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Small and Mid-Size U.S. Businesses Experience More Barriers to Entry with European Union

May 19, 2014
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Republished from Amber Road’s Road to Global Trade Success Blog

The United States International Trade Commission recently released a report stating small and medium-sized U.S. businesses are disproportionately affected by certain trade barriers with the EU as compared to their larger counterparts. Several factors contribute to this discrepancy, especially cost; most expenses in international trade compliance are fixed regardless of company size and quantity of items shipped. This dramatically limits the trade process for small and mid-size companies.

Additionally, certain industries face even further challenges because of high duties, lack of conformity with standards across continents, issues with regulations and logistics, and others. The following industries are most affected:

  • Chemicals – Chemicals have comprised about 30 – 35% of exports from the U.S. to the EU over the last few years. However, tricky testing requirements and communication barriers between the U.S. and Europe cause chemicals to be one of the more difficult industries for small and mid-sized companies to export. Additionally, compliance in this industry is not only costly, but also causes companies to reveal trade secrets because of the level of detail they have to divulge about their products.
  • Apparel – There was a sharp increase in the EU duty on women’s jeans, up from 12% to 38%. However, this increase will be dropped by May 1st of this year.
  • Machinery, Electronics, Transportation, and Others – The primary causes of complications in this area are the safety certification process, the need to conform to a multitude of regulations and standards, and the complex nature of the value-added tax.
  • Agriculture – High tariffs, a multitude of regulations, and issues finding up-to-date information create major barriers to entry. Specific areas within agriculture that have been affected are corn, dried fruit, animal feed, cheese, wheat, nuts, and meat.
  • Services – Although this sector seems not to be as severely impacted as the goods sector, it is important to consider varying credentialing requirements between countries in the EU, licensing issues, lack of clarity in EU regulations, different testing standards between continents, and other conflict.

 For more information on this topic, you can read the full report here

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