The U.S. and the EU had almost $600 billion in combined trade and investment in 2003.

The United States and the European Union (EU) enjoy the largest economic relationship in the world – with almost $600 billion in combined bilateral trade and investment in 2003. Working to ensure that European integration is a success for American business, the United States Commercial Service at the U.S. Mission to the European Union (CSEU) anticipates and responds to the needs of U.S. exporters, especially small and medium-sized businesses (SMEs), as well as U.S. businesses already operating in Europe. CSEU focuses on providing information and insights on developments in EU policies, regulations, standards setting initiatives and program funding. Our role is to ensure that U.S. firms that are targeting the EU market have the information they need to factor these “EU angles” into their strategic business development decisions.

EU angles can create threats, opportunities and compliance obligations – indeed, sometimes all three. By providing market research, business counseling and advocacy, our office helps U.S. companies better position themselves to seize the opportunities, better manage the threats and better meet their compliance obligations. We also support U.S. industry’s efforts to positively shape policies and legislation by helping them ensure that their views on EU-related issues are heard and understood by key EU decision makers. We work closely with other U.S. Government agencies, including standards organizations and regulatory agencies, as well as private groups such as trade associations, to help reduce market access problems for U.S. firms.

There is sometimes a tendency to view EU developments as somehow detached from what is happening in national markets. This can lead to problems. While EU policy and legislation is agreed at the EU level, it is implemented, administered and enforced, for the most part, by the Member States. Thus, our office is part of the equation in understanding and pursuing markets, whether a company is planning to do business throughout the European Union or only in several Member States.

Here’s a look at the Information and Communication Technology (ICT) sector for some practical examples of how EU developments can impact U.S. exporters, and the role that CSEU plays.

Data Privacy

There are strict EU-wide laws that set out how supplier, customer and employee data can be collected, stored, processed and transferred. This type of data is crucial to most companies’ operations, and many are willing to invest in hardware and software to facilitate these tasks. A real understanding of the compliance challenges facing potential customers can help in the development and marketing of software solutions to them. Furthermore, a recent review of the EU’s Data Protection Directive encouraged greater use of Privacy Enhancing Technologies (PETS) to allow consumers to better manage their identities and information online.

The Safe Harbor Framework enables U.S. companies to access personal data from the EU.

The Directive also restricts transfers of personal data outside of the EU, specifying that such data can only be exported if its “adequate” protection is provided for. The U.S. mix of self-regulation and sector-specific privacy legislation (the U.S. does not have a comprehensive privacy law, relying on sectoral laws instead to cover such sensitive areas as medical and financial information) is not considered “adequate” by the European Commission. Therefore, to ensure the continued trans-Atlantic flow of business-critical data, the United States Commerce Department negotiated a framework with the EU called Safe Harbor to enable international data transfer from the EU to the United States. The framework allows those U.S. companies that commit to a series of data protection principles, and who publicly state that commitment by self-certifying on the Safe Harbor web site, to receive personal data from the EU. CSEU has worked closely with EU and Commerce Department officials to establish and maintain this framework to facilitate business.

Editor’s Note: The Safe Harbor framework and other options open to U.S. companies that need to export personal data from the European Union are explained in the report, Transferring Customer and Employee Data from the EU to the U.S.

eVAT

EU national VAT rates vary between 15-25%.

Since July 2003, U.S.-based companies selling downloadable software to private consumers in the EU have had to collect Value Added Tax (VAT) on those sales and reimburse the VAT to a local tax authority in the EU. The tax is levied according to where the consumer is based. With EU national VAT rates varying from 15-25%, the price hit varies per tax jurisdiction. Under a special scheme provided by the legislation, non-EU based suppliers can choose which national tax authority they want to deal with for VAT purposes. They must register with that authority and provide regular VAT returns detailing the sales made in each Member State.

Although VAT is not a tax on business, there are nevertheless compliance costs involved with administering it. CSEU reported to U.S. firms when the eVAT was announced and also recently wrote a new report on how the implementation is working. In addition, our Commercial Specialist has regularly provided counseling on the details of eVAT to U.S. firms.

There are several types of research available through the CSEU. Our most comprehensive report is the Country Commercial Guide that presents an overview of the EU’s commercial environment. This guide is updated annually; a new one will be completed in January. In addition, we provide short, timely reports on regulations affecting U.S. companies and information on EU-funded projects and programs in which U.S. firms can participate.

CSEU also offers a database on its web site to help U.S.-based companies identify European public procurement opportunities. It features all current public procurement tenders issued by all national and regional public authorities in the 25 Member States of the European Union, plus four other European countries, that are open to U.S.-based firms under the terms of the Government Procurement Agreement. The database covers approximately twenty industry sectors, is updated twice a week and is easy to use with a range of search options. It also contains tenders for public procurement contracts relating to structural funds.

Editor’s Note: All of these reports and tools are available at no cost to U.S. firms.

FP6 is allocating 15% (or € 2.2 billion) of its total budget to SME applications for project funding.

U.S. companies with a European base can qualify for the European Sixth Framework Program for Research and Development (FP6) funding, available until 2006. As explained in LISA’s guide, EC Rider – How European Funding Can Help SMEs, FP6 is allocating 15% (or €2.2 billion) of its total budget to SME applications for project funding, supposedly the largest such handout ever for SME research and innovation worldwide. The focus for this Programme is on next generation, high-tech companies wishing to research outside the box, rather than on near-market productization. Many companies get involved for strategic reasons, as the research work and results often feed into European Commission policies and legislative proposals, as well as regional standards initiatives. Involvement in FP6 programs also provides companies with opportunities to develop cooperation with EU-based companies at the grass roots level that can provide the basis for sustained commercial relationships in the mid- to long-term.

Editor’s Note: For more details on all types of EU funding, please click here.

The U.S. Commercial Service has representatives across Europe who specialize in providing market insights, leads and contacts in the various EU Member States. The Show Case Europe initiative brings together their experience, skills and resources to provide clients with a pan-European view of the region's markets. To find information on Commercial Service representation in other EU Member States, please click here. Within the U.S., the Commerce Department has an extensive network of Export Assistance Centers to help U.S. companies develop or expand their exports of goods and services. To find the one nearest you, please click here .

Transatlantic Business Dialogue (TABD)

CSEU also supports broader efforts to strengthen transatlantic economic ties through ensuring that the private sector plays an important role in this relationship. In a move to strengthen the transatlantic relationship, the U.S. Commercial Service, the U.S. State Department and the Office of the United States Trade Representative are leading a new initiative to forge a more seamless transatlantic marketplace. This initiative grew out of the work of the Transatlantic Business Dialogue (TABD). It encourages dialogue among all economic stakeholders and government officials in order to generate fresh ideas about deepening our transatlantic economic ties.

In 2003, Commerce Secretary Don Evans, in conjunction with the European Union and leading business officials, helped to re-launch and reinvigorate the Transatlantic Business Dialogue (TABD). The TABD is comprised of business leaders from U.S. and European companies, and develops ideas and promotes solutions to further U.S.-EU economic relations. The Commerce Department serves as the TABD’s liaison to the U.S. Government. At this summer’s U.S.-European Union Summit in Ireland, U.S. and European Union leaders acknowledged the vital role of economic stakeholders in developing innovative ideas to enhance transatlantic economic integration. They agreed to call upon all interested U.S. and European stakeholders to engage in a vigorous discussion of concrete ideas to give the transatlantic economic relationship new impetus.

We Need Your Input

The U.S. Government, through the Office of the U.S. Trade Representative, is formally seeking written public input on ideas for strengthening transatlantic economic ties. The objective is to stimulate concrete ideas for specific government action that can enhance U.S.-EU economic integration. Examples include, but are by no means limited to:

• Where are there opportunities for further and deeper cooperation?
• How can the U.S. and EU do more to advance competitiveness and innovation?
• What should be done to better mesh U.S. and EU regulatory approaches?
• What can be done to further liberalize transatlantic trade in services?

The input of LISA members is important, and we strongly encourage your participation. Written comments are welcome through November 15 and should be submitted to the U.S. Trade Representative. For further information about the whole initiative and how to participate, please click here. If you miss the November 15 deadline, but you have an issue to be considered, please contact Rosemary.Gallant@mail.doc.gov. This is an effort that the U.S. Government will be working on for the next several months.

CE Marking

CE marking is a big issue for many exporters to the EU, but it is impossible to choose one single effective route because there are several elements that play a role in the process. For example,

• What is the product?
• Is the manufacturing process based on a certified quality system?
• Is the manufacturer comfortable handling self-certification?
• Can the manufacturer self-certify?
• What are the risks for a consumer when using a given product?

Some products, such as non-electric toys (puzzles, etc.) are fairly easy to self-certify. Other items, such as medical implants, require outside testing and certification. For many others, self-certification is possible, but time-consuming. Companies may find it more efficient and cost-effective to work with consultants to obtain their CE marks. Thus, it is impossible for us to recommend the single “best” route to certification. A look at the CE mark’s requirements and process may be helpful.

U.S. manufacturers may wonder why their products, tested and certified in the U.S. to ensure safety and protection of the domestic consumer, have to be retested and re-certified for the EU market. The answer is simple: the EU and the U.S. have entirely different regulatory systems. In the EU, regulators anticipate and address safety concerns by adopting various types of technical legislation, of which the most commonly applied one is the requirement for CE marking.

To sell products on the EU market, U.S. exporters are required to apply CE marking whenever their product is covered by specific product legislation. The range is wide and includes so-called horizontal risks, such as electromagnetic compatibility, as well as product-related risks that apply to such items as toys, pressure equipment, gas appliances, machinery, medical devices, personal protective equipment, etc. Directives cover essential safety, health and environmental requirements. While the majority of the directives allow the manufacturer to self-certify, certain high-risk products require the involvement of an accredited test laboratory known as a "notified body" (based in the EU) or a "conformity assessment body" (based in the U.S.).

Manufacturers are best advised to carefully weigh the benefits of access to a vast market of countries accepting CE marking against the time and money required for the certification process. Unfortunately, there is no free, quick way for U.S. exporters to be educated before starting the certification process. The successful exporter needs to check all relevant directives, comply with the requirements, perform the necessary tests and proceed through CE marking.

Editor’s Note: For more details on CE marking, please click here for a list of very useful web sites. You can also check out the National Institute of Standards web site, and An Update on the EU’s In-Vitro Diagnostic (IVD) Directive.

Don’t Hesitate to Contact Us

We encourage you to check out all of our services by clicking here. You are welcome to contact any of our staff with specific issues that are not covered on our web site. And don’t forget, we need your input for the TABD.

Rosemary Gallant is the Commercial Attaché at the U.S. Mission to the European Union. Her previous postings with the U.S. Foreign Commercial Service of the U.S. Department of Commerce have included Shanghai, Hong Kong and Taipei. She wishes to thank all of the staff of CSEU for their contributions to this article. You can reach Gallant at Rosemary.Gallant@mail.doc.gov.