Table of Contents
Selling Internationally – It’s Easier Than Ever
Trade Promotion Agreements (TPAs)
North American Free Trade Agreement (NAFTA)
Tools to Help Your Business Enter into the Global Marketplace
Selling Internationally – It’s Easier Than Ever
West Salem, Ohio Company Finds Success in South Africa
American Augers, Inc., of West Salem, Ohio, a unit of Astec Underground of Loudon, Tennessee, manufactures construction equipment such as horizontal augers and trenchers. Beginning in 2005, Dan Sharpe, Astec’s International Sales Manager, was looking to tap overseas opportunities in the South African market. Working with trade specialists from the U.S. Commercial Service in Cleveland and South Africa, Sharpe received counseling on market entry strategies and participated in the Gold Key Matching Service program, which provides for pre-arranged business appointments abroad. Traveling to South Africa, Sharpe met with several potential distributors and agents and, shortly thereafter, signed an international manufacturer’s representative agreement with a South African company.
With a foothold in the South African market, Sharpe said he is ready to pursue new sales opportunities stemming from the World Bank’s $500 million (USD) project to connect Africa with fiber optic cable. "Our products, are ideal for the laying of fiber optic cable, and with our dealer in place we are in a perfect position to have our products provide this valuable service in laying the fiber optic infrastructure for Africa," he said.
Sharpe credits the Gold Key for the successes in South Africa. "The U.S. Commercial Service saved us valuable time and resources in locating potential buyers, and it would have taken much longer on our own,” said Sharpe. "They understand the local business environment, culture, and ways of doing business, and our company has made good headway in South Africa as a result."
"Our export sales to South Africa have contributed to our company’s overall export growth, enabling us to add new jobs at our factory in West Salem, Ohio and Loudon, Tennessee,” Sharpe added. "With more exports, we hope to see even more job growth in the future.”
American Augers is just one example of the many U.S. companies that bolster their bottom line and contribute to the world economy by selling internationally.
Each day, billions of dollars worth of goods and services flow across U.S. borders, creating new opportunities and a better standard of living for Americans and for those in our trading partner countries. With May recognized as World Trade Month – including the third week designated as World Trade Week through Presidential Proclamation by President Bush – there’s no better time for U.S. firms to explore the vast opportunities for selling internationally and increasing their worldwide customer base.
Last year, some 239,000 U.S. companies made export sales, recording an impressive $1.4 trillion in sales abroad—selling everything from energy equipment and automotive goods to healthcare technology, aviation parts, information technologies, services and much more. However, the potential for increasing both the number of smaller businesses that are exporting and the amount of export sales is tremendous, as only a small fraction of smaller businesses that could be exporting actually are. For example, 96 of exporters are small and medium-sized firms but, as a group, comprise less than one-third of the total value of U.S. goods’ exports—meaning that a few “big guys” account for the vast majority of U.S. export sales.
It doesn’t have to be that way. Just think, with more than 70 percent of the world’s purchasing power outside of the United States, ease of transportation, the Internet, and free trade agreements covering 14 countries, exporting is now simpler than ever.
And if you’re a smaller business that has yet to “take the plunge” into exporting, it’s reassuring to know that there’s help just around the corner with your local U.S. Export Assistance Center, where you can get counseling and everything else you need to expand your international sales. For example, if you’re new to exporting, we’ll assess your export capability and put you on the right track—whether you’re considering Canada, Mexico, the United Kingdom, or other market. But you won’t be alone. Why? Because the U.S. Commercial Service has a global network of 1700 trade specialists, with offices in over 100 U.S. cities, and American embassies and consulates in 80 countries that stand ready to assist your company. We provide export counseling, market research, matchmaking, and participation in trade events, advocacy, and many other services. And overseas, our offices can help match foreign buyers looking to source goods and services from U.S. firms.
Or, perhaps you’re already exporting and want to expand your international sales even further. Well, there are plenty of opportunities in challenging and robust markets throughout South America, Europe, Asia, and Africa. For example, did you know that India has one of the fastest growing economies in the world, with a rising middle class of 300 million consumers and an insatiable demand for American goods and services? Or how about the Government of South Africa—it plans to spend at least $860 million in preparation for the 2010 Soccer World Cup. These are just a few of the countless opportunities.
Interested in learning more about worldwide international sales opportunities? Then read more about Trade Promotion Authority and Free Trade Agreements (FTAs) helping your company easily enter the global marketplace.
Trade Promotion Authority enables the United States to maintain its leadership position in the global economy. Under Trade Promotion Authority, future international trade agreements will be subject to an up-or-down vote, but not amendment, in Congress. Trade Promotion Authority promotes free trade by giving other countries confidence that the agreements they negotiate with the United States will not be subject to subsequent renegotiation, allowing the Administration to open markets around the world for Americans through trade promotion agreements.
Read more about Trade Promotion Authority at the US Trade Representative’s web site.
Since the United States negotiated its first preferential trade agreement in the 1980s, such agreements have been called “free trade agreements” (FTAs). Currently, the United States has nine FTAs in force. Some of the more recently concluded FTAs are being called Trade Promotion Agreements instead, such as the U.S.-Colombia Trade Promotion Agreement (TPA) and the U.S.-Peru TPA. The nature of these agreements has not changed, only the name.
FTAs can help your company better compete in the global marketplace. Trade agreements help level the international playing field and encourage foreign governments to adopt open and transparent rulemaking procedures, as well as non-discriminatory laws and regulations. FTA’s strengthen business climates by eliminating or reducing tariff rates, improving intellectual property regulations, opening government procurement opportunities, easing investment rules, and much more.
The Commercial Service is aptly placed to provide assistance to U.S. companies that need assistance understanding FTAs and to further explain all the benefits these trade agreements offer the U.S. economy.
North American Free Trade Agreement (NAFTA)
NAFTA was implemented on January 1, 1994. It immediately eliminated duties on the majority of tariffs between products traded among the United States, Canada and Mexico. Restrictions were removed from many categories, including motor vehicles, automotive parts, computers, textiles, and agriculture. Overall trade in goods among the United States, Canada and Mexico has grown from $294 billion in 1993 to $865 billion in 2006 (should be 2006), an increase of 194 percent. U.S. exports to Canada and Mexico (listen to an audio market brief about Mexico) grew from $142 billion in 1993 to $364 billion in 2006, an increase of 156 percent. We should be using 2006 numbers – no reason to use 2005 – I know the source probably was 2005 but we can run our own numbers using 2006 data . . . put that intern back to work.
Canada and Mexico are our first and second largest export markets, accounting for 35 percent of our export growth to the world from 2006 to 2007. Through NAFTA, the United States benefits greatly when Mexico and Canada have increased economic growth. By generating growth, trade multiplies the purchasing power of our trading partners, which in turn benefits Americans, as well as those in Mexico and Canada.
View our NAFTA Documentation Webinar from our webinar library for a small fee.
Other benefits of NAFTA include investments, services, government procurement, and intellectual property rights (IPR). Learn more about these benefits and determine if your product qualifies for NAFTA.
Which region would be best for your company?
Europe
The European Union (EU) created uniform import regulations and mutual recognition of standards for member countries, making it easier for U.S. companies to export their goods to Europe. Additionally, with the use of a common currency, the Euro, the EU market has, in many respects, been turned into one single market. This has made the EU more competitive as well as more open to international trade.
While the EU is truly a single market for some U.S. goods and services, it is still fragmented along country, language, cultural, and regional lines for others. With the ongoing consolidation of distribution channels and retailers, marketing for many goods can now be done with a pan-European perspective. But for other items – particularly specialty products – the retail outlets, distributors, and end-users are still local, and the best coverage for such markets will likely be on a regional basis that might even divide Europe’s larger countries into more than one market.
The top European sectors include aerospace and defense, automotive, chemicals, energy, environment, seafood, food hygiene, fishery and aquaculture products, food and nutritional supplements, information and communication technology, medical equipment, pharmaceuticals, safety and security, and textiles.
The U.S. Commercial Service, with locations at U.S. Embassies and Consulates throughout Europe, works with companies to increase U.S. exports to Europe. You’ll find trade opportunities, new business partners, market research and one-on-one assistance at our Commercial Service Europe web site.
Africa, Near East, South Asia (ANESA)
The ANESA region includes a large number of countries on two continents, including the large markets of India, Egypt, Saudi Arabia and South Africa. African economies continue to sustain the growth momentum of previous years, recording an overall real GDP growth rate of 5.7 percent in 2006, compared to 5.3 percent in 2005 and 5.2 percent in 2004. Approximately 28 countries recorded growth in 2006.
Leading U.S. Export Markets in Sub-Saharan Africa
U.S. exports to Sub-Saharan Africa remained highly concentrated among a small number of countries. The top three markets of South Africa, Nigeria, and Angola accounted for 62.3 percent of U.S. sales in 2005, with South Africa claiming 37.6 percent, Nigeria 15.7 percent, and Angola 9 percent. Nigeria’s share of U.S. exports declined, while Angola’s increased, driven by a decline in U.S. exports of oil field machinery and parts to Nigeria but an increase in the same products to Angola.
Leading U.S. Exports to Sub-Saharan Africa
U.S. exports to Sub-Saharan Africa in 2005 were largely in the aircraft, infrastructure related machinery, agricultural commodities, and motor vehicle industries. The top three U.S. exports in 2005 were aircraft and parts (12.9 percent of exports), oil and gas field machinery and equipment (11.7 percent), and oil seeds and grains (8.8 percent). Other leading export categories include: motor vehicles; construction and general purpose machinery; industrial chemicals; communications equipment; grain and
oilseed milling products; navigational, measuring, electromedical and control
instruments; and computer and peripheral equipment.
Specifics on two leading markets in the Africa and Near East:
India
The Indian market, with its one billion-plus population, presents lucrative and diverse opportunities for U.S. exporters with the right products, services, and commitment. In recent months, the declining value of the dollar is expanding and accelerating these opportunities. India’s infrastructure, transportation, energy, environmental, health care, high-tech, and defense sector requirements for equipment and services will exceed tens of billions of dollars in coming years, as the Indian economy globalizes and expands. India’s GDP, currently growing at over six percent per year, makes it one of the fastest growing economies in the world. Construction of nearly everything from airports to container ports to teleports is setting the stage to remake India.
View webinars about New Delhi and Chennai from our webinar library for a small fee.
South Africa
South Africa's market size (forty four million people), infrastructure, and pro-business environment make it the logical choice for companies seeking a stepping-stone to conduct business on the African continent. It is the most advanced, broad-based and productive economy in Africa, with a 2005 GDP of $239.5 billion. The South African economy is characterized by standards similar to those found in developed countries. Its service sector is well established and growing and the economy is increasingly well managed. It has a well-developed physical infrastructure that is comparable to OECD standards. It also boasts a sophisticated financial sector with well-developed financial institutions and a stock exchange (Johannesburg stock exchange) that ranks among the top exchanges in the world.
Watch a Video Market Brief on South Africa. In-country experts share unique prespectives and new opportunities for markets around the world.
Western Hemisphere
Market opportunities in Latin America are predicted to grow as a result of regional economic stability, despite a slowing of the global economy. Many countries in the region have built significant hard currency reserves and have improved inflation-fighting techniques, making them better suited to handle global business cycle downturns than in the past.
In the last decade, many countries in the region initiated liberalization measures, such as lowering barriers to trade and investment. To stimulate investment, some countries have signed and ratified bilateral investment treaties with the United States. These steps, combined with strong world demand for commodities and raw materials in recent years, provided a good basis for the sustained growth of three to four percent per annum. As a result, U.S. exports to the region grew by about 15 percent.
This growth in exports was further enhanced by a series of Trade Promotion Agreements (TPAs), formerly known as FTAs, including Agreements with Chile and Central America/Dominican Republic. These Agreements were implemented between 1995 and 2007, respectively. Waiting for ratification (in both the United States and the respective countries) are three new Agreements with Colombia, Peru and Panama. Together, these Agreements and others cover about 65 percent of all U.S. trade with the region. During the first year of implementation, growth of U.S. exports approximated 10 percent, led by significant expansion in many categories of goods and services.
For information on best prospects in Latin America, click here.
Demand for machine tools, medical products, energy generation, transmission and distribution related equipment, transportation equipment, and IT and telecommunication products represents significant opportunities for U.S. exporters. Moreover, the IT sector has seen significant expansion in the export of services related to new investment in the region. Pending TPAs should provide further growth opportunities for these and other export sectors. In Panama alone, planned infrastructure investments will require substantial outlays for heavy equipment, such as earth moving and other types of equipment, particularly for the Panama Canal expansion and modernization program.
New sectors of opportunity reflect recent efforts by the United States and Brazil (View our webinar about Brazil from our webinar library for a small fee) to formulate a policy to support bio-fuels development. This new partnership could stimulate the use of these alternative fuels and reduce carbon emissions. Moreover, the agricultural sector will stimulate a stronger incentive to expand, reducing rural poverty and possibly increasing other economic activities in the rural areas of the region's economies. New technologies may also stimulate new industries with new export opportunities.
East Asia Pacific
As one of the largest continents, regional economic development varies greatly by Asian country. Over the past four decades, several Asian countries have seen some of the fastest economic growth in the world as these countries rapidly transformed their economies from agrarian-based to industrial powerhouses. Currently, Asia includes two of the largest economies in the world – Japan and China – as well as some of the world’s poorest countries. As a result, the diverse economic markets of Asia offer excellent opportunities for a large variety of U.S. companies.
In general, U.S. goods are desired throughout Asia. To many Asian consumers, “Made in the United States” equals superior quality. This often allows U.S. sellers to demand premium prices for their products. Top exports from the United States to Asia include: intellectual technology products, aircraft (and parts), soybeans, cotton, machine tools, and aluminum scrap metal. Whether selling capital goods or consumer goods, there is a buyer interested in your products in Asia. With rapidly growing markets and consumer classes, it is a great time to begin exporting your products.
Tools to Help Your Business Enter the Global Marketplace
The U.S. Department of Commerce offers various tools to help your business enter and succeed in markets worldwide
Before you Begin – Are you ready?
Export Basics helps you assess your export readiness, understand what you need to know and consider before pursuing an international sales strategy, and when you are ready, develop and implement your export strategy. Start your export evaluation now.
Think Globally, Around the World in Four Ways, An American Success Story. Watch: Going Beyond Borders
Want to take a college-level course on-line? Texas Tech University’s business school and the Commercial Service have pulled together in one place. What trade professionals need to know to help their companies grow. Available for college credit no certificate qualification. Learn more.
Market Research
Plan your market entry the right way – use market research to learn your product’s potential in a given market, the best prospects for success, and the market business practices before you first export. Search Export.gov’s market research database
Market Information Via Webinar
Get new market and industry information without leaving your office. Tune into our webinars to hear from U.S. Commercial Service and industry trade experts about how your company can increase your international sales. View past and future webinars.
Trade Events
Trade Events provide venues for U.S. exporters to meet international buyers, distributors or representatives. Search trade events by state or sector
International Partners
Meet the best buyers, distributors, and agents for your products and services through trade missions or personalized business meetings. Learn more
Consulting and Advocacy
Get expert help at every step of the export process with our consulting and market access services. Learn more
Are you interested in China, the Middle East or North Africa?
We have trade experts that can assist you in our Business Information Centers.
Middle East and North Africa Business Information Center (MENABIC)
The Middle East and North Africa is a region of great opportunity for all types of companies – not just large multinationals. Business in the region can be challenging as well as rewarding. Find out whether doing business in the Middle East and North Africa is right for you. What are the opportunities? What does it take to succeed? Let us assess your possible risks and potential rewards. If you would like to speak to a specialist contact MENABIC’s Kam Shah
China Business Information Center
China's growing economy presents a tremendous opportunity for U.S. business. However, doing business in China can be challenging – particularly for companies that have limited experience in the China market. The China Business Information Center (China BIC) provides information and tools to help U.S. companies sell their products and services in this vast market. Visitors to the website have access to a wealth of information, including trade leads and industry-specific market research, market access and compliance issues, contact information for local Department of Commerce officials, and much more. By accessing the China BIC's trade events calendar, visitors will have an opportunity to participate in the many “Doing Business in China” outreach events that the China BIC supports around the country and through the Internet. If you would like to learn more about the information available from the China BIC, or if you wish to speak to a China specialist, please contact Jim Mathews at 1-800-USA-TRAD(e) (ext. 3-3787).
Partnerships
To help the Unites States remain competitive, we must engage more of the business community in the global economy. The Government can reach thousands of potential exporters by partnering with private sector enterprises that already do business with these companies. Express delivery companies (FedEx, UPS); banks (PNC, M&T); and web-based marketplaces (eBay) are examples of the Commercial Service’s current corporate partners.
As partners, these service providers can significantly boost awareness of export opportunities and access to assistance programs. They can also help communicate to the U.S. business community and overseas buyers that trade agreements and technological advancements make exporting easier then ever. In addition, partners are themselves making exporting easier by providing trade facilitation services.
The Commercial Service has developed a number of models for inviting private sector companies to be partners, to broaden the base of exporters. These partnerships can range from single event joint sponsorships of seminars and conferences to long-term commitments. The formal partner process occurs when the CS issues a zero-dollar procurement through the government’s FEDBIZOPPS procurement service to identify companies engaged in a mission consistent with that of the Commercial Service. This approach has been very successful and the CS plans to issue a public call for new partners on an annual basis.
Would you like to learn more about the partnership program or about how to become a partner of the Commercial Service? Contact Robert McEntire in Washington, DC.
Are you ready to explore opportunities in the global marketplace? Are you already exporting and interested in expanding? For more information about our export services, contact your local U.S. Export Assistance Center or call 1-800-USA-TRADE