While the European Union and the Euro zone create many common features across much of Europe, cultural and market distinctions still exist across the continent and need to be taken into consideration by proactive exporters. The varied policies implemented to fight COVID-19 by the different national governments within the European Union have produced varying results. The International Monetary Fund projections suggest EU growth of 4.4% in 2021 after contracting 6.6% in 2020. While the exit deal that the United Kingdom negotiated with the EU means that 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.

View detailed country information: United Kingdom, Benelux, Germany, France, Russia

 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 at the end of 2020, the COVID-19 pandemic’s impact on the UK economy came on rapidly and many forecasters are predicting that the UK will bounce back faster than expected as well. 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.

As not only a large and sophisticated market but one that is recognized for its ease of doing business, the United Kingdom is an attractive market for Wisconsin exporters. U.S. companies already have a strong position in the market due to longstanding relationships, close cultural links, a shared language, and strong trade links across multiple sectors; in addition, the UK’s departure from the EU will encourage UK companies to reevaluate their sourcing strategies. Similarly, Wisconsin firms will want to review their distribution and service strategies in Europe in light of this realignment.

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. But today, British demand is also seeking out Wisconsin companies in life sciences, water technology and the services industries.

 BENELUX

Many U.S. companies employ a regional approach when doing business in the three Benelux countries. 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 center for banking, finance, and insurance. The Benelux countries all have favorable tax climates, well-educated and English-speaking workforces, and favorable Ease of Doing Business rankings from the World Bank.

While each of the Benelux countries has its own national and cultural identity, economic strengths, and distinct language, there are also very close ties among them, and many U.S. exporters employ a regional approach. Careful consideration should be given to market differences, but there are definite advantages in consolidating operations.

Both The Netherlands and Belgium are in the top 10 destinations for Wisconsin exports, amounting to a combined total of $800.000 USD in 2020. The Benelux countries all have favorable tax climates, well-educated and English-speaking workforces, and each has favorable Ease of Doing Business Rankings 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 within the supply of the Chemicals and High Tech sectors are especially of interest to the Benelux, with nearly half of the goods imported in 2019 being attributable to these two sectors.

 GERMANY

Germany is home to both reliable customers of Wisconsin exporters and some of their 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. This makes it the largest economy on the continent and the fourth-largest worldwide. For total trade, Germany is surpassed only by China and the U.S. However, the world’s fluctuating economic situation and the Brexit deal have had their effect on the German economy, 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 10 years. However, the outlook for 2021 is more positive.

As one of the strongest economies of the world and the largest national economy in Europe, Germany is the main European trading partner of the U.S. Despite the current slowdown, Germany’s economy has continued to perform well. A high number of subject matter experts (many so-called “hidden champions” with status as world market leaders in their respective niche segments) 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 the EU’s manufacturing turnover. Innovative products account for an estimated 27% of German manufacturing sales.

As one of the strongest economies of the world and the largest national economy in Europe, Germany is the main European trading partner of the U.S. Despite the current slowdown, Germany’s economy has continued to perform well. A high number of subject matter experts (many so-called “hidden champions” with status as world market leaders in their respective niche segments) 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 the EU’s manufacturing turnover. Innovative products account for an estimated 27% of German manufacturing sales.

ITALY

The Italian economy is the eighth-largest in the world and third largest in the European Union, with a GDP of $2.1 trillion ($35,551 per capita) in 2021 according to trade.gov. Although it is the 18th-largest market for U.S. export goods, Wisconsin has seen tremendous growth in exports to Italy (an increase of 54% in 2021 alone). Many U.S. firms have opportunities and success in Italy, typically where technological, design, or price advantages exist.

 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 power, public transport, 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 the second-largest population in the European Union. It is also the largest country geographically in the EU—with nearly twice the land mass of the United Kingdom. France maintains the advantage of having the most borders with other European countries (Belgium, Germany, Luxembourg, Switzerland, Spain, and Monaco) and shares a common language with several of them, leading to a vast amount of cross-border trade. With an enviable logistics network, a sophisticated consumer base, and the second-strongest industrial base in Europe, France has long attracted U.S. exporters with innovative technologies and service offerings.

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

The views or opinions expressed here are solely those of the author(s) and do not reflect those of WEDC. WEDC is not responsible for the contents nor does WEDC guarantee the accuracy, completeness, timeliness or reliability of this information.