Whether you’re a small business or an international corporation, there are procurement laws that regulate how you do business and what goods and services you have access to. Some of those laws may not seem to directly affect you—but even if they don’t regulate how you do business, they affect the supplies you purchase and the organizations you purchase them from.
For example, the United States has laws such as the Lacey Act, which bans the use of illegally sourced products. Now, you may not be involved in illegally sourcing products (we know you’re not) but one of your suppliers might be and you might not be aware of it. You could be in trouble for your supplier”s bad deeds—or at least out a substantial amount of money if they get caught and their goods are confiscated, which is a good reason to make sure you fully investigate all your vendors.
The United States also has the Foreign Corrupt Practices Act (FCPA), which prohibits the bribery of foreign officials when finding or getting business. This includes bribery committed anywhere in the world. It goes without saying, but bribing foreign officials is never a good idea, unless you’re a fictional character in a movie who obviously doesn’t play by the rules (we know you’re not).
Photo credit: NAN728 / Shutterstock
International customs laws affect what goods can be imported into a country. Any organization (or person) wanting to bring goods into a country needs to know what items are allowed, which are prohibited, and which are limited (meaning some of that item can be brought in, but only certain amounts). People who violate international customs laws could find themselves facing fines or jail time and often the issue isn’t as obvious as not being allowed to bring illegal drugs across the border. Some countries, for example, won’t allow fresh produce to be transported. And some countries have harsh rules for breaking the law (as a few clothing-optional tourists recently discovered, reported by CNN).
As described by Supply Chain Resource Cooperative, another international law affecting procurement is The United Nations Convention on Contracts for International Sale of Goods (CISG; also known as the Vienna Convention). That law reduces obstacles to international trade by standardizing international contracts.
Companies who want to import or export goods need to know their own country’s customs and contract laws as well as the customs and contract laws of the country they are shipping to or from. Failure to do so can result in heavy penalties, and wouldn’t you rather avoid that? (We know you would).