American companies are eager to sell their world-class, cutting-edge goods and services to foreign markets. First-time and seasoned U.S. exporters alike should consider joining the more than 42,000 American firms that currently export to the United Kingdom. This article discusses the unique appeal of the U.K. to our companies. It also provides a snapshot of the vast U.S.-U.K. commercial relationship, highlights of best prospect sectors there, and how the Commerce Department can help U.S. companies tap into the U.K. market.
LARGEST COMMERCIAL PARTNERSHIP IN THE WORLD
The United States and U.K. share the deepest of bonds beginning with our interconnected history, common language, strong rule of law, and mutual fondness and friendship that are separated only by an ocean. We also share the world’s largest bilateral investment relationship (valued at more than $1 trillion), which is vital to jobs growth. In fact, more than one million Americans work for British-owned companies in the United States and a million Britons work for American-owned firms in the U.K.
The United States and U.K. also share an important trade relationship. In 2014, the U.K. was the United States’ fifth-largest merchandise export market, following Canada, Mexico, China, and Japan. It is noteworthy, however, that while U.S. merchandise exports to these other markets grew between 2% to 4% in 2014, U.S. exports to the UK grew by nearly 14%.
When looking at the European Union, many think of Germany and France as the leading economic players, both with economies larger than that of the U.K. However, it is the U.K. – not Germany or France – that is the top destination for U.S. companies in Europe. In fact, in 2014, U.S. companies exported $54 billion in goods to the U.K., well ahead of our exports of $49 billion and $31 billion to Germany and France, respectively.
Thus, we are seeing a trend in which more and more U.S. companies are choosing to export to the U.K. One reason is that the U.K. has one of the most highly developed, diversified, and open markets in the world. It is also consistently placed at the top of leading global business climate and economic rankings by organizations such as the World Economic Forum and World Bank. Another reason is the strength of the U.K.’s 64 million consumers who, in 2014, had a healthy per capita gross domestic product (averaging $44,141) with the means to consume U.S. goods and services. Finally, the U.K.’s location is ideal for the more than 7,500 U.S. companies that have established operations there as a launching pad for exporting to the rest of the E.U., the Middle East, and Africa.
John Dickerman heads the Washington D.C. office of the Confederation of British Industry (CBI), a highly influential business organization in the U.K., and author of this report’s U.K. Economic Forecast. Dickerman points out that “it is true that the U.K. is an appealing place for U.S. investment because of our shared cultural, political, and economic links that are unparalleled.” However, he adds that the U.K. represents a strong choice for U.S. exporters because “it has a talented, innovative workforce, and a competitive tax regime.”
BEST PROSPECT U.K. SECTORS FOR U.S. EXPORTERS
The U.K.’s economic diversity means that American exporters in almost any industry can achieve success, particularly when the product or service is advanced and unique given the market maturity. There is a high concentration of U.S. exports to the U.K. in the aerospace, cyber security, medical device, and pharmaceutical sectors. The $40 billion U.K. aerospace industry, for example, is the second-largest in the world and employs 400,000 people. The $8bn cyber security market has a strong demand for U.S. security software, services, and appliances. The $9 billion U.K. medical device market, the third largest in Europe, has a high demand for U.S.-manufactured medical equipment in telemedicine, assistive technologies, electronic monitoring equipment, home care technology, and rehabilitation equipment.
The Commerce Department believes that these sectors will continue to offer new opportunities to U.S. companies in the coming years. It also sees a strong demand for products and services that improve productivity, including information communications technology software and services that lower costs and improve business efficiencies. The U.K.’s commitment to low-carbon targets also is driving market demand for U.S. products and services in the areas of renewable energy, energy efficiency, low carbon/green technologies, smart grid technologies, and e-vehicles.
In addition, when successfully concluded, the Transatlantic Trade and Investment Partnership (TTIP) agreement will create even more opportunities for U.S. companies of all sizes in the U.K. and throughout the E.U. market.
COMMERCE CAN HELP
The Commerce Department’s U.S. Commercial Service team at the U.S. Embassy-London promotes U.S. exports and advocates on behalf of U.S. business interests in the U.K., while highlighting the United States as the premier destination for investment and tourism. It also helps U.S. exporters to identify U.K. partners and showcase their products in the local market through a variety of customized products and services. Finally, it coordinates its trade promotion activities with other U.S. embassies throughout Europe, providing a multi-market approach in support of U.S. business. In the United States, the U.S. Commercial Service has a network of export and industry specialists located in more than 100 U.S. cities that assist small and medium-sized U.S. businesses export their products and services.
In Washington, international trade specialists provide broad policy guidance to U.S. companies as they consider exporting to the U.K. and other European markets. This includes indepth analysis of E.U. laws and directives that could impact U.S. companies’ operations in Europe, as well as ways in which a TTIP agreement would help them. In addition, our Industry and Analysis unit provides guidance to companies on particular industry sectors in Europe.
The United States and U.K. share a “Special Relationship” and, indeed, an “Essential Relationship,” as U.S. Ambassador to the U.K. Matthew Barzun has often pointed out. Our companies want to do more business with each other in the years ahead. The U.S. and U.K. governments want to create more opportunities for our exporters. The Commerce Department is excited and ready to support this goal.