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State Of The Union

Apr 1, 2005
2005 / April 2005

Proving there’s more than a grain of truth to the adage “there is strength in numbers,” the collective forces known as the European Union have inched their way toward a level of Herculean success — and their impact on the American business world has not lagged behind.

“The trans-Atlantic relationship between the United States and the European Union constitutes the strongest, most comprehensive and strategically most important partnership in the world,” said Gunter Burghardt, then E.U. ambassador to the United States, in a July speech to the House International Relations Subcommittee on Europe.

The relationship between the United States and European Union is founded on shared values and common roots, interests and ideals, and a common appreciation of democratic principles and human rights, and covers all issues of the international agenda, ranging from trade to development to foreign and security policy.

Shared Economies
Over the past 10 years, the U.S. and E.U. economies have become so intertwined they have created a precedent-setting open and integrated trans-Atlantic marketplace. Businesses on either side of the pond now invest and produce much more overseas than they export from their national borders. In fact, the European Union and the United States are the leading players in international trade, accounting for 37 percent of world merchandise trade, which makes the EU-U. S. trading relationship the largest in the world.

In 2002, the total amount of two-way investment amounted to more than 1.5 trillion euro ($1.98 trillion), and the “trans-Atlantic work force” — jobs directly or indirectly linked to the trading relationship — is estimated to number 12 million to 14 million. In the United States, 7 million workers owe their jobs in some way to E.U. companies, according to information provided by the European Commission. In 2003, the European Union exported 220 billion euro ($291 billion) of goods and 115 billion euro ($152 billion) of services to the United States — 22.6 percent of total E.U. exports in goods. The United States exported 151 billion euro ($199 billion) in goods and 109 billion euro ($144 billion) in services to the European Union, the commission reports.

The prospect of conducting trans-Atlantic business has become so appealing to U.S. companies that courses on doing business with the European Union are cropping up in colleges across the nation. For example, Texas A&M University’s continuing education program offers a class called “The Executive European Union Business Program” to Texas professionals. The four-day course is open to companies with operations in the European Union, as well as to those that are exploring the possibility.

Today there are 25 member states in the European Union: Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, the Netherlands and the United Kingdom. Bulgaria, Croatia, Romania and Turkey are expected to join the union in coming months, and the former Yugoslav republic of Macedonia has applied for membership.

In order to become a member of the European Union, a country must have a stable democracy that guarantees the rule of law, human rights and protection of minorities, and it must have a functioning market economy as well as a civil service capable of applying and managing E.U. laws.

Countries preparing to join the European Union say membership will serve as a credential for all other partners with which they deal. Bulgaria is expected to sign the treaty conjoining it with the European Union on April 25.

“We are very excited to join,” said Bulgaria’s ambassador to the United States, Elena Poptodorova, during a recent telephone interview. “We think it will lead to a completely compatible national economy and will also help Bulgaria be a better partner with the United States.”

Other nations are clamoring for inclusion. When the new Ukrainian president, Viktor Yushchenko, delivered his inaugural speech in January, he promised to seek greater ties with the European Union.

“My goal is Ukraine in a united Europe,” he told a vast crowd of supporters gathered at Independence Square in Kiev on Jan. 23. “Our road into the future is the road on which a united Europe is headed.”

But the European Union has said the Ukraine has a lot of work to do before it can be considered for membership. To become viable, Ukraine must first show substantial progress in reducing government corruption.

ndeed, membership in the European Union has its privileges. Since Ireland joined in 1973, for example, the European Union has contributed significantly to the country’s growth. Most recently, the union chipped in with the nation’s largest and most ambitious investment plan ever: Dubbed Ireland’s “National Development Plan,” it involves an investment of over 52 billion euro of public, private and E.U. funds between 2000 and 2006.

The plan involves significant investment in health services, social housing, education, roads, public transport, rural development, industry, water and waste services, child care and local development. It also helps Ireland put into place many of the standards it pledged to adopt when it joined the European Union. (One of the more quirky changes took place earlier this year, when workers replaced 35,000 road signs. European Union rules require that all distance signs in member countries be converted to kilometers by the end of the year.)

European Union Beginnings
The European Union began in the 1950s in the wake of World War II, as a devastated Western Europe sought to rebuild its economy. Known as the “European Community,” it comprised just six member states: Belgium, Italy, France, Germany, Luxembourg and the Netherlands. In those days, the main purpose of the European Community was the pooling of European coal and steel production under a common authority. War between European countries is now unthinkable, thanks to the unity that has built up among them over the past 50 years. Given this success, the European Union is now increasingly involved in preserving peace and creating stability in neighboring countries.

When E.U. External Affairs Commissioner Benita Ferrero-Waldner ended a two-day visit to the Middle East recently, she announced the European Commission’s plan to allocate about 250 million euro ($331 million) this year toward the creation of a viable Palestinian state. Part of this allocation may be used to help rebuild infrastructure shattered by decades of conflict, she said.

“We will continue to be a major provider of political and financial support to the peace process,” Ferrero-Waldner said at a Washington press conference after her return in early February. “It is essential that the Palestinian people see a concrete dividend of moves towards peace, and we will make funds available to help (Palestinian Authority) President (Mahmoud) Abbas deliver tangible improvements in his people’s living conditions. We will also support the reforms and institution building necessary to build up the Palestinians’ government capacity, and support the reconstruction of infrastructure and basic services.”

In response to the recent tsunami disaster, the European Commission in February proposed to expedite a planned European Union preferential trade regimen for developing countries. The focus of the new “Generalized System of Preferences,” which became effective April 1, is on developing countries most in need, such as the Maldives, Sri Lanka, Thailand and Indonesia. It will provide for further tariff concessions, in particular in the clothing and fishery sectors. Its benefits will extend to all the countries affected by the recent tsunami.

According to Anthony Gooch, E.U. spokesman in the United States, the European Union’s “Generalized System of Preferences” is the preferential trade regimen the European Union has been granting to developing countries for the past 30 years. It is worth more than 52 billion euro ($69 billion) in trade flows and is the world’s most extensive preferential trading regimen, providing more market access for developing countries than the preferential access regimens of the United States, Japan and Canada combined.

“By accelerating this boost to developing countries’ market access, the European Union has acted quickly to provide relief for countries affected by the recent tsunami,” European Trade Commissioner Peter Mandelson said recently in a prepared statement.

Travel Within the European Union
The European Union did a lot to make traveling in Europe simpler with the 2001 elimination of passport controls between the Scandinavian countries and the Schengen Agreement countries of the European Union (Austria, Belgium, Denmark, France, Finland, Germany, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain and Sweden), but Americans still need passports. Passports must be shown when entering any Schengen country from the United States or from any other non-Schengen country. The European Union has eliminated customs controls under the single market, and the euro makes it easier to shop. Still, not all E.U. members belong to the European Monetary Union: Great Britain, Denmark and Sweden, for example, still use their own currencies.

Frequently Asked Questions

Q. Where can I get information on companies in Europe, or European companies in the United States?

A. This information is most readily available through Europages (www.europages.com).You should also consult a reference librarian at your nearest university or large public library.

Q. Where can I get marketing information on the computer industry in Europe?

A. E.U. industry information is presented by the Enterprise Directorate General. There is a CD-ROM product, titled Europroms, that contains output and market statistics on selected industry sectors. This is available through the Eurostat Data Shop in the United States, Haver Analytics.

Q. How can I find out about E.U. grants and loans?

A. While funding from the European Union generally is available only to E.U. citizens and E.U.-based establishments and subsidiaries, information on available grants and loans is provided on the Web site of the secretariat general.

Source: www.eurunion.org


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