The USA trade bonanza
The United States of America (US) is the economic powerhouse of the world, with its largest and richest consumer market. Last year marked the 10th anniversary of the Australia-United States Free Trade Agreement (AUSFTA), which came into force in January 2005.
The United States of America (US) is the economic powerhouse of the world, with its largest and richest consumer market.
Last year marked the 10th anniversary of the Australia-United States Free Trade Agreement (AUSFTA), which came into force in January 2005. Two-way investment has more than doubled since, growing from $642 billion in 2004 to more than $1.3 trillion in 2014. Two-way trade in goods and services has also increased – from $41 billion in 2004 to more than $60 billion in 2014, making the US Australia’s third-largest two-way trading partner.
- Capital: Washington D.C.
- Population: 321,602,210 (26 August 2015)
- GDP: US$17,418.9bn
- Real GDF growth 2015: 2.5% (IMF/EIU forecast)
- Trade with Australia: Two-way goods and services trade reached $60.4 billion in 2014
- Trade rank: Australia’s third-largest two-way trading partner
Doing business in the US
- Nearly 9000 Australian companies sell or operate in the US. These mostly small-to-medium-sized businesses have found success by being smart, creative, prepared and persistent.
- Given the size and complexity of the US market, it cannot be described as ‘one’ market. Each state and region has its own purchasing habits and regulatory considerations. Many distributors only cover certain geographic areas.
- Ensure you use American spelling on materials targeted at the US market, e.g. color, not colour.
- Remember that your first price is just the starting point for negotiating. The US entity will expect several offers and counter-offers before a mutually acceptable price is reached.
- Involve a US-based lawyer to check any contract.
- Make sure you clarify what you understand to have taken place at a meeting. Americans are courteous and positive when listening to a presentation, which can give a false impression of interest (or commitment).
- Follow up. If you’ve called or emailed two or three times and haven’t received a reply, don’t assume there is no interest. Americans expect and reward persistence. It may take as many as 10 to 12 attempts to get a response.
- The majority of Australian companies doing business in the US are small operations that often have just a few employees and a limited budget. The key to success doesn’t lie in being large but in having a strong product or service and being able to clearly articulate your competitive advantage.
There are a variety of resources available to help Australian businesses enter the US market, including:
- American Chamber of Commerce in Australia
- American National Standards Institute
- US Census Bureau
- US Commercial Service
- US Consumer Products Safety Commission
- US Federal Government Information Centre
- US International Trade Commission
- US Small Business Administration.
This article was first published in Business View magazine (Summer 2015). For more articles and interactivity, download the iPad edition of Business View for free via our app, NAB Think.
More from NAB: