Across the Pond

Across the Pond

INTERNATIONAL TRADE by Francis X. Gilpin | Associate Editor

John T. Lumborg has some advice for Florida business owners looking for new markets to conquer, especially if the United States is becoming saturated with your product.

"Europe is a very American product-friendly area," says Lumborg, whose job is to increase U.S. technology exports to Germany and neighboring countries.

An added incentive for exploring trade opportunities within the European Union is the fact that the euro remains stronger than the American dollar, says George Martinez, director of the U.S. Department of Commerce's Tampa Bay Export Assistance Center. With fewer trade barriers than in the past, American goods are price-competitive with many of the same products made in EU countries.

Yet, in dollar volume, only three of the 25 biggest recipients of Florida goods shipped abroad in 2005 were in Europe, according to the Commerce Department. Latin American trading partners, such as Colombia, Mexico and Venezuela, dominate the list.

Lumborg, a Commerce Department official stationed in Berlin, recently visited Florida. He took a group of Gulf Coast tech and other business executives on an economic tour of Europe without any of them leaving a Largo meeting room.

The good, the bad and the average

The trans-Atlantic tech trade facilitator seemed to split the nations of Europe and the former Soviet Union into three categories, based on their willingness to accommodate American imports.

There were nine in the very-receptive category. Those included Ireland, where tax laws have become so favorable to American multinational corporations that Microsoft Corp. licenses much of its intellectual property to subsidiaries based on the Emerald Isle. But the tech influx has driven up housing costs in Ireland, Lumborg says.

The Netherlands also aggressively promotes software development, Lumborg says. Poland is one of the fastest-growing markets for information technology in Europe. And the Scandinavian nations - Denmark, Finland, Norway and Sweden - have more computer-literate citizens with higher incomes than most Western countries because of their policies encouraging wealth redistribution.

In the middling category, Lumborg placed countries that have lots of trade potential but are less attractive for other reasons. Germany, the biggest consumer market in Europe, has nonetheless been burdened with slow growth so far in the 21st century. Likewise in France and Italy.

Spain is another big IT market, but Lumborg says the country has rampant software piracy. Switzerland is full of rich trendsetters who covet the latest digital gadgets. But the Swiss don't belong to the EU, and they speak a lot of different languages, with English not usually being one of them, he says.

Turkey is trying desperately to get into the EU. Consequently, the Turks are far more open to American business partnerships. But the country has a strong Muslim influence that occasionally flares into hostility toward the West, according to Lumborg.

'Wild West' and the rest

Lumborg warned the Gulf Coast tech executives specifically about four countries. Leading the way was France.

"It's a difficult market," says Lumborg. "Even the French find it difficult."

The Russian market is tempting because of sheer size. "Who wants to ignore 143 million people?" says Lumborg. But following Russian customs too closely could expose American businesses to the federal Foreign Corrupt Practices Act.

"It's not what you know, but who you know," says Lumborg. "You have to have somebody who knows his way around the markets there, how to get things done."

Lumborg all but declared payoffs to be common in Russian commerce. "It's a fact of life," he says. "There's no way around it."

Serbia, which Lumborg called "the wild West," and the Ukraine are in serious need of political reform before they attract legitimate foreign investment, he says.

And in the EU, American companies will find annoying regulatory obstacles that might remind them of home. Two recent edicts from Brussels require companies to put up guarantees that they will recycle all computer hardware they sell within the EU. Unfortunately for vendors, Lumborg says, each of the 25 EU states is interpreting the regulations differently.

Skirting the vendor registration isn't a good idea. The registry of recycling companies is open to public inspection. Competitors make sure everybody has signed up and paid their guarantees, he says.

"For many companies, especially small- to medium-sized companies, exporting can seem problematic," Lumborg told the Gulf Coast executives. "Foreign languages, strange terms, strange money, strange ways and it might cost more money. Surprisingly, though, there are many ways to do this that are not expensive and are reasonably easy to do."

INTERNATIONAL ASSISTANCE

John Lumborg, a U.S. Commerce Department official stationed in Berlin, recently spoke to a group of Gulf Coast executives about doing business overseas. He suggests American business owners visit one of his agency's Web sites, www.export.gov, for details about issues such as tariffs. The Commerce Department can also make introductions for newcomers in foreign commercial centers.

"When we say we're from the government and we're here to help you," Lumborg says, "it really is true."

Florida's top 25 export destinations

Trading partner 2003 2004 2005

Brazil $2,537,014,470 $2,904,957,578 $3,059,257,584

Canada $2,368,526,713 $2,499,648,721 $2,821,451,185

Venezuela $775,775,806 $1,499,894,132 $2,070,861,930

Mexico $1,814,458,344 $1,795,016,816 $2,024,613,617

Colombia $1,017,724,520 $1,104,024,641 $1,291,137,924

Dominican Republic $1,059,211,029 $1,042,381,874 $1,134,640,305

United Kingdom $761,544,903 $984,271,630 $1,088,867,727

Chile $636,961,659 $736,890,673 $955,854,826

Argentina $451,047,551 $654,231,273 $871,340,588

Japan $745,765,069 $831,496,658 $791,149,660

Bahamas $523,779,306 $561,040,298 $789,460,296

Netherlands $407,243,877 $671,527,887 $788,601,514

Germany $499,383,269 $636,858,387 $762,478,665

Paraguay $372,714,194 $477,398,970 $718,648,514

China $649,473,786 $544,653,469 $690,428,355

Guatemala $595,878,466 $602,740,149 $629,893,289

Costa Rica $638,536,703 $591,180,962 $562,695,486

Ecuador $435,644,780 $473,159,677 $539,871,052

Peru $428,459,318 $462,454,800 $523,696,433

Australia $318,713,643 $464,917,623 $482,425,094

Saudi Arabia $138,064,905 $366,872,030 $463,066,646

Panama $339,303,754 $368,176,520 $424,074,984

Honduras $358,304,577 $445,484,746 $422,434,531

Jamaica $361,274,010 $397,771,532 $398,915,316

El Salvador $362,791,189 $414,298,745 $391,875,431

World total $24,953,413,564 $28,981,515,202 $33,377,054,012

Source: U.S. Dept. of Commerce