The new European market and the Belgian opportunities for American businesses

THE NEW EUROPEAN MARKET AND THE BELGIAN OPPORTUNITIES FOR AMERICAN BUSINESSES

THE EUROPEAN COMMUNITY (EC)

If the 20th century was the American century, the 21st century may be the European century. Europe is in transition - from cooperation to integration. It is evolving into a "new" continent.

Currently, twelve European countries are working together to form a single market known as the European Community or EC. The goal of the EC is to become more globally competitively by creating an area without internal frontiers in which the free movement of goods, persons, services and capital is insured.

The EC is often referred to as EC 1992, because the goal is to create a single European Market by December 31, 1992. The result would be the formation of the largest, richest market in the world. The annual gross product of the EC is estimated to be $ 4 trillion with a market of 325 million people. EC leadership is specifically trying to eliminate trade barriers including:

* physical barriers such as customs/border controls

between members,

* differing technical standards/product standards/financial

service regulations,

* differing excise, corporate, and value-added taxes.

Members of the European Community include: Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, The United Kingdom.

Currently, the bulk of internal market legislation has been adapted. In addition, about 900 European standards have been agreed upon, while another 800 have to be harmonized and approved by 1992. As the twelve member states work toward the creation of a unified market, a number of issues related to national sovereignty have to be resolved: a common currency, research and development, social policy, protection of the environment, and cooperation in foreign policy.

OPPORTUNITIES

The new European market will offer many opportunities for American businesses. However, existing relationships between American companies and their European counterparts will have to be redefined in order to prepare new strategies to remain competitive in the European Community.

STRATEGIES

U.S. companies are considering several key strategies in response to the new Europe:

Expand production

A clear majority of US companies surveyed (65 %) are planning to expand, or have already expanded their production and service capacity in Europe. Larger companies, and those in high-technology and other manufacturing industries, are most likely to have already implemented this strategy.

Merge/Acquire/Joint Venture

A decisive 58 % of companies surveyed are planning to merge, acquire or enter into a joint venture with a European partner, or have already done so. Companies in the transportation, high-technology and other manufacturing sectors were the most likely to have already formed such an alliance.

Distribution

Nearly half of the respondents have changed, or plan to change, their current distribution arrangements in Europe.

BELGIAN ASSETS: the BETZ case

When US-based BETZ LABORATORIES decided to consolidate its European activities, there was only one question: where to establish the new EC headquarters? Betz had representatives throughout Europe and manufacturing plants in Belgium, Italy and the United Kingdom. The plants could be maintained - most Betz chemicals sold in Europe are produced there - but management had to be consolidated. Betz undertook a detailed site study that eventually narrowed down the possibilities to Belgium, France and the United Kingdom. Belgium, says Carlo della Roca, Director of European Affairs, was the hands-down winner. Geography was the major reason. Betz liked Belgium's central location and easy access to European markets.

SPECIAL TREATMENT FOR EUROPEANS DISTRIBUTION

CENTERS

Belgium may indeed be called the distribution hub for the years following the completion of the European internal market. A favorable tax regime is granted to companies which decide to locate their distribution center in Belgium. They pay a corporate income tax rate of 39 % (soon 38) on only five percent of operating expenses. They may also qualify for full tax exemption under Belgium's Double Taxation Treaties. Additionally, regional governments can cover up to 21 percent of eligible investments through capital grants and interest rebates.

[Tabular Data Omitted]

COPYRIGHT 1991 Embassy of Belgium
COPYRIGHT 2004 Gale Group