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Continental consolidation.

A United European Market Presents Sales Opportunities For Arkansas' 800 Exporters

Arkansas exporters will have enhanced trade opportunities with Europe as economic unification spreads across the continent.

That was the message brought to Little Rock earlier this month by Andreas Van Agt, the European Community's ranking envoy to the United States.

The European Community is made up of Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom and Germany.

"By the end of next year, there will be a single market for the 12 member countries," says Van Agt, a native of the Netherlands. "There will be a free circulation of products, services, capital and persons. And these changes will mean even more for Americans who have been doing business successfully in Europe ... That market is a promise and an opportunity for you."

Except for agricultural products.

Some agricultural trade barriers will remain in place for years, according to Van Agt. However, he believes a 35 percent reduction in European farm subsidies is possible during the next five or six years.

Small European farms can't compete with larger U.S. operations without subsidies, Van Agt says. Subsidies, tariffs and other government actions keep many of the 10 million EC farmers from being overwhelmed by the output of America's 3.4 million farmers.

"What we fear is a social disaster," Van Agt says.

Van Agt spoke to a joint meeting of the World Trade Club and the Little Rock Committee on Foreign Relations.

Van Agt, who has served as the EC ambassador to the United States since January, offered candid assessments of the economic and political changes that are transforming Europe.

Van Agt was the ranking EC official in Japan from 1987-89. Prior to his work with the EC, Van Agt held key posts in the Dutch government, serving as minister of justice (1971-77), prime minister (1977-82) and minister of foreign affairs in an interim cabinet (1982).

Fletcher Morgan, sales and marketing manager for American Cedar Inc. at Hot Springs, says U.S. manufacturers "had better wake up or they will be |left~ at the starting gate."

An estimated 800 Arkansas companies export products, and experts believe the time is ripe for more to participate in the international market.

Europe is America's biggest trading partner with $200 billion in annual commerce. The flow of goods has increased as trade barriers gradually have been reduced. An estimated $20 billion U.S. trade deficit in 1986 has been transformed into a projected $12 billion trade surplus with Europe in 1991.

The European unification movement will bring down barriers between member countries without increasing trade restrictions on the outside world, Van Agt says.

"Some people think the European Community can only abolish internal barriers by making higher barriers |for~ outside countries, but that is a misunderstanding," he says. "Something historic is happening ... that is going to change the face of Western Europe and surrounding countries. And that will have particularly positive consequences for the United States."

One of the next major changes for exporters will occur next year when the bureaucratic headache of dealing with 12 sets of rules disappears.

If an Arkansas company is licensed to do business in one of the EC countries, it can do business with other member countries as well without extra paperwork.

Countries such as Norway, Iceland, Sweden, Finland, Switzerland and Austria are expected to soon join the unification movement. There is heavy pressure for neighboring countries to become EC members as soon as possible. Tardiness in qualifying for EC membership could prove economically damaging and politically embarrassing.

Agreements also are in place for Eastern European countries such as Czechoslovakia, Hungary and Poland to join the EC once they have rebuilt their economies and overhauled their political systems.

Instability in Yugoslavia and the splintered Soviet Union have left political and economic question marks hanging over those two former bastions of communism.

"An indispensable part of an economic reform plan is a clear distribution of power," Van Agt says.

Following years of negotiations in Western Europe, change is occurring at a furious pace. The EC agreed to establish a single currency and central bank during recent meetings in the Netherlands. The European currency unit will become the standard monetary exchange by Jan. 1, 1999.

"I thought |Van Agt~ was being overly optimistic about how quickly it will happen," says W.A. "Rob" Robinson, president of IQ International Inc. of Little Rock.

How did others react to Van Agt's glimpse into the future?

"The situation is fluid there, especially in the countries |that~ aren't members yet," says Vernon Markham III, president of Marco International of Little Rock, an export trading company that opened four years ago. "... You get the message that no matter what Great Britain does, the process |of change~ is inexorable."

Van Agt predicted Great Britain's response regarding a central bank and a single currency: "The British could block the whole thing with a single 'no' vote, but they won't because of the dire political consequences."

Ever the diplomat, Van Agt had good things to say about Arkansas, the 25th state he has visited since arriving from Europe.

"It's very useful to get out in the country to visit," Van Agt says. "There's a temptation to hang around Washington."

Van Agt noted the large European business investment in Arkansas, especially Little Rock. He believes the amount of European investment "is bound to have an impact on the decisions of others. If they come to the conclusion that Little Rock is a good place to do business, the |international perception~ is that it |is~ a good place for others to do business."

In 1976, Arkansas was one of the first states to open a foreign trade office in Brussels, Belgium, headquarters for the European Community.

"That shows a lot of foresight," Van Agt says of the foreign marketing effort administered by the Arkansas Industrial Development Commission. "... Arkansas has a lot of experience with Europe that is not equaled by other states. Arkansas is better positioned to take advantage of the rapid changes in Europe."

In some cases, export opportunities won't be reciprocated on this side of the Atlantic Ocean, the envoy claims.

"American banks licensed in one EC country will be allowed to |do business~ all over Europe," Van Agt says. "The opportunities are vastly better for banks going to Europe than vice versa because of the sadly fragmented U.S. market caused by interstate restrictions."

Why aren't Europeans complaining more about this alleged one-way street of opportunity?

Van Agt will only say, "There is no question of discrimination ... In other words, you are treating our banks as badly as you treat your own."

Location, Labor And Eagerness

Little Rock Named One Of The Top 10 Cities For International Companies

Little Rock made the list when World Trade magazine recently published its second annual "Top 10 Cities For International Companies."

The other nine cities were Louisville, Ky.; Orlando, Fla.; Memphis, Tenn.; Norfolk, Va.; Portland, Ore.; Raleigh, N.C.; Sacramento, Calif.; San Antonio, Texas; and Salt Lake City.

World Trade's panel of business, university and government leaders judged cities on the basis of five criteria:

* Access to international markets.

* International orientation.

* Organized public and private support for international business.

* General business vigor.

* Education.

This is an excerpt of what the publication said about Little Rock and Arkansas:

"Home to British Aerospace and France-based |Falcon~ Jet Corp., Arkansas already knows Europe. Now the state is building ties to the Pacific Rim.

"Arkansas' Oriental adventure has been aided by an unlikely ally: Japan's Ministry of International Trade and Industry will spend $100 million boosting trade between Arkansas and the Far East.

"Part of that will pay the salary of a Japan External Trade Organization adviser stationed in Little Rock to work with current and potential Pacific Rim traders.

"On the domestic side, the city capitalizes on its geography. Its position at the crossroads of major highways and as a stop on the Union Pacific and Southern Pacific rail lines links Little Rock to U.S. and offshore markets.

"On the balance sheet, |Arkansas~ posted 322 manufacturing expansions in 1990 -- not exactly boom times by the standards of the 1980s, but steady enough.

"What's more, the city's wage rate runs about 80 percent of the national average.

"Workers are skilled -- trained and retained in local vocational and technical programs.

"The University of Arkansas at Little Rock's School of Engineering Technology and the Graduate Institute of Technology work with the business community on biomedical and electronic instrumentation engineering.

"Little Rock's biggest draw?

"Location, labor and an eagerness to enter the global fray."
COPYRIGHT 1991 Journal Publishing, Inc.
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Title Annotation:Exporting Arkansas, part 2; single European market to boost Arkansas' international trade; includes related article
Author:Waldon, George
Publication:Arkansas Business
Date:Dec 16, 1991
Previous Article:Going to new heights.
Next Article:Dynamic duo.

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