Exporting to the European Union (EU) Presented by: What is the European Union? • An expansion of The European Common Market • A true Free Trade Agreement (FTA) • Created the largest “trading block” of independent countries • Unlike any of the U.S. FTAs • Continuing to expand… April 2019 Team Intrernational Trade Services 2 Member Nations (States) •Austria • Germany • Portugal • Belgium • Greece • Romania • Bulgaria • Hungary • Slovakia • Croatia • Ireland • Slovenia • Cyprus • Italy • Spain • Czech • Latvia • Sweden Republic • Lithuania • United • Denmark • Luxembourg Kingdom • Estonia •Malta • Finland • Netherlands • France • Poland April 2019 Team Intrernational Trade Services 3 Team Intrernational Trade Services April 2019 4 Future Members • 1.1 Recognized • 1.3 Potential candidates candidates that have not yet applied – 1.1.1 Iceland for EU membership – 1.1.2 Macedonia – 1.3.1 Western Balkans policy – 1.1.3 Montenegro – 1.3.2 Bosnia and Herzegovina – 1.1.4 Serbia – 1.3.3 Kosovo – 1.1.5 Turkey • 1.2 Applied but not recognized as official candidate – 1.2.1 Albania April 2019 Team Intrernational Trade Services 5 Reasons for Creating the EU • Eliminate Customs borders between member countries • Promote trade between member countries • Create a single trading block to compete with Asia and others • Protect intellectual properties • Create uniform safety standards • Promote economic development April 2019 Team Intrernational Trade Services 6 Reasons for Creating the EU (cont’d.) • Create a single currency, the euro (€) • Prevent political and military conflicts between member countries • Improve environmental efforts • Work towards more consistent laws • Reduce poverty • Create a framework for dispute resolution • And much more… Lex building of the Council of the European Union, Brussels (Wikimedia) April 2019 Team Intrernational Trade Services 7 What You Should Know About Doing Business in the EU • EU members use a single Harmonized Tariff with consistent rates of duty • VAT Rates vary by country • The Euro, which is the primary currency, is generally stronger then the dollar • There are still vast cultural differences between the members April 2019 Team Intrernational Trade Services 8 What You Should Know About Doing Business in the EU (cont’d.) • What is Landed Cost? • What is CE Mark? • How should I market my goods to the EU? • Will language be an issue? • Is there a single culture in the EU? • How should I handle terms of sales and logistics? • What else should I know? April 2019 Team Intrernational Trade Services 9 Single Harmonized Tariff • EU member countries subscribe to a single Harmonized Tariff • Bureau International Des Tariffs Douaniers (International Customs Tariffs Bureau) • Consistent duty rates • May have differing rulings and interpretations on classifications • Actual country of import may present benefits or disadvantages April 2019 Team Intrernational Trade Services 10 VAT (Value Added Tax) Rates Vary by Country • There are standard rates, reduced rates and in some cases super reduced rates • Standard rates can vary from 15 to 25% • Some countries have deferments • Should you pay VAT direct or should your customer? • Can it be recovered? April 2019 Team Intrernational Trade Services 11 The Euro • Has been fully adopted by almost all member countries and must be within specific time guidelines • A notable exception is the UK, but they do trade in euro (€) as well as BP (£) • Currently the euro is about 1.37 to the USD – This makes U.S. goods more attractive • Rates do vary April 2019 Team Intrernational Trade Services 12 What is Landed Cost? • It is the fully allocated or expensed price/cost to bring a product to the point of sale or use • It is the most important price to the buyer so it is the most important cost to the seller • There are many elements to landed cost and they can vary • A seller can help to reduce landed cost April 2019 Team Intrernational Trade Services 13 What is CE Mark? • The CE marking (an acronym for the French "Conformite Europeenne") certifies that a product has met EU health, safety, and environmental requirements, which ensure consumer safety. • Manufacturers in the European Union (EU) and abroad must meet CE marking requirements where applicable in order to market their products in Europe. • A manufacturer who has gone through the conformity assessment process, may affix the CE marking to the product. With the CE marking, the product may be marketed throughout the EU. CE marking now provides product access to 27 countries with a population of nearly 500 million. April 2019 Team Intrernational Trade Services 14 What is CE Mark? (cont’d.) • Unfortunately, there is no comprehensive list of the products that require a CE marking. • It is the manufacturer's responsibility to determine if a product requires a CE marking. • The “New Approach Directives” are documents that contain the legislation issued by the European Commission on the requirements that need to be met and procedures that must be followed in order for a particular product to be CE marked for sales in the EU. April 2019 Team Intrernational Trade Services 15 How Should I Market My Goods in the EU? • Trade Shows • Distributors • Direct Sales • Internet • Print Ads Assistance is available from the U.S. Department of Commerce Export Assistance Centers and others April 2019 Team Intrernational Trade Services 16 Will Language be an Issue? • Americans generally speak and conduct business in English • There are many languages within the EU and varied levels in regard to the use of English • Many times business is conducted in English when dealing outside the EU or with the UK, etc. • Knowledge of other languages can be very helpful and will be critical for marketing/advertising and labeling April 2019 Team Intrernational Trade Services 17 Is there a Single Culture in the EU? • Culture varies widely between countries • Understanding the culture of a country can, in some cases, be more important then knowing the language • Doing your research on both the culture of the country and the industry or companies you are targeting is extremely important • Discarding some bad “American” habits can be helpful April 2019 Team Intrernational Trade Services 18 How Should I Handle Terms of Sale and Logistics? • Most Europeans are familiar with INCOTERMS® so INCOTERMS® 2010 should be used to create a “common business language” (Note INCOTERMS 2020 are coming) • You may have to use more then just “EXW.” You need to make it as easy to deal with you as a supplier in another EU country • Use of distribution or order fulfillment centers can be beneficial • VMI (Vendor Managed Inventory) can also give you a competitive advantage April 2019 Team Intrernational Trade Services 19 Documentation Requirements • Commercial Invoices • Packing Lists • Certificates of Origin • Special Documents • Wood Packaging Material Regulations • New Wood Product Regulations • Other April 2019 Team Intrernational Trade Services 20 Payment Terms • Checking Credit • Open account • Cash in advance • Letters of Credit • Collections • Other risks Should I worry about the economic status of some member nations? April 2019 Team Intrernational Trade Services 21 What Else Should I Know? • Manufacturing Standards • Difference in electrical requirements • Food and Drug regulations • Environmental regulations • Country of origin regulations and requirements • U.S. Export Control regulations • Other April 2019 Team Intrernational Trade Services 22 What The Future May Hold • Continued economic difficulties for some Member Nations • Brexit ? • Continued expansion of members • Possible Free Trade Agreement with the U.S. • Trade disputes with non-members April 2019 Team Intrernational Trade Services 23 Helpful Websites • COUNTRY COMMERCIAL GUIDE http://export.gov/europeanunion/eustandardsandcertification /2010countrycommercialguide/index.asp • EXCISE DUTY RATES http://ec.europa.eu/taxation_customs/taxation/excise_duties/energ y_products/rates/index_en.htm • HOW THE EU WORKS http://europa.eu/about-eu/index_en.htm • EUROPEAN COMMISSION http://ec.europa.eu/index_en.htm • VAT RATES http://ec.europa.eu/taxation_customs/taxation/vat/ how_vat_works/rates/index_en.htm April 2019 Team Intrernational Trade Services 24 Conclusion Doing business in the European Union can be complex but does offer new markets and opportunities to U.S. companies. As with all international trade, “doing your homework” and being proactive will go a long way to help insure success! April 2019 Team Intrernational Trade Services 25 Thank you for attending this Team International Trade Services Program If you are in need of export or import training, consulting or auditing contact us at: Team International Trade Services Bob Imbriani 516-448-2440 [email protected] April 2019 Team Intrernational Trade Services 26.