Why you need to understand local regulations

Lesley Batchelor, Director General of the Institute of Export, explains why exporters need to take local regulations into account when selecting their market and preparing their offering.

Local regulations are the equivalent to our VAT or product registrations that we have in the UK, only specific to the market you’re looking at.

Normally you know if your product is registered in the UK it will probably be subject to an international extension of that registration. The best people to talk about this would be your trade association or British Standards Institute.

The main thing to remember about the local regulations is that it may impact on your product process or cost of manufacture if the regulation requires an additional or change to your product.

This is why as you export more you will be drawn towards standardising your product offering to save on manufacturing costs and also warehousing of differing stock for different markets.

What type of local regulations might I need to think about?

VAT or the equivalent is an important aspect of any trade and is a separate issue to that of duties or excise (if your product is covered by excise you will already be aware). You can check out the MADB to see if your product is affected.

A duty is a tax that is part of a trade agreement. These are normally based on, or are part of, a fiscal policy of your chosen market’s government. Effectively, it’s a method of ensuring local manufacturers are not unfairly treated and a revenue generator for the policies they are trying to implement.

The amount of the tax due is triggered by the tariff code (sometimes called Harmonised Code). This code will help your goods transit countries and travel easily as the customs authorities will be able to identify exactly what it is that you’re sending. Harmonised Codes are based on what raw materials are used, where they come from and what percentage process they have undergone in the country of manufacture.

Raw materials from one country can, with sufficient process in the UK, become “UK origin” and thus attract a different rate of duty than from the country the raw materials originated in.

These are considerations to be taken into account when pricing, especially if you are tight on margin.

Further help is available from the IOE Helpline – +44 (0) 1733 404400.

Lesley Batchelor OBE is an expert on international trade and a passionate champion of UK exporters. She is also the Director General of the Institute of Export, the professional membership body representing and supporting the interests of everyone involved in importing, exporting and international trade.

Topics: Export Planning, Getting Started, and Legislation & Regulation
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