While the European Union and the Euro Zone create many common features across much of Europe, cultural and market distinctions are still very common across the continent and need to be taken into consideration by proactive exporters. The varied policies to fight COVID-19 implemented by the different national governments within the European Union have produced varying results. International Monetary Fund projections call for EU growth of 4.4% in 2021 after 6.6% contraction in 2020. While the exit deal that the United Kingdom negotiated with the EU means there will not be any tariffs levied or restrictive quotas imposed, there will be a series of new customs and regulatory checks, including rules of origin and stringent local content requirements. Wisconsin firms will need to evaluate how that will affect their distribution strategies.

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 UNITED KINGDOM

While Brexit seemed to be on a slow boil for several years between the June 2016 referendum and the Christmas Eve deal struck with the EU at the end of 2020, the COVID-19 pandemic’s impact on the UK economy came on rapidly, and many forecasters are also predicting that the UK will be bouncing back faster than previously expected. The International Monetary Fund forecasts the UK will go from one of the hardest-hit Western economies in 2020 to the fastest-growing G7 country in 2022.

The UK is an attractive market for Wisconsin exporters, not only as a large and sophisticated market but also as one that is recognized for its ease of doing business–particularly for U.S. companies, with longstanding relationships, close cultural links, a shared language and strong trade links across multiple sectors. The UK’s departure from the EU will prompt UK companies to reevaluate their sourcing strategies. Similarly, Wisconsin firms will want to review their distribution and service strategies in Europe. Traditionally, Britain’s strong manufacturing base has attracted Wisconsin industrial machinery suppliers and advanced manufacturing companies, particularly those serving the aerospace, defense and security sectors. Current trends have British partners seeking out Wisconsin companies in life sciences, water technology and the service industries.

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 BENELUX

While each of the Benelux countries (Belgium, Netherlands and Luxembourg) have strong national and cultural identities, distinct languages, and different economic strengths, there are also very close ties between them, and many U.S. companies employ a regional approach when doing business in the three countries. Careful consideration should be given regarding the market differences when employing a regional strategy at a consumer and individual business level, but there are definite advantages in consolidating operations. The location and logistics infrastructure in the Netherlands and Belgium make them ideal locations for broader European distribution facilities. Luxembourg has long been a world banking, finance and insurance center. Both the Netherlands and Belgium are in the top 10 destinations for Wisconsin exports, amounting to a combined total of $800,000 in 2020. The Benelux countries all have favorable tax climates, well-educated and English-speaking workforces, and a favorable Ease of Doing Business ranking from the World Bank. (Out of the 185 countries reviewed, the Netherlands ranks 42, Belgium ranks 46 and Luxembourg comes in at 72.) Wisconsin companies active in chemical supply and high-tech sectors are especially of interest to Benelux partners, with these two sectors comprising nearly half of the goods imported by this market in 2019.

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 GERMANY

Germany is home to both reliable customers of Wisconsin exporters and some of the toughest competition. With a population of 82 million, Germany is the largest consumer market in the EU. Economically, Germany is Europe’s powerhouse, by itself constituting 21% of the EU economy–making it the largest economy on the continent and the fourth-largest worldwide. Germany’s total trade is surpassed only by China and the U.S. However, the world’s fluctuating economic situation and Brexit have had their effect on the German economy as well, leading to an economic slowdown in 2018 and 2019. Due to the effects of the pandemic, in 2020, Germany’s economic output declined for the first time in a decade. However, the outlook for 2021 is more positive.

As one of the strongest economies of the world and as the largest national economy in Europe, Germany is the top European trading partner of the U.S. Despite the current economic slowdown, Germany continues to perform well. The high number of small and midsize enterprises, many so-called “Hidden Champions” because of their world market leader positions in their respective niches, shapes the German market, which is especially known for its high degree of innovation. The manufacturing industry represents 8.5% of Europe’s manufacturing companies and generates 27% of total EU manufacturing turnover. Over 27% of German manufacturing sales come from innovative products.

Wisconsin has been called one of the most German states in the U.S., thanks to its long history of German immigration and much of its manufacturing and agricultural heritage claiming German roots. In both Germany and Wisconsin, businesses value quality and productivity, and are characterized by a strong work ethic. Despite an overall recession slowing economic growth for the German market, export prospects remain strong for Wisconsin companies.

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 FRANCE

France is one of the most modern countries in the world and is a leader among European nations. The government has partially or fully privatized many large companies, including Air France, France Telecom, Renault and Thales. However, the government maintains a strong presence in some sectors, particularly the energy, public transportation and defense industries. France is the most popular tourist destinations in the world, so the travel restrictions brought on by the COVID-19 pandemic have had a major impact on the country’s economy. France is a large market, the sixth-largest economy in the world and second-largest population in the EU. It is also the largest country geographically in the EU, with nearly twice the land mass of the UK. France holds the advantage of having the most borders with other European countries, such as Belgium, Germany, Luxembourg, Switzerland, Spain and Monaco, and shares a language with several of them, leading to a vast amount of cross-border trade. With an enviable logistics network, sophisticated consumer base and the second-strongest industrial base in Europe, France has long attracted U.S. exporters with innovative technology and services offerings.

France imports nearly $500 million Wisconsin goods every year. As a powerhouse of EU agriculture, France is a natural primary export target market for Wisconsin companies. But France also is home to world leaders that act on a global stage, from EDF (the world’s second-largest in electricity and nuclear power generation) to LVMH (the global leader in luxury goods). French businesses boast particular strength in aeronautics, defense, retail, consumer and luxury goods, building materials and construction. Having entered the French market, Wisconsin companies can often benefit from their partners’ global reach to enter new markets.

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Russian flag RUSSIA

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy to a more market-based system. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy, transportation, banking and defense-related sectors. The protection of property rights is still weak, and the state continues to interfere in the free operation of the private sector. Russia is one of the world’s leading producers of oil and natural gas, and is also a top exporter of metals such as steel and primary aluminum.

Russia is a vast country covering nine time zones. Although the country is still dependent on raw material exports, other sectors such as agriculture, mechanical engineering and automotive are gaining in importance. There is a strong need for modernization of industry and introduction of innovative technologies. U.S. exporters must be extra diligent to ensure that customers, intermediaries or business partners are not subject to U.S. government sanctions or other restrictions.

Russia has a growing market that is reliant on imports in numerous sectors, especially in machinery and industrial equipment, which constitute about half of Russia’s imports. The main opportunities for foreign companies lie in export of engineering products, tools and implements; consumer goods; and technology transfer. Generally, Russia has relatively low tariff rates. In addition, Russia has a growing middle class with disposable income.

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