The executive agencies within the U.S. government spend hundreds of billions of dollars each year to purchase an incredible range of products, services and other goods from foreign countries. The government’s ability to acquire said goods requires the governance of laws and regulations intended to promote fair and open trade before a contract is signed. The laws are also intended to ensure that all the products sold comply with the United States government’s specific requirements. Unfortunately, many of the laws set up by the U.S. federal government regarding procurement contracts are complicated because they also seek to promote various societal, economic and international trade goals- these terms can become misinterpreted overseas.
Today’s global business economy has launched many procurement professionals into the international procurement industry. This a completely new experience for most. Because of this, communication problems can develop between different countries trying to engage in trade. One of the most significant challenges in the global trade environment is the preparation of terms for these types of transactions. Some United States procurement terms that can be commonly misinterpreted overseas included terms like “fiscal year”, “caveat emptor”, “the Pareto Principle”, also known as “the 8/20 rule”, “price index” and a wide variety of abbreviations used by the United States government for foreign trade that can easily be misconstrued.
The term “fiscal year” is a loose and easily misinterpreted term because the time period a country qualifies as their fiscal year can vary from country to country. Time is not a constant variable across the globe, so assuming that everyones fiscal year is the same is simply naive. Terms like “caveat emptor,” which mean let the buyer beware in Latin, are commonly used in U.S. trade. Latin is not a commonly known language across the globe and can be misinterpreted if used when trying to negotiate with foreign countries. “The Pareto Principle,” also known as the “80/20 rule” a principle based off of writings by an Italian economist, but a principle that is not commonly known by countries like India, China, and the middle East. The easiest way to confuse someone when trying to be successful in foreign trade is to use confusing abbreviations that are foreign to that specific nation. The United States government has a slew of abbreviations they use within the procurement contract industry, such as “CIF” or cost, insurance, freight, “COD”, which means cash on delivery, “MOQ”- minimum order quantity and “PPI”- producer price index- just to name a few. These are just a few terms used in United State trade that can complicate foreign trade and create unnecessary barriers.