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Writer's pictureLindsay Powell

Compliance Matters

Updated: Sep 9, 2022

Watch movies or content made for cable or television, and you’d think that the USA is a country where everyone is a lawyer or the client of one. The thing is, it’s true; almost. According to the American Bar Association (see ABA Profile of the Legal Profession (americanbar.org)), there are 1,327,910 licensed attorneys practicing in the USA in 2022 – that’s nearly one lawyer for every 250 of the population.


The USA is famously a country of laws, and one thing people in the 50 States like to see is that the law is being followed. Indeed, “Equal justice under law” is a maxim deeply engraved into the pediment above the front entrance of the United States Supreme Court Building in Washington, DC: it’s a core tenet of the US Constitutional (see Happy Birthday, USA! (atxponential.com)).


While many lawyers work for individuals, many others work only on behalf of corporate clients. These attorneys advise them on the body of rules and regulations which govern business practices, such as patent filings or mergers and acquisitions. CEOs don’t usually face a lethal injection for wrongdoing, but they can – and occasionally do – serve time in prison for serious violations. More likely, companies face fines for breaking the law – and it’s not a small change! Public Citizen reports that, since 2020, some 111 members of the US Chambers of Commerce have paid out a staggering $154 billion in penalties (see U.S.

Chamber of Commerce Members Have Paid $154 Billion in Penalties - Public Citizen) – with some very big household brand names among them.


The offenders in this rogues gallery operated in financial services, pharmaceuticals, oil and gas, information technology, utilities, and power generation. Their “white collar crimes” included illegal promotion schemes, felony price fixing or price manipulation, breaking labor health and safety standards, and pollution violations – including dumping products in the sea! One even pleaded guilty to violating the Foreign Corrupt Practices Act (FCA) of 1977 (see Foreign Corrupt Practices Act (justice.gov)), which is very serious indeed.


A company from overseas looking to do business in the USA must comply both with Federal and State laws, from company formation to collecting sales taxes. Important to note is that there are often differences in State law, depending on the profession or the market. Securing the necessary certifications and permissions before trading in the USA may be required.


Many markets function under specific regulatory constraints – laws, guidelines, or standards covering issues like safety, environmental, and interoperability. Compliance with them is often enforced by government authorities and trade or industry standards bodies. Think of cars and trucks, information and communications technology, electrical and electronic equipment, medicines, and medical devices.


The Federal Communications Commission (FCC) issues regulations for hardware for radio, TV, wire, satellite, and cable communications sold in the USA (see Federal Communications Commission | The United States of America (fcc.gov)), while the Food and Drug Administration (FDA) covers food, drink, and pharmaceuticals consumed in the USA (see U.S. Food and Drug Administration (fda.gov)).


The process of ensuring compliance can be complicated, protracted, and expensive. As a manufacturer of, say, smart home security systems, you would have to submit your products against specific safety test requirements at approved agencies, such as Underwriters Laboratories (UL), or install them to National Electric Code (NEC). Helpfully, the National Institute of Standards and Technology (NIST) of the US Department of Commerce publishes A Guide to the United States Electrical and Electronic Equipment Compliance Requirements (see A Guide to the United States Electrical and Electronic Equipment Compliance


Some of the most active ‘police’ enforcing the regs in the market are the competitors themselves, who are constantly looking out for cheats and charlatans trying to gain an unfair advantage. This has the effect of keeping every legitimate participant in the market on their toes. Collusion between competitors to rig the free market is, of course, strictly against US law, and cartels are entirely banned.


It is your job as a new entrant to know which laws, guidelines, or standards apply to your goods or services. The devil is in the detail. You can’t simply ship the surplus candy or cookies manufactured in your home-based factory to the USA. You may discover that some ingredients are banned outright and may need to be substituted, or that they have to be presented in specific terminology understood by American consumers. Even the layout of ingredient and calorie labels on food and beverages is strictly regulated.

Having satisfied yourself that the product you make does comply, relabeling could be quite straightforward: you may be able to affix a printed sticker in the US format with the required information to comply with local regulations on top of the original package label. You must label your product correctly per FDA rules and regulations (see Food Labeling & Nutrition | FDA) but remember: non-compliant labels can lead to recalls and fines. Doing the due diligence first is vital. This would be a good reason for a field trip (Opportunity Knocks! (atxponential.com)).


In summary, when considering the USA as an export market, it is crucial to research the laws and standards that your products or services are required to comply with. You may need to designate someone on your payroll to become the company’s US regulatory issues expert. You could also consider hiring a licensed US attorney to brief you on the regulatory environment and then consult them again to thoroughly check any claims you make in your sales collateral. Fail to comply and you may need to “lawyer up” anyway to face the storm of legal actions from individuals, companies, or government authorities intent on enforcing the law. At least you’ll have a lot of lawyers to choose from.


By Lindsay Powell

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