Doing Business In…

The European Union

EU European Union 15 Countries Original –Austria –Belgium –DenmarkAbstain –Finland –France –Germany –Greece –Ireland –Italy –Luxembourg –Netherlands –Portugal –Spain –SwedenAbstain –United KingdomAbstain

On May 1, 2004, ten more countries were admitted to the European Union: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia Slovenia.

Background The EU-15 (pre-2004 member nations) million citizens. The 10 countries entering in 2004 add another 100 million. The 2001 GDP per capita of the EU-15 was 23,210 euro but only 10,700 euro for the ten new member countries.GDP The 2003 unemployment rate for the EU-15 was 7.5 percent and 15.1 percent for new member countries.

Evolution of European Union 1951 – Belgium, France, West Germany, Italy, Luxembourg and Netherlands signed Treaty of Paris creating European Coal and Steel Community 1957 – Six ECSC nations signed Treaty of Rome, establishing the European Economic Community & broadening concept of common market – First wide-ranging cuts in customs duties between EEC members took effect 1968 – To establish a common labor market, freedom of movement was guaranteed to all workers within the EEC 1972 – EEC was enlarged to include Denmark, Ireland & U.K European Monetary System started to operate 1981 – Greece joined EEC 1986 – Spain and Portugal joined EEC

Evolution of European Union 1993 – Introduction of single market under accord signed in – Maastricht Treaty took effect paving the way for economic and monetary union 1995 – Austria, Finland, and Sweden joined European Union as the bloc became known 1995 – Schengen Agreement took effect eliminating border checks 1995 – Euro was chosen as name for European currency Introduction of the Euro

European Union Objectives The European Union promotes the free movement of goods, services, people, and capital between all member states. Tariffs have been eliminated between all members of the EU.Tariffs Border check points have been eliminated between almost all nations. EU citizens have the right to live, work, and establish business in any EU member state. Single currency (12 countries) Uniform regulations Single telecommunications market Single insurance market

EU and the U.S. constitute 50 percent of all of the world's trade. Each is the largest trading partner of the other, accounting for approximately 20 percent of total trade for both.

What exactly is the euro? A single currency to replace the franc of France, the mark of Germany and the currencies of nine other members of the European union? Euro bills and coins began circulating Jan

What’s in a Euro? Value 1/1/99 –1.167 U.S. Dollars – Japanese Yen –.705 British pounds –7.449 Danish kroner – Greek drachmas Permanent fixed value vs. 11 national currencies: –1.956 German marks – Belgian francs – Luxembourg francs – Spanish pesetas –6.560 French francs –.788 Irish punts –1, Italian lire –2.204 Dutch Guilders – Austrian schillings – Portuguese escudos –5.946 Finnish mark

French Euro Coins

Objectives of Single Currency Eliminates costs & headaches of converting money Reduces risk of variation in exchange rates Promotes European cohesion Allow Europe to negotiate trade & monetary issues on equal footing with U.S. & Japan

Source of Information on EU Trade Barriers European Union Homepage Click on EU Law and Policy Overview

European Organizations Setting Standards More than 100 European organizations influence, direct or set standards for European products –European Association o Manufacturers of Water Meters, European Liaison Committee for Sewing Machine Industries, European Fishing Tackle Trade Association Goal of EU is to standardize product standards between European wide & individual country

Complying with Europe’s Product Standards is becoming easier, even as enforcement becomes more strict… Export Today, March 1998 EU Medical Device Directive (June, 1998) –Process appears to be getting easier & directives less confusing –Monopolies on testing enjoyed by European laboratories less restrictive –Enforcement becoming more strict E.g Swedish authorities checked compliance of 3000 machines in random survey

Medical Device Directives E.g. Dental floss generally regarded as a medical device in Class I category- meaning a manufacturer does not have to use a Notified Body for certification. If dental floss is marketed as “sterile” than it does.

MDD E.G. Cold packs if intended to be used to reduce swelling considered active therapeutic device; if intended to cool beer then not.

Europe’s Metric Labeling Requirement Metric Only Directive (Scheduled to go into effect 2010) all products sold in EU will have to list only one system of measurement on the labels, I.e. the metric system –U.S. exporters must develop two separate packages, warehousing and inventory systems