Types of International Trade Agreements
To conduct your business globally, you have to be aware of the following International Trade Agreements. However, before you start exploring these agreements, let us explore a little bit about the organization responsible for negotiating and enforcing them:
World Trade Organization (WTO)
The primary purpose of the WTO was to promote global trade, resolve trade disputes, and negotiate trade agreements. GATT, GATS, TRIPS and many more are part of the WTO agreements. Let’s see each in detail:
i) General Agreement on Tariffs and Trade (GATT)
This agreement allows you to avoid trade barriers and promote your business internationally. Offshore companies also benefit from these fair trade practices, which help reduce trading costs and expand their access to various markets.
ii) General Agreement on Trade in Services (GATS)
GATS helps you overcome restrictions on foreign services, such as IT, consulting, and customer support.
iii) Trade-Related Aspects of Intellectual Property Rights (TRIPS)
When someone steals your invention or tries selling copies of your brand, TRIPS steps in to stop them.
iv) Free Trade Agreements (FTAs)
You can utilize Free Trade Agreements to reduce tax liabilities. The different agreements that come under FTAs are as follows:
North American Free Trade Agreement (NAFTA)
You can follow this agreement to reduce taxes on imports between the US, Canada, and Mexico. It also lowers labour costs and enables the business to conduct operations freely across the three regions.
The European Single Market provides various opportunities for offshore companies involved in trading activities. It allows you to move your goods and services freely within and outside the EU markets. On the other hand, these markets provide safety and enhance the credibility of offshore companies.
Understanding these agreements for global trade is essential for effectively planning your offshore business. Here are some advantages of establishing an offshore company for international trade to enhance your business strategy.
Tariffs Used for International Trading Business
Are you aware of the number system, tariffs, and export duties your international trading business must adhere to?
If not, let us explain in detail.
i) Harmonized System Codes (HSC)
HSCs are standardized numbers that help you identify products for customs and determine the amount of taxes to be paid. They are basically six-digit numbers, and countries such as India, the European Union, and the United States use these codes. The main purpose of HSCs is to maintain transparency in trading agreements and the exchange of goods. Failure to add these codes to your products may result in paying higher taxes.
ii) Import Duties and Taxes
Offshore companies are subject to import duties when raw materials or components are imported from other countries. Contact an expert or your business setup advisor to know the import duty charges applicable to your international business.
iii) Export Duties and Taxes
The Export Administration Regulations oversee the export, re-export, or transfer of goods and services. Its motto is to protect US security and make sure that the technology doesn’t end up in the wrong hands.
iv) International Tariff in Arms and Regulations (ITAR)
You can use ITAR to check the control of the import and export of defense-related services. Also, you must get permission from the US government before sending any US-related items to another country.
Intellectual Property Rights Used For Your International Business
You can safeguard your IP through the Patent Cooperation Treaty, Madrid System and Copyright Treaties. Let’s explore each system in detail:
The Patent Cooperation Treaty (PCT) and the Madrid System are used to simplify your application process at a single time. The main difference between the two is that through PCT, you will protect your patent, and the Madrid system safeguards your trademark. You can choose these systems depending on the nature of your offshore business.
Secondly, offshore companies need to rely on copyright treaties to protect their creative works. The Berne Convention for the Protection of Literary and Artistic Works (1886) is the oldest copyright treaty that safeguards your original works, such as books, music, and films.
However, keep in mind that these agreements serve distinct purposes and apply to different IPs. Contact a business expert to determine what best suits your business requirements.
Strategies to Resolve Your Trade Disputes
Are you worried about facing trouble resolving disputes regarding your offshore trade? Well, here is what you can do to resolve such situations peacefully.
When two people disagree on a business, you can choose arbitration instead of going to court. An arbitrator hears the disputes from both sides and provides a clear answer. At the same time, a mediator or conciliator overlooks the communication between both parties to identify issues and resolve misunderstandings.
So far, we have covered the essential points that you must know about to ace your global trade game. However, we suggest getting in touch with the experts at Business Setup Worldwide for an in-depth understanding of the international trade laws along with a step-by-step plan for offshore company formation. We at BSW are committed to helping your business grow beyond borders. For a free consultation, contact us now!
