The enlargement of the European Union has led to a tremendous amount
of economic reform in the Central and Eastern
European countries, which, in turn, has provoked some beneficial changes
in the 15 older EU member states. In some areas, the new EU member
states have not only set a strong example for their
European partners, they have also aroused a good deal of interest in
the United States. A number of American business leaders
are asking why the United States does not have a low flat tax like
Slovakia or lower corporate taxes like some of the other new member
states.
The success of EU enlargement bears out America’s belief that
a strong and united Europe is important for the prosperity and security
of the United States, a point
emphasized by President George W. Bush at the latest U.S.-EU summit
meeting
in June. The U.S. interest in a united Europe is equally strong in
both political and economic terms. So it is very important that we
continue to have very frank and
open dialogues about what needs to be done for our relationship to
continue to be successful.
The entry of the ten new member states into the European Union in May
2004 has been tremendously beneficial for U.S. companies and industries.
U.S. exports to the new member states have grown by an average of 26
percent, and there has been particularly impressive growth in Lithuania
(81 percent), Slovenia (37 percent), and the Czech Republic (22 percent.)
Particularly notable have been sales of iron and steel to Slovenia,
agricultural goods and chemicals to the Czech Republic and meat products
to Lithuania.
The precise development of this new business has been a little hard
to track because the new members accomplished so much in the way of
tariff reductions and economic reforms well before their actual date
of accession. The process was many years in the making, and U.S.
companies took note of it early on. Now, we are taking note of other
opportunities that have been created, and we
believe this is only the beginning.
There are still tremendous business opportunities available. An enormous
amount of privatization has yet to take place, and there are certainly
still some significant areas where other improvements can be made.
We will continue
to discuss these issues with interested countries that want to add
to their
competitive advantage.
“Countries that actively seek competitive advantage will have
great success”
Intellectual property rights are something that we need to spend a
great deal of time discussing. As former Secretary of Commerce Donald
Evans used to say, “Capital is a coward;” companies are
only going to invest where they feel comfortable and believe that their
investments and innovations will be protected. As a former global CEO,
the current Secretary, Carlos Gutierrez, is also extremely focused
on this issue. When we see the potential of some countries taking a
more aggressive
approach than required by Brussels, whether in pharmaceuticals or software,
it opens up opportunities.
A lot of American companies,
particularly those involved in pharmaceuticals, are asking where the
best
investment opportunities are in Europe, and where there is the least
amount of regulation. It is not the Department of Commerce’s
job to tell them which country to go to only to identify where
the problems and opportunities exist. But I find that, especially with
pharmaceuticals, many European health ministries just want to comply
with EU regulations, rather than investigate what they can do to make
their countries more competitive in attracting new
investment.
Talking about investment to a health minister is not the easiest conversation,
as their focus is obviously very different from that of economic or
trade ministers. But countries that actively seek to create competitive
advantages will have a great deal of success. Unfortunately for Europe,
a lot of American companies
ultimately decide to make their investments in the United States, in
Ohio or in South Carolina. That is obviously good for the United States,
because it means that we continue to add to our jobs, our growth, and
our productivity. It means, however, that Europe loses out, because
these companies were looking for opportunities there, but ran into
difficulties with the non-tariff barriers, such as
regulations.
While the new EU member states have made great progress, we look
forward to them making their voices heard even more loudly in Brussels
in the future. We hope to hear more
of their ideas and see their proposals taken up in EU policies and
decisions, because we believe very much that their presence will continue
to strengthen a united Europe. When Romania and Bulgaria join the European
Union in 2007, the influence of the new member states in Central and
Eastern Europe
will increase further in EU decision-making.
Eric Stewart is Deputy Assistant Secretary for Europe, International
Trade Administration,
U.S. Department of Commerce. He directs activities on trade, commerce,
compliance and investment policies for 50 countries, including Russia
and the Newly Independent States. He was previously Chief of Staff
to Assistant Secretary for Market and Compliance William H. Lash. Before
that, he served as Director of External Affairs for the telecommunications
company Ameritech/SBC. He was Political Director of the National Federation
of Independent Business (NFIB/Ohio) representing more than 36,000 small-business
owners.
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