On this page
- Key opportunities for exporting to the United States of America
- Victorian Government support
- Advice on doing business in the United States of America
The United States of America and its economyThe United States of America (USA or US) is the world’s largest economy with a GDP of US$17 trillion in 2014, as estimated by the International Monetary Fund (IMF). It is the world’s third most populous country, with 319 million inhabitants in 2014, according to data from the World Bank.
The US is a major driver of the global economy and a world leader in relation to international trade and investment, research and development expenditure, stock market capitalisation and share of large global corporations. The IMF estimates the US currently accounts for 18.4 per cent of global GDP and has a GDP per capita of approximately US$54,000 in 2014.
Trade with the USA
The US is Victoria’s second largest export market for merchandise trade. The market is focused on elaborately transformed manufacturing items which generate high employment opportunities and greater economic benefit to Victoria. Victoria’s main exports to the US in 2014 included aircraft, meat, pharmaceuticals, vehicle parts and paper.
The US is one of Victoria’s largest service export destinations and is predominantly focused on professional services.
In recent years, the Australian dollar has reached above parity with the US dollar, impacting Victorian exports into the US. Of late, the Australian dollar has fallen to a four and half year low, creating a competitive advantage for Victorian exporters to the US.
Current and Emerging Opportunities
Key opportunities for Victorian export growth include:
- Technology (ICT)
- Defence and Aerospace
- Medical Technology
- Water Technology and Services.
Increasing productivity is an important goal of US economic policy, as the country seeks to sustain its standard of living. This requires a business environment that supports continual innovation in products, processes and management. A growing body of research suggests that US acceleration in productivity growth is reflected by underlying technology acceleration, with Information and Communication Technologies (ICT) in particular playing a substantial role.
Defence and Aerospace
The US is the largest defence market in the world and is expected to remain so, despite funding cuts to reduce the US fiscal deficit. For 2014 fiscal year, (1 October 2013 – 30 September 2014) the US defence budget was valued at approximately US$496 billion , over three times as much as China, who ranked second for defence spending with a 2014 defence budget of US$131.5 billion .
The US is the largest medical instrument market in the world and continues to grow due to an ageing population and public healthcare reform.
Demand for medical instruments and supplies in the US has grown as a result of:
- increased public and private health spending
- ageing population
- continued innovations and new product introductions.
Water-related issues are becoming more significant to the US and Australia is in a unique position to capitalise. In recent years, the realisation that the US is susceptible to significant water issues has seen all levels of government take serious consideration of the impacts of water in their communities. It is estimated that US water infrastructure needs to be upgraded over the next 15 years, at a cost of at least US$1 trillion.
Victorian Government support
The Victorian Government is building the profile of Victorian exports in the US through sustained engagement. It is elevating the scale of engagement through selecting strategic industry sectors in which Victoria has a competitive strength.
The Victorian Government undertakes its trade activities through its Victorian Government Business Office (VGBO) in San Francisco. It also has an office in Washington DC which has a focus of trade related activities in defence and aerospace. These offices are able to provide in-market intelligence and support to Victorian companies wishing to export to the US.
Doing business in the USA
When dealing with US business people, the use of Australian slang should be avoided as it may lead to confusion and misunderstanding. Ensure you use American spelling on materials targeted at the American market, eg. color not colour.
Face-to-face business meetings are an important element of doing business in the US.
In the US, business attire will vary depending on the industry you are working in, but is very important and projects the image of your company. US business people are generally quite sensitive to dress standards, so it’s wise to dress on the conservative side. A business suit is appropriate for meetings and most trade shows.
Academic credentials are not necessary on business cards. Americans will place more importance on your understanding of the market, your product, and their company. It is recommended that phone and mobile numbers on your business cards should include the International Country Code dialling details.
US tariffs are not unusually high by world standards. The US Customs Service and a number of government agencies regulate goods imported to the US.
Non-compliance may result in delays, extra costs, litigation and even prohibition.Comprehensive information on US tariffs can be obtained from the website of the US International Trade Commission.
Product liability is an issue that can cause concern for business operations in, or exporting to the US. Exporters need to assess the risks associated with their product and industry and determine the measures necessary to limit exposure to product liability lawsuits. Advice from lawyers and specialists in product liability is recommended.
A license or permit from the responsible agency may be necessary to import:
- alcoholic beverages
- animal and animal products
- certain drugs (Note: narcotic drugs are generally prohibited)
- firearms and ammunition
- fruits, nuts
- meat and meat products
- milk, dairy and cheese products
- plants and plant products
- poultry and poultry products
- petroleum and petroleum products
Product certification, labelling and packaging
The Federal Trade Commission, the Food and Drug Administration (FDA), and the Department of Agriculture all have guidelines that must be met depending on the product.
- All imported products are inspected by US Customs to ensure that appropriate packing and labelling requirements are met.
- Goods subject to different rates of duties should be packed separately unless they can be easily identified separately on the import documents. Packages containing mixed goods may otherwise be assessed for total duty at the highest rate applicable to any of the contents.
- Strict regulations govern both the distribution and labelling of any packaged consumer commodity, including the manner of specifying and indicating net contents.
- Textiles and apparel must list country of origin, fibre content, and fabric care instructions. The US Federal Trade Commission has produced a guide to help companies comply with federal labelling requirements for textiles and wool products. This guide is essential reading for companies involved with exporting textiles and clothing to the US.
- Samples of labels for some cosmetics, foodstuffs and pharmaceuticals should be submitted to the US Food and Drug Administration for approval, before shipments are made.
- Most US retailers require Universal Product Codes (UPC) bar codes, rather than the bar coding system used in Australia called EAN International. If you are exporting to the US, you are advised to join EAN Australia and then apply for a UPC.
The US Customs authorities are very precise about import documentation being provided completely and accurately. Presenting unclear or incomplete documents can cause major problems, risking delays or seizure of goods. The services of a competent customs broker is therefore strongly recommended.
Get in touch
For more information, contact George Di Scala, Director, Trade Engagement – Americas.