximize your success in your new target market. If you are considering exporting to an emerging market, we encourage you to contact us at [email protected].

Also, we would love to hear from you. Send us your thoughts on exporting on our LinkedIn or Twitter.

Chelsea Hamati
[email protected]
240.389.9003