Leon Lacroix

When nations impose more and more trade barriers on trade with the other country, one speaks about a “trade war”. In many cases trade wars are the result of protectionism, whereby trade barriers are used as economic weapons. China and the U.S. have been entangled in a trade war in 2018, as both countries have imposed additional import duties on goods imported from the other country.

Hello, Vincent. Very good question.The idea is that the countries in close geographical proximity could increase trading among themselves and take advantage of lower transport costs. Also, by forming a bloc, they can increase bargaining power vis a vis larger and more powerful countries. However, the literature is not conclusive on the trade creation v. trade diversion. Yes, more trade is created within the bloc but much (maybe all) of it replaces previous trade with outside the bloc countries. Blocs could also be used to create additional trade restrictions - hence the fortress argument.

Let us figure out the definitions: Market Access – U.S. exporters sometimes encounter trade barriers. For instance, a country may only allow products to enter the most inconvenient port or a country may treat imported goods differently than domestic goods. MAC receives calls from businesses, associations, and international U.S. commercial offices, and we then map out a plan to solve the problem. Compliance – The United States is a party in over 250 trade agreements. But trade agreements are only paper unless foreign governments comply with their obligations. MAC addresses compliance problems quickly and aggressively. Once a problem is identified, we organize a team to outline and implement a solution.

From my experience I can tell that you need to consider carefully the restrictions in place against the designated person or company. For example, if a person is subject to financial sanctions under the Syrian regime, you need to look at the regulation that underpins that regime. Some regimes have exemptions or licensing grounds for the provision of goods or funds for humanitarian, medical or diplomatic purposes. OFSI seeks to process applications for licenses where there is a risk to life as a priority.

First of all I want to say that the main compliance risks still flow from US regulators and the relevant laws (FCPA/OFAC/export controls). Those are still the most energetically enforced and extra-territorially so. In the past five years, OFAC risks in particular have increased manifold as the number of countries embargoed has increased, but also as the programs have broadened in number – to include human rights violators – and in complexity, particularly the financial sanctions that are the heart of the Ukraine and Venezuela sanctions. These programs now can easily tie a company up in knots when it comes to understanding what is permissible and trying to understand who it is doing business with. Third party OFAC and FCPA risks are some of the most serious and hard to mitigate challenges.