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The United States (US) is the world's largest economy and third most populous nation.
In 2012, US GDP exceeded US$15.6 trillion, representing almost one quarter of global GDP.
The US is a key export destination for Australia and Victoria. In the financial year 2011-2012 the US was Australia's fifth largest merchandise export market and one of the most important export markets for services.
In 2011-2012, Australian goods exports to the US were valued at $9.85 billion and services exports were valued at $5.172 billion. Major exports include beef, aircraft, spacecraft and parts, alcoholic beverages, as well as tourism and professional, technical and other business services.
In 2012, Victorian goods exports to the US were worth $1.5 billion or 7% of total goods exports. The top exports were medicaments, beef, meat, aircraft parts, measuring and analysing instruments and pharmaceutical products.
Current and emerging opportunities
The Australia-United States Free Trade Agreement (AUSFTA) came into force in 2005, creating significant export opportunities through the reduction of tariffs, the increase of specific quotas, the easing of market restrictions and the streamlining of investment processes.
As the US economy recovers from the worst recession in decades there have been gains in manufacturing but continuing low jobs growth is keeping consumer spending low.
The US cleantech industry is forecast to grow strongly, focusing on scale, and despite the high Australian dollar, there are many opportunities for Victorian businesses due to many American companies holding record cash reserves.
Key opportunities for exports growth include:
- Automotive aftermarket
- Medical devices
- Water technology
- Defence and aerospace
- Food and beverage
- The world’s largest market means it is also the most competitive.
- “Time is money” – Meetings with potential customers have to count. Exporters need to be well prepared, know ROI calculations, pricing and logistical details.
- Being direct is a virtue, with persistence required to get attention. Expect to contact potential customers 7 to 12 times before getting a reaction.
- Segment the market geographically – few companies have the resources to effectively target and service the entire market.
- Know your limits – a month’s order could equal an Australian supplier’s annual production, so don’t over promise.
- Quote like other US competitors – never go in with your best price.
- Promotional material must be concise, use US measurements and paper size, and include international phone numbers and web site details.
- Attend US tradeshows. They provide you with the opportunity to observe your competitors, meet new customers and gather market intelligence on the latest market trends.
- Product liability insurance requirements need to be assessed due to the litigious nature of the US market. Seek professional advice.
- Always do background checks on potential US partners. The US is EFIC’s number one default payment market.
Regulatory and Legal Environment
Federal regulations include US Customs (tariffs, quotas), Food and Drug Administration (FDA), labelling (apparel, toys, cosmetics), BioTerrorism Act, Environmental Protection, and Consumer Safety Standards.
Most of the 50 states have different regulatory regimes (e.g. prohibited items, controlled items, consumer safety requirements).
Product certification is an important feature of the market. Most US standards are voluntary. However, some products require certification.
Registration of trademarks in the US can be done at the federal and/or state level. A registration with the United States Trademark Office can offer nationwide and international rights and protections.
US Customs laws require that each imported article be marked with the country of origin. In the case of food, cosmetics and drugs, the FDA has detailed mandatory standards as to what information must appear on labels.
Victorian Government support
The Victorian Government Business Office (VGBO) in San Francisco and its sub-branches in Chicago and New York provide in-market intelligence and support to Victorian companies.
The Victorian Government also supports Victorian ICT companies through the Plug and Play program, part of the Melbourne Australia Pavilian in Silicon Valley.