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EC '92 revisited.

The much-touted European Community has arrived. But there's plenty of time for associations to carve a niche in this still-unsettled marketplace.

"EC '92 WILL TAKE A DECADE TO COMPLETE, not just two more years." That prediction, made by the chief elected officer of a European trade association delegation visiting its U.S. counterpart in 1991, is coming true.

The European Community--12 nations representing a unified economic market--has officially made its debut, but the formalization of regulations and laws governing trade within this new entity shows all the signs of continuing to be a complicated, drawn-out affair--one that offers valuable opportunities for associations representing members with international interests.

As any association that has already ventured into European Community waters knows, effectively monitoring the developments in Europe is a long-term effort. It took the American Gear Manufacturers Association, Alexandria, Virginia, nearly a decade of sending delegations to Europe before its counterpart association there--known as EUROTRANS--made a visit to U.S. shores to meet with AGMA's board.

EUROTRANS members were concerned about possible market protection actions their U.S. parallel group might initiate. As olive branches, the Europeans promised greater cooperation in international standards setting, an exchange of information about European Community developments and European market statistics, and the possible development of cooperative research programs.

Europe has been and will continue to be a major focus for associations. Some U.S. associations already maintain European offices or retain representatives to represent their interests. Others make frequent trips abroad or publish special reports on European developments. Speakers knowledgeable about European Community developments continue to be in demand at association conventions.

The movement toward EC '92 began more than 30 years ago with the signing of the Treaty of Rome, which created the European Community. With the enactment of the Single European Act in 1987, the number of nations participating in the European Community grew to 12 and the "EC '92 Process" began.

To eliminate trade barriers and establish a common system of tariffs and a single European Monetary System, the Europeans created a central government in Brussels to address 282 specific proposals necessary to develop a unified market. This mountain of legislation, passed as a series of directives, caused concern for many of Europe's trading partners, including the United States.

Potential for tension

EC directives are intended to provide the framework for harmonization of laws and regulations governing such areas as safety standards, product liability laws, industry subsidies, and special incentives that affect trade within Europe. While these new regulations and programs promote trade among members of the European Community, many of these same actions can be seen either as erecting barriers or providing disproportionate advantages to European firms in international markets.

Associations are especially concerned because of the enormous role that the European market plays in the U.S. economy. While Canada is the single largest country of export for U.S. products, the European Community represents our largest export market--accounting for more than $100 billion in merchandise exports each year, with a favorable balance of trade of more than $15 billion.

Recent disagreements between the United States and Europe over wine, steel, and other products illustrate the potential for tension in our trade relations. U.S. concerns focus on aggressive government support for these and other EC industry sectors as well as restrictive procurement policies. As the European economy suffers a downturn, pressures mount for European companies to protect their own industries, possibly limiting the ability of U.S. companies to compete in one of their best export markets.

Adding to trade pressures is the uncertainty about where Europe is headed. A currency crisis in late 1992 indicates a disturbing weakness in Europe's ability to stabilize its monetary systems. The related turmoil over efforts to modify the Maastricht Treaty for a single currency union and joint security policy-making process clearly indicates major questions remain to be resolved. Additional questions concern the prospects for expansion of European Community membership to other Western European nations and the possible inclusion of Eastern European states as well--not to mention the ongoing effort to keep the unification process on track.

The continuing political and economic changes in the European Community make it even more critical that U.S. associations monitor and report on developments and offer guidance to members to enable them to make the most of this evolving trade environment. To name a few options, associations can

* use the expertise of members that have foreign subsidiaries to help gather information;

* become knowledgeable about the massive information sources provided by the federal government;

* enlist the advice and assistance of foreign consultants;

* publish special reports;

* gain the ability to provide input into the decision-making process in Brussels through lobbying activities;

* support marketing efforts; and

* organize trade study missions.

Collecting information

Monitoring developments in Europe is a natural and common role for associations, which can develop impressive information collection networks by using the European contacts of their members. For example, the Association of Home Appliance Manufacturers, Chicago, and the Gas Appliance Manufacturers Association, Arlington, Virginia, rely on members with European subsidiaries as their primary sources of information. GAMA President Reuben C. Autery regularly visits his members' European plants to discuss European Community developments.

"Testing our ideas of what we in the United States think is happening in Europe against what our members see first-hand in Europe is extremely valuable. We usually get a more accurate picture of the actual European situation for our industry," says Autery.

One of the simplest and generally cost-free approaches to gathering information is becoming knowledgeable about the wide variety of resources provided by the federal government. To varying degrees, many associations are adopting this approach. The State Department, Department of Commerce, International Trade Commission, Office of the U.S. Trade Representative, Agency for International Development, Export-Import Bank, and the Department of Agriculture are only several of the departments and agencies that monitor the European trade arena (see sidebar, "Government Information").

One of the best resources is the Commerce Department's central clearing-house for European Community information, known as the Single Internal Market 1992 Information Service (SIMIS). Individual "country desks" at the Commerce Department's International Trade Administration also track individual country political and economic events in remarkable detail. Analyses of market potential for various industries are often available. This information can be extremely specific, including lists of established distributors for U.S. products in each European market.

The U.S. International Trade Commission publishes data-packed reports, as does the Office of the U.S. Trade Representive. The National Institute of Standards and Technology publishes a 437-page directory listing organizations involved in standards activities. The Central Intelligence Agency publishes some of the best maps available and often includes excellent economic information.

Equally valuable as information resources are the many international offices located in the Washington, D.C., area. The World Bank, for example, operates a bookstore offering excellent sources of economic and political information. The British Standards Institute has offices in Fairfax, Virginia, and Germany's equivalent of Underwriters Laboratory, the Technische Uberwachung Verein (TUV), is represented by RTI, Inc., Alexandria, Virginia.

Washington, D.C.-based umbrella organizations, such as ASAE, the Chamber of Commerce of the United States, and the National Association of Manufacturers also offer resources for associations tracking international developments. NAM's international division, for example, invites key players from U.S., European, and international agencies to its frequent trade forums.

In addition to public resources, associations also may opt to contract with an international consultant to gather and analyze information. For example, the Health Industry Manufacturers Association, Washington, D.C., retains professional services in Brussels and London to track both political and technical developments. HIMA identified its European consultants through its network of members with international operations and other associations active in Europe.

Getting the word out

Dissemination of information to an association's membership is another traditional function. Many associations report the latest industry developments in their association newsletters. Other associations develop more comprehensive information sources, such as books or special monthly publications.

The American Electronics Association, Washington, D.C., publishes a monthly newsletter on European Community developments. The Information Technology Association of America, Arlington, Virginia, produces books and reports on European market trends and issues. Says Barbara Van Gorder, ITAA acquisitions editor, "These publications have an enormous advantage for our members, because the information provided is far more specific about the industry's interests than the more general publications."

Providing direct representation

The process of collecting and disseminating information about Europe is an important service for members. Some associations also believe they need direct input into the decision-making process in Brussels. (See "The European Connection," ASSOCIATION MANAGEMENT, March 1991.)

The American Electronics Association operates an office in Brussels not only to track European Community activities but also to provide an ongoing lobbying presence. The association maintains an active dialogue with senior officials in the European Commission and counterpart trade associations. "This office has given us the ability to organize the European subsidiaries of our U.S. members into an effective lobbying group in Brussels," says Brian Wynne, AEA director of international trade for Europe.

HIMA works directly with its European counterpart associations on European Community-related activities. With significantly smaller staffs, European trade associations are just beginning to develop programs typical of their larger and more experienced American counterparts. "Some of these groups are just learning to lobby the European Commission," observes Matt Gallivan, HIMA director of international programs. "We've been able to show a clear illustration of our common interests, so most are willing to cooperate with us.

"HIMA is able to offer not only professional association management expertise but also a means for developing a truly international, harmonized approach to industry regulation by bringing to the table Canadian and Japanese counterpart associations as well," notes Gallivan. "Our hope is that we will be able to develop in Europe and the rest of the world an approach to good management practices and government regulation of our industry that will set an example for use here in the United States."

A critical issue voiced repeatedly in lobbying circles is the European process of standards development, which involves testing and certification methods. The European Community is moving toward a system of CE Marks--like the UL Label and similar laboratory certifications--before permitting a product on the European market. Without a clear and uniform process--one that includes a means for mutual recognition for U.S. companies issuing these marks--exports to Europe could be profoundly affected.

The standards area is one with enormous potential for creating nontariff barriers to trade; the process is moving slowly and therefore requires constant monitoring. U.S. concerns focus on the potential lack of access and influence in the process used to establish the European standards. The decision makers in the Committee for European Normals (CEN) and similar standards groups are the Europeans, while U.S. parties have only observer status. While some associations can turn to European subsidiaries for involvement in this standards development process, their access does not always answer the concerns of American firms without European subsidiaries.

As a direct response to this situation, the American National Standards Institute, New York City, now operates an office in Brussels to monitor progress and maintain open communication with key people in the European process. ANSI also publishes a series of reports to keep members up to date.

More important, ANSI is working with the Department of Commerce to raise European sensitivity to U.S. concerns. In an ongoing series of sessions with European Community representatives and standards-writing officials, slow but measurable progress is being made in developing means for mutual recognition and cooperation in testing and certification for entry into the European market.

Promoting expositions

To a greater extent than is common in the United States, Europeans rely heavily on expositions as part of their process for making purchasing decisions. As a result, a wide variety of shows are held, many of enormous proportions. Associations can provide marketing support for members wishing to get involved in this activity.

Industry specialists at the Commerce Department's Trade Development offices maintain a list of current expositions, and several Commerce Department publications, such as Business America, summarize major shows.

Many associations organize participation in these shows for their members. Some organize pavilions, which allow several companies to use the same booth space. A pavilion reduces individual company costs and significantly raises the U.S. industry's visibility at the show. Foreign language directories, special social and press events, and other collective marketing efforts offered as association activities can further enhance an industry's presence at a show.

The Packaging Machinery Manufacturers Institute, Washington, D.C., which has staff dedicated primarily to the development of association participation in international expositions, emphasizes the importance of customized presentations.

"The trick is to be 'glocalized,'" says Andy Benson, PMMI director of market development. "That means to look at worldwide markets but from a local perspective."

Market research and guidance provided by PMMI allows members to tailor their mix of products and presentations for each show to best match the market needs and achieve maximum impact. This leverage is particularly critical in European shows, where competition from European companies can be intense.

Offering export assistance

Another vehicle for assisting members in exporting is the export trading company. An ETC is part of a government program, established in 1982, through which associations can offer members a means for obtaining government exemption from antitrust laws, allowing cooperation among companies for development of international markets.

An ETC can be a powerful tool in meeting some of the competition found in the European market, as the Outdoor Power Equipment Institute, Alexandria, Virginia, has realized in its efforts to provide members with special overseas arrangements not permissible in the U.S. market. These activities include using common sales representatives in a foreign country, preparing joint catalogs, agreeing to sell other ETC members' products, agreeing to sell two companies' products as a single unit, and allocating among ETC members those sales that result from a common bid.

Studying the possibilities

To aid members in evaluating new markets or assessing trends in old ones, some associations organize their own trade study missions or piggyback on ones organized by the Department of Commerce. (See "Not Mission Impossible," ASSOCIATION MANAGEMENT, June 1990.) Study missions offer the advantage of greater access to government officials and market leaders and an opportunity to meet and evaluate foreign competition. For example, the Association of Manufacturing Technologies, McLean, Virginia, organizes several every year.

Even with expositions, ETC arrangements, and study missions, many associations find their members hesitant--often simply because of a lack of familiarity with how to enter the export market--to enter international markets.

To serve its new-to-market companies, the Association for Suppliers of Printing and Publishing Technologies, Reston, Virginia, offers a how-to-export seminar each year. The result is a significant increase in the number of companies exporting and a parallel growth in the industry.

Trading within a unified European market promises to be complicated for years to come as leaders from the 12 European nations and the United States strive to reach agreement on the maze of regulations, laws, and programs that require modification. For associations with international interests, this uncertain period offers abundant opportunities for associations to carve meaningful niches in the evolving European market.

Rick Norment is president of Norment & Associates, Falls Church, Virginia, which specializes in international affairs and market development.

Conducting Initial Research

Here are some practical steps for associations gearing up for international trade initiatives.

* Determine what percentage of your members are exporting and what they need to support their activities. Do they need information on market trends? Do they use manufacturers representatives or distributors to sell their products? In which markets are they most interested? A simple, one-page survey often provides useful information.

* Talk with other associations to gain a sense of how they launched their international programs and what has worked for them.

* Check out organizations that offer specialized assistance. The Capital Equipment Export Council, managed by Association and Society Management International, Falls Church, Virginia, and the Environmental Technologies Export Council, Washington, D.C., monitor federal trade-promotion activities, share market development program ideas, and organize group trade missions.

* Start modestly. Remember the adage of Winston Churchill: "One does not a chasm cross in two bounds." Resist the urge to create several new programs and strategies right off the bat. And don't overcommit on a program--especially an international trade program. Your foreign counterparts will be slower to respond than you might expect.

Government Information

The federal government is a gold mine of information on export and European Community-trade-related issues. You can get a directory of the federal government's resources and export programs, published by the Trade Promotion Coordinating Committee, by calling (800) USA-TRADE.

A free, seven-page handout outlining federal export assistance programs and contacts also is available from Norment & Associates, 100 N. Washington St., Suite 312, Falls Church, VA 22046; (703) 532-2151; fax (703) 532-2188. Here is a sampling of the various agencies profiled.

* Agency for International Development. The agency disburses all nondefense foreign aid of the United States with a new focus on the formerly Communist states of Central Europe; (703) 875-1551.

* Export-Import Bank (Eximbank). The bank offers seminars, loans, and various forms of insurance and guarantees to encourage businesses to sell overseas; (202) 566-4490.

* Overseas Private Investment Corporation. The corporation provides funds, risk insurance, and other assistance for investment for clearly defined projects; (202) 457-7091.

* U.S. Trade and Development Agency. The agency funds feasibility studies of major overseas projects; (703) 875-4357.

* International Trade Administration of the U.S. Department of Commerce. Many offices within the International Trade Administration provide export assistance. They include the Eastern European Business Information Center, (202) 482-2645); Office of Export Trading Company Affairs, (202) 482-5131); Business Information Service of the Newly Independent States, (202) 482-4655); International Economic Policy Country Desk Officers, (202) 482-3022); and Trade Development Industry Officers, (202) 482-1461).

States also are often keenly interested in promoting trade for particular industries. They also organize trade missions and catalog shows that associations should make known to their members. Check the local telephone book in metropolitan areas where your members are concentrated to get the telephone number for that state's economic development agency.
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Title Annotation:includes related articles
Author:Norment, Rick
Publication:Association Management
Date:Jul 1, 1993
Words:3027
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