The European Union (EU) is currently negotiating with 13 countries to have them become full members of the European trade bloc. As this process continues and additional countries are admitted, the EU’s level of global influence will increase. What does all this mean for your business?

The Big Kid on the Block Has Company

Since World War II and throughout the Cold War period, the United States has been unquestionably the world leader in terms of trade and economic policy. In fact, the Cold War provided much of the glue that held the American-Western European alliance together. However, since the end of the Cold War, and in light of the EU’s expansion plans, the U.S.’s position of dominance is being challenged.

To a greater extent, the EU is questioning the policy decisions of the United States. Consequently, forging new multilateral trade agreements or defending U.S. interests in trade disputes could be more difficult. Additionally, developing countries are becoming a more cohesive bloc, and in turn, generating greater negotiating strength of their own.

WTO Filed Trade Disputes Continue

As of January 17, 2001, 103 complaints were brought to the World Trade Organization (WTO) either by the United States or against it. Thus far, the United States has prevailed or was satisfied with 29 rulings, lost 14 cases, and resolved 11 without litigation. Currently, 45 are in the panel or consultation stage, and four have been merged into other complaints.

Of the cases the United States has won, two involve the EU over banana and hormone-treated beef imports. But thus far, the U.S. is not rejoicing over the decisions because the problems still continue. Since the EU did not comply with the WTO rulings on hormone-treated beef or the bananas, the United States has separately imposed 100% duties on a list of EU products with a combined annual trade value of $308.2 million. The EU still has not complied.

EU Accession Plans Underway

The 15-member EU, which has a population of 375 million consumers, comprises Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

Accession negotiations for the Czech Republic, Hungary, Poland, Slovenia, Estonia, and Cyprus began on March 31, 1998, and on February 15, 2000 for Latvia, Lithuania, Slovakia, Bulgaria, Malta, and Romania. Pre-accession discussion is underway with Turkey. These countries represent a population of 170 million consumers.

Although many differences among candidate countries exist, details are being worked out. As of January 17, 2001, “Almost 300 activities, comprising bilateral visits, seminars and technical assistance activities, were conducted between the Eurosystem and accession countries,” said Christian Noyer, Vice President of the European Central Bank.

And, Gunter Verheugen, who is responsible for EU enlargement, believes the EU will accelerate its enlargement plans. On January 17, 2001, he said “The enlargement train has been given the green light and the way ahead is clear... and under the Swedish presidency (of the EU), it is going to be a high speed train.”

Who Is Using the Euro?

Increasingly, European companies are asking U.S. firms to use the euro, the single European currency, for business transactions. Fulfilling this request may give you an edge over the competition — as well as additional risk.

Currently, only three EU countries, the United Kingdom, Sweden, and Denmark, have not adopted the euro. And support toward the currency had waned, partly in response to its recent volatility and Denmark’s September 28, 2000 decision not to participate. Since its inception on January 1, 1999, the euro has reached a high of $1.19, has fallen to a low of $.82, and has risen up to the $.93 - $.95 range in January 2001.

Nevertheless, the U.K., Sweden, and Denmark are likely to eventually participate. And in time, as East European and other countries accede to the EU, they undoubtedly will adopt the euro — putting additional pressure on non-European countries to transact in euros.

Greater Challenges Ahead

If all accession candidates become EU members, the population of the trade bloc will rise to 545 million, a number twice as big as the U.S. What does this mean for U.S. trade policy and your business?

As the EU becomes more influential, U.S. trade policy initiatives and interests are likely to be challenged to a greater extent. Additionally, when dealing in European markets, U.S. companies may find themselves at a competitive disadvantage due to trade barriers that don’t apply to European companies.

This article appeared in March 2001. (BA)

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author and an international columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




More Articles | Speaker Programs | Speaker Demo | Videos | Services


You don't have permission to view or post comments.