United States International Trade Commission

Investigation No. 332-541

USITC Publication 4455

March 2014

Trade Barriers 

That U.S. Small 

and Medium-sized 

Enterprises 

Perceive as 

Affecting Exports 

to the European 

Union 
Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

Sandra A. Rivera

U.S. International Trade Commission

Robert B. Koopman

Director, Office of Operations

Acting Director, Office of Economics

COMMISSIONERS 

 

Irving A. Williamson, Chairman 

Shara L. Aranoff 

Dean A. Pinkert 

David S. Johanson 

Meredith M. Broadbent 

F. Scott Kieff
U.S. International Trade Commission

Washington, DC 20436

www.usitc.gov

Trade Barriers That U.S. Small and Mediumsized Enterprises Perceive as Affecting Exports to 

the European Union

Investigation No. 332-541

Publication 4455 March 2014
This report was prepared principally by

Project Leader

William Deese

william.deese@usitc.gov

Deputy Project Leader

Tamar Khachaturian

tamar.khachaturian@usitc.gov

Office of Industries

 Caitlin Blair, Laura Bloodgood, Joanna Bonarriva, Andrew David, Dennis Fravel, 

John Fry, Alberto Goetzl, Cathy Jabara, Jacqueline Jones, John Kitzmiller, Martha Lawless, 

Jeanette Leary, Katherine Linton, Brendan Lynch, Elizabeth Nesbitt, Erick Oh, Jeff OkunKozlowicki, Joann Peterson, Alison Rozema, George Serletis, Michael Stanton-Geddes,

Mihir Torsekar, Marin Weaver, and Linda White

Office of Economics

Samantha Day, Bill Greene, Aimee Larsen, and Sandra Rivera

Content Reviewers

Heidi Colby-Oizumi and Kyle Johnson

Office of Analysis and Research Services

John Stevens

Editorial Review

Peg Hausman

Administrative Support

Trina Chambers and Monica Reed

Help Desk and Customer Service Division

Debra Daniels, Shadara Peters, Mark Toye, and Sonya Wilson

Under the direction of

Sandra A. Rivera, Acting Director, Office of Economics

William Powers, Chief, Research Division
i 

Acknowledgements 

The U.S. International Trade Commission (Commission) wishes to acknowledge the 

assistance provided by the Small Business Administration and U.S. Commercial Service 

in both their Washington and field or export assistance center offices in identifying and 

inviting small and medium-sized enterprises (SMEs) to the roundtable meetings and in 

providing the facilities at which many of the roundtables were held. 

The Commission also wishes to acknowledge the assistance from the U.S. Census 

Bureau’s Foreign Trade Division in providing specially tabulated data on SME exports to 

the European Union. 

 

iii 

Abstract 

This report catalogs trade-related barriers that U.S. small and medium-sized enterprises 

(SMEs) perceive as disproportionately affecting their exports to the European Union 

(EU) relative to large exporters to the EU. Various approaches were used to gather 

information directly from SMEs and other interested parties (“respondents”) for this 

report. 

Respondents reported that numerous EU trade barriers, particularly standards-related 

measures, limit SMEs’ exports to the EU more than those of large exporters. They 

explained that while complying with standards, technical regulations, and conformity 

assessment procedures is costly for larger firms, it is potentially prohibitive for SMEs 

because many costs are fixed regardless of a firm’s size or revenue. Respondents also 

cited difficulties involving trade secrets, patenting costs, and logistics challenges, 

especially customs requirements, Harmonized System classifications, and the EU’s 

value-added tax system. Trade financing in the EU was reported to be a lesser problem. 

Besides these cross-cutting issues, the report describes many industry-specific barriers. 

Many respondents involved with chemicals and related products singled out high 

compliance costs for the EU chemical regulation, while SMEs exporting cosmetics 

expressed difficulties meeting the EU’s cosmetics directive. Respondents in the apparel 

industry highlighted the recent retaliatory increase in EU duties on U.S. exports of 

women’s denim jeans, since most affected producers are SMEs. SMEs producing 

machinery, electronic, transportation, and other goods cited a lack of harmonized 

international standards and mutual recognition for conformity assessment, as well as 

problems complying with technical regulations and conformity assessment procedures. 

Respondents in the agriculture sector reported diverse export barriers. Respondents in the 

corn, dried fruit, animal feed, cheese, and wheat industries cited high tariffs, stringent and 

inconsistent EU rules and testing mandates, non-science-based regulations (especially for 

genetically modified traits), lack of harmonization between U.S. and EU standards, and 

the EU’s protected designations of origin (PDOs). The U.S. poultry and lamb industries 

reported that they are effectively banned from exporting to the EU. 

U.S. services SMEs in the healthcare, engineering, testing, and audiovisual industries 

highlighted a lack of mutual recognition of licensing, credentials, and standards, as well 

as broadcasting and film quotas, language dubbing requirements, government subsidies, 

and intellectual property and piracy issues. 

In certain industries, respondents also provided suggestions for increasing U.S. SME 

transatlantic trade with the EU and, at times, stories of successfully exporting to the EU. 

CONTENTS

Page

Acknowledgments........................................................................................................... i

Abstract................................................................................................................................... iii

Abbreviations and Acronyms................................................................................ ix

Executive Summary....................................................................................................... xi

Chapter 1 Introduction............................................................................................... 1-1

Purpose and scope.......................................................................................................................... 1-1

Approach........................................................................................................................................ 1-2

Roundtables............................................................................................................................. 1-3

Washington, DC hearing and field hearing in California........................................................ 1-4

Letter sent to SMEs................................................................................................................. 1-4

Review of the literature ........................................................................................................... 1-4

Statistics on SME trade with the EU....................................................................................... 1-4

Organization................................................................................................................................... 1-5

Importance of the EU market and SME trade................................................................................ 1-5

Barriers to accessing the EU market.............................................................................................. 1-6

EU tariffs................................................................................................................................. 1-6

EU NTMs................................................................................................................................ 1-7

Suggested ways to enhance SME participation in trade ................................................................ 1-9

Bibliography .................................................................................................................................. 1-11

Chapter 2 Cross-cutting Trade Barriers and Issues........................... 2-1

Standards and regulations.............................................................................................................. 2-2

Different regulatory approaches in the EU and the United States........................................... 2-4

Conformity assessment procedures and the Conformité Européenne marking perceived as 

barriers to SME exports...................................................................................................... 2-6

Intellectual property issues important to U.S. SMEs exporting to the EU..................................... 2-7

Increased protection of trade secrets and regulatory data........................................................ 2-7

A unified system for EU patent protection.............................................................................. 2-8

Logistical issues, including customs, tax requirements, shipping, and distribution ...................... 2-9

U.S. SMEs encounter problems understanding, and complying with EU customs 

requirements....................................................................................................................... 2-10

U.S. SMEs highlight challenges with the transportation and distribution of products in the 

EU....................................................................................................................................... 2-12

Private and public entities assist U.S. SMEs exporting to the EU .......................................... 2-13

Finance-related issues faced by SMEs exporting to Europe.......................................................... 2-13

Longer payment terms in the EU............................................................................................. 2-14

Protection against nonpayment................................................................................................ 2-14

Payment transaction fees......................................................................................................... 2-15

v
CONTENTS

Page

Chapter 2 Cross-cutting Trade Barriers and Issues—Continued

Additional obstacles related to regulatory and legal frameworks ........................................... 2-15

U.S. government assistance..................................................................................................... 2-16

Bibliography .................................................................................................................................. 2-18

Chapter 3 Chemicals and Apparel.................................................................... 3-1

Overview........................................................................................................................................ 3-1

Chemicals and related emerging technologies............................................................................... 3-2

Trade barriers related to chemicals........................................................................................... 3-3

Apparel........................................................................................................................................... 3-12

Trade barriers related to apparel ............................................................................................... 3-13

Suggested ways to enhance SME participation in trade ................................................................ 3-14

Bibliography .................................................................................................................................. 3-16

Chapter 4 Machinery, Electronics, Electrical Equipment, 

Transportation, and Miscellaneous Manufacturing .......................... 4-1

Overview........................................................................................................................................ 4-1

Machinery and equipment.............................................................................................................. 4-3

Trade barriers related to machinery and equipment.................................................................. 4-4

Computers and electronic products................................................................................................ 4-9

Trade barriers related to computers and electronic products.................................................... 4-10

Transportation products................................................................................................................. 4-13

Trade barriers related to transportation goods .......................................................................... 4-14

Other manufactured products......................................................................................................... 4-17

Trade barriers related to miscellaneous manufactured products............................................... 4-18

Suggested ways to enhance SME participation in trade ................................................................ 4-23

Suggested policy adjustments to enhance trade........................................................................ 4-23

Suggested alternative approaches to enhance SME exports to the EU..................................... 4-25

Bibliography .................................................................................................................................. 4-27

Chapter 5 Agriculture ................................................................................................. 5-1

Overview........................................................................................................................................ 5-1

Overall EU measures affecting U.S. agricultural exports to the EU.............................................. 5-3

Product-specific barriers affecting agricultural exports to the EU................................................. 5-5

vi
CONTENTS

Page

Chapter 5 Agriculture—Continued...................................................................... 

Corn........................................................................................................................................... 5-5

Dried fruit.................................................................................................................................. 5-6

Animal feed............................................................................................................................... 5-8

Cheese....................................................................................................................................... 5-10

Wheat ........................................................................................................................................ 5-11

Nuts........................................................................................................................................... 5-12

Meat .......................................................................................................................................... 5-13

Suggested ways to enhance SME participation in trade ................................................................ 5-15

Bibliography .................................................................................................................................. 5-17

Chapter 6 Services.......................................................................................................... 6-1

Overview........................................................................................................................................ 6-1

Professional services...................................................................................................................... 6-2

Trade barriers related to healthcare services............................................................................. 6-2

Trade barriers related to engineering services .......................................................................... 6-3

Trade barriers related to testing services................................................................................... 6-4

Information services....................................................................................................................... 6-4

Trade barriers related to audiovisual services........................................................................... 6-6

Bibliography .................................................................................................................................. 6-8

Appendices

A. Request letter....................................................................................................................... A-1

B. Federal Register notices...................................................................................................... B-1

C. Calendar of hearing ............................................................................................................. C-1

D. Position of interested parties ............................................................................................... D-1

Boxes

2.1. Standards, technical regulations, and conformity assessment............................................. 2-3

2.2. The “old approach” and “new approach” in the EU............................................................ 2-5

2.3. CE marking ......................................................................................................................... 2-6

3.1. Use of biotechnology and nanotechnology in the chemical sector ..................................... 3-2

3.2. Background information REACH and the chemical industry............................................. 3-4

4.1. Restriction of the use of certain hazardous substances (RoHs)........................................... 4-7

5.1. Sanitary and phytosanitary measures.................................................................................. 5-4

vii
CONTENTS

Page

Tables

ES.1 Barriers and primary issues reported by SMEs and others, by sectors................................ x

1.1. Commission roundtable dates and locations....................................................................... 1-3

1.2. The known value of U.S. exports and the numbers of exporters, by all exports and U.S. 

SME exports, and by all destinations and the EU .......................................................... 1-6

2.1 Cross-cutting trade barrires and issues................................................................................ 2-2

3.1. The known value of U.S. exports and the number of exporters of chemicals (NAICS 

325), by all U.S. exports and U.S. SME exports, and by all destinations and the EU ... 3-3

3.2. The known value of U.S. exports and number of exports for apparel (NAICS 315), by 

all U.S. exports and U.S. SME exports, and by all destinations and the EU.................. 3-13

4.1. The known value of U.S. exports and the number of exporters for machinery

manufacturing (NAICS 333), by all U.S. exports and U.S. SME exports,

and by all destinations and the EU ................................................................................. 4-4

4.2. The known value of U.S. export and the number of exporters for computer and electronic

product manufacturing (NAICS 334), by all U.S. exports and U.S. SME exports and

by all destinations and the EU ....................................................................................... 4-10

4.3. The known value of U.S. exports and the number of exporters for transportation 

equipment manufacturing (NAICS 336), by all U.S. exports and U.S. SME export

and by all destinations and the EU ................................................................................ 4-13

4.4. The known value of U.S. exports and the number of exporters for miscellaneous

manufacturing (NAICS 339), by all U.S. exports and U.S. SME exports and

by all destinations and the EU ....................................................................................... 4-17

5.1. The known value of U.S. exports and the number of exporters for food manufacturing 

(NAICS 311), by all exports and U.S. SME exports, and by all destinations and

the EU............................................................................................................................. 5-2

viii
Abbreviations and Acronyms

ACH Automated Clearing House 

AIG American International Group, Inc.

AMS U.S. Agricultural Marketing Service 

ANSI American National Standards Institute 

APHIS U.S. Animal and Plant Health Inspection Service 

ASME American Society of Mechanical Engineers

ASTM ASTM International

BCTT Business Coalition for Transatlantic Trade 

BPR Biocidal Products Regulation 

BRC British Retail Consortium 

BRIC Brazil, Russia, India, and China

CE Conformité Européenne 

CEN European Committee for Standardization

CENELEC European Committee for Electrotechnical Standardization

CFA California Fashion Association 

CHIP Chemicals (Hazard Information and Packaging for Supply) Regulations

DON deoxynivalenol 

EASA European Aviation Safety Agency 

EC European Commission 

ECHA European Chemicals Agency

EGIF Exporters Guide to Import Formalities

ETSI European Telecommunications Standards Institute

EU European Union

FCC Federel Communications Commission

FGIS U.S. Federal Grain Inspection Service 

FSIS U.S. Food Safety and Inspection Service 

FTA free trade agreement

GAO U.S. Government Accountability Office 

GDP gross domestic product

GFSI Global Food Safety Initiative 

GM or GMOs genetically modified organisms 

HS Harmonized Description and Coding System (or “Harmonized System” )

IEC International Electrotechnical Commission

IP intellectual property 

ISO International Organization for Standardization 

ITU International Telecommunication Union

KB Karnal bunt 

LLP low-level presence 

MNCs multinational companies 

MPAA Motion Picture Association of America 

MRLs maximum residue levels

MSDS material safety data sheets 

MY marketing year 

NAFTA North American Free Trade Agreement

NAM National Association of Manufacturers 

NCGA National Corn Growers Association 

NTBs nontariff barriers 

ix
Abbreviations and Acronyms—Continued

NTMs nontariff measures 

OR Only Representative

PDO protected designations of origin 

PGI protected geographic indicators 

PRTs pathogen reduction treatments 

REACH Registration, Evaluation, Authorisation and Restriction of Chemicals 

SBA Small Business Administration 

SEPA Single Euro Payments Area 

SIEFs Substance Information Exchange Forums 

SME small and medium-sized enterprise

SOCMA Society of Chemical Manufacturers and Affiliates 

SPS sanitary and phytosanitary 

SQF Safe Quality Foods Program 

SUSB Statistics of U.S. Businesses 

SWIFT Society for Worldwide Interbank Financial Telecommunication

TBT Technical Barriers to Trade Agreement

TIB Temporary Importation under Bond 

TRQs tariff-rate quotas

TTIP Transatlantic Trade and Investment Partnership

TVWF Television Without Frontiers

USDA U.S. Department of Agriculture 

USEAC U.S. Export Assistance Center

VAT value-added tax

WCO World Customs Organization

WFD Water Framework Directive 

WTO World Trade Organization

x
Executive Summary

Although U.S. small and medium-sized enterprises (SMEs) saw their merchandise 

exports to the European Union (EU) increase from $67 billion in 2010 to $76 billion in 

2011, many SMEs report that EU technical regulations and other trade barriers limit their 

exports to the EU more than those of large exporters.

1 The EU accounted for 27–

28 percent of world gross domestic product during 2010–12 and is thus an important 

market for U.S. businesses, including SMEs.

2 As the United States is seeking to enhance 

the participation of SMEs in transatlantic trade in negotiations for the Transatlantic Trade 

and Investment Partnership (TTIP), the U.S. Trade Representative requested that the U.S. 

International Trade Commission (Commission or USITC) catalog trade barriers 

perceived by U.S. SMEs as disproportionately affecting their exports to the EU compared 

to large U.S. exporters to the EU.

3

In response to the Commission’s queries, many SMEs reported that to export to the EU,

they must meet a large number of EU technical regulations and other requirements. The 

cost of meeting these requirements is particularly high because in many cases they 

require U.S. firms to hire representatives in the EU and perform extra tests. SMEs 

contended that these rules tend to affect them more than large exporters because they

relate mainly to the approval process for the product itself; the costs must be borne

regardless of the quantity of goods shipped. Large firms have a greater volume of sales 

over which to spread these costs. Although the situation with tariffs is somewhat different 

in that the tariff paid varies directly with the value of the goods shipped, SMEs also 

perceived that tariffs affect them disproportionately.4

Other broad issues emphasized by SME respondents included the high cost of obtaining

patents and difficulties protecting trade secrets; logistics problems, especially difficulties

navigating customs; and, to a lesser extent, challenges related to finance. These are 

discussed below, along with issues specific to certain industries in the manufacturing, 

agricultural, and services sectors. Major barriers reported by SMEs and industry 

associations are summarized in table ES.1.

1 Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and 

Exporting Companies, Exhibit 7, 2013; Commission calculations. 2 World Bank, World Development Indicators (accessed November 25, 2013). As a single entity, the 

EU is also considered to be the world’s largest trading bloc. WTO, “Trade Policy Review”, 2013, 9. 3 A disproportionate effect implies that a trade measure affects SMEs more than large firms, even 

though impediments typically do not explicitly discriminate against SMEs. 4 A previous USITC report also recognized that high tariffs can cause a disproportionate effect on 

SMEs in an industry in which tariffs are higher than average and SMEs account for most of the industry’s 

exports. USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6-15. 

xi

 
TABLE ES.1 EU Barriers and primary issues reported by SMEs and others, by sectors

Barrier Primary issues reported by SMEs Sectors affected by barrier

Registration, Evaluation, 

Authorisation and Restriction

of Chemicals (REACH)

High costs of compliance, responsible EU 

agency difficult to communicate with, time 

consuming, required EU representation, 

required to reveal too much about products, 

evolving lists of restricted substances, 

documentation, and other issues 

Chemicals, apparel, machinery and

equipment, computers and

electronics, transportation 

products, miscellaneous 

manufacturing

Biocidal Products Regulation High costs of compliance, applies to each 

component instead of overall product

Biocide chemicals

Water Framework Directive High costs of compliance Chemicals

Cosmetics Directive High costs of compliance, separate approvals 

required for minor product differences (e.g.,

different colors), required to hire expensive 

consultants/testing services in EU

Cosmetics

Antidumping/countervailing 

duty orders

Increase costs Biofuel, including bioethanol and

biodiesel

High tariffs Increase costs Apparel and processed food

Safety of machinery directive Increase costs, very broad in scope but other 

directives still apply

Machinery and equipment

Pressure equipment 

directive and regulations for 

classifying high-efficiency 

particulate air (HEPA) filters 

Increase costs, difficulty in proving compliance Machinery and equipment

ATEX (atmospheric 

explosives) directive

High costs of compliance, different member 

states certify equipment according to different 

standards, incompatibility with equivalent U.S. 

regulations, outside certifications not allowed

Machinery and equipment

Restriction on the Use of 

Certain Hazardous 

Substances (RoHS)

Increase costs, no equivalent U.S. regulation, 

lengthy certification process

Chemicals, machinery and

equipment, computers and

electronics, transportation products

Waste Electrical and

Electronic Equipment 

Directive (WEEE)

High costs of compliance, lengthy certification

process

Machinery and equipment, 

computers and electronics

Excessive rights of original 

trademark owner

Block sales of certain original and used 

equipment with trademarks

Computers and electronics

Automotive parts certification 

requirements

High costs of compliance, time consuming, 

requirements vary by region

Transportation products

Lack of harmonization in 

design standards

Increase costs, standards lack transparency, 

rules vary by region, prevent SME exports to 

EU

Transportation products, 

miscellaneous manufacturing

EU environmental 

regulations requiring 

materials tracking

Increase costs, time consuming Transportation products

Standards and technical 

regulations in aviation

High costs of compliance, European Aviation 

Safety Agency difficult to communicate with, 

lengthy and uncertain approval times, some 

countries require separate certification

Aircraft, space equipment and parts

xii
TABLE ES.1 Barriers and primary issues reported by SMEs and others, by sectors—Continued

Barrier Primary issues reported by SMEs Sectors affected by barrier

Obtaining CE mark High costs of compliance, time consuming, 

product approval impedes innovation, multiple 

CE marking requirements for all directives that 

apply to the product, audit requirement for 

medical devices too broad, difficulties in 

finding facility to provide CE certification 

Chemicals, machinery and 

equipment, computers and 

electronics, miscellaneous 

manufacturing

Rules on toys Differ from those of International Organization 

for Standardization (ISO), testing rules vary by 

country

Toys

Sanitary and phytosanitary 

regulations

Lack science-based approach especially 

regarding approval of genetically modified 

traits, increase costs, vary among EU 

countries

Agricultural products

Maximum residue levels for 

pesticides

Increase costs, vary by EU country Agricultural products

Global Food Safety Initiative 

(GFSI)

Extensive and costly certification, specific 

certification requirements

Agricultural products

Protected designations of 

origin (PDOs)

Prevent U.S. exports of products with PDOs Cheese

Lack of mutual recognition of 

credentials

Increase cost and time or prevents provision of 

U.S. service

Healthcare services, engineering 

services

EU accreditation High costs of compliance, lack of 

transparency, hard-to-find regulations

Testing services

Local content quotas, local 

language dubbing 

requirements; film piracy

Quotas make it more difficult for SMEs to enter 

certain EU markets; dubbing requirements 

increase costs; piracy affects independent 

filmmakers

Audiovisual services

Source: USITC compilation from roundtable transcripts, hearing transcripts, written submissions, and email 

messages.

The Commission used a variety of approaches to gather information for this report, 

including a literature review. However, the report mainly relies on information and views 

provided directly by SMEs and related associations through roundtable meetings across 

the United States, a public hearing, and written submissions. The roundtables, which 

were organized with the assistance of the Small Business Administration and the U.S. 

Department of Commerce, were the principal source of information for this investigation.

Commission staff traveled to 21 cities and held 28 roundtables during September 2013. 

Cross-cutting Issues 

Standards-related Measures 

The barriers to exporting to the EU most frequently cited by SMEs involve EU standards, 

technical regulations, and conformity assessment procedures that are used to determine if

products comply with the standards and regulations. Various interested parties reported 

that differences in the way that the United States and the EU develop standards, 

regulations, and procedures act as barriers to U.S. SMEs’ exports. For example, the

Business Coalition for Transatlantic Trade (BCTT) stated that, despite the strong trading 

xiii
relationship between the United States and the EU, differences in this area remain a 

significant obstacle to deepening trade.5

Protection of Trade Secrets and Patents 

Participating SMEs cited difficulties related to protecting trade secrets and the high cost 

of obtaining a patent in the EU. The SMEs stated that stronger protection of trade secrets 

is needed, especially when firms are supplying confidential information during the 

process of regulatory approval. Trade secrets were described as being important to SMEs 

because unlike patents and trademarks, they can be protected without registration or other 

formalities and are thought to be less expensive to acquire and maintain. Patent protection 

issues were also cited as barriers to trade, given the high costs of obtaining a patent in the 

EU, including meeting varying patenting standards across EU member states. The EU has 

recently taken steps towards better protecting trade secrets (it has a draft directive in this 

area) and mitigating the costs of obtaining a patent (it has worked towards creating 

unitary patent protection).6

Logistics Issues, Including Customs, Tax Requirements, Shipping, 

and Distribution

Many SMEs reported having too few resources to effectively navigate the numerous 

different, and at times opaque, EU customs procedures across EU member countries. 

SMEs reported difficulties, for example, in consistently obtaining the correct Harmonized 

System (HS) classification for their products (which affects the tariff rate applied to a 

product); understanding and complying with the EU’s value-added tax system (VAT);

and distributing products within the EU. They indicated that such difficulties create 

barriers to trade, to the point where they prevent some U.S. SMEs from exporting to the 

EU at all. However, logistics firms (such as international shipping companies) and other 

firms, as well as the U.S. government, offer some support to SME exporters in these 

areas.

Finance-related Issues 

SMEs reported certain finance-related challenges, but noted that such issues are not 

significant obstacles to their EU exports. Among these challenges, SMEs cited the higher 

costs of exporting to the EU as a result of the longer payment terms customary in the EU, 

compared with the United States; prohibitively expensive protection against nonpayment 

by customers; inflated payment transaction fees (e.g., wire transfer fees assessed to both 

sender and receiver); and differences in regulatory and legal frameworks between the EU 

and the United States. SMEs and other interested parties said that information about U.S. 

government assistance in these areas should be streamlined and more widely 

disseminated. 

5 U.S. Chamber of Commerce for the Business Coalition for Transatlantic Trade (BCTT), Regulatory 

Cooperation Working Group, written submission to the USITC, December 2, 2013. 6 European Commission, “Commission Proposes Rules,” November 28, 2013; and European 

Commission, “The EU Single Market: FAQs,” November 11, 2013.

xiv

 
Chemicals and Apparel 

SMEs and industry associations reported that a number of trade barriers, including high 

tariffs and a variety of technical regulations, limit exports of chemicals and apparel. One 

of the most frequently cited barriers is the EU chemical regulatory system—Registration, 

Evaluation, Authorisation and Restriction of Chemicals (REACH)—which imposes 

stringent requirements on a number of products. 

Chemicals 

U.S. exports of chemicals to the EU are fairly large, and SMEs have accounted for 30–

35 percent of those exports by known value in recent years.7 However, the expense and 

effort of complying with REACH’s complexities disproportionately affect SME exporters 

of chemicals and related products, including nanomaterials and biobased chemicals, to 

the EU. SMEs described problems related to REACH as follows:

• Compliance is expensive and time consuming and can reportedly add over 

20 percent to the cost of the product.

• Particularly burdensome for SMEs are testing requirements and the requirement 

for nonresident companies to have a special representative in the EU.

• Compliance, according to SMEs, requires firms to reveal too much about their

products, especially those protected by trade secrets.

• SMEs reported difficulty communicating with the European Chemicals Agency, 

which they said makes decisions having broad implications without any input 

from U.S. companies. 

SMEs also cited other regulations that disproportionately affect SMEs seeking to export

chemicals to the EU, including a new regulation covering the marketing and use of 

biocides. SMEs said that such products can also be restricted under the Water Framework 

Directive. 

SMEs exporting cosmetics to the EU expressed concerns about difficulties meeting the 

EU’s cosmetic directive. They described the cost of testing as high, particularly for SME 

exporters. They also cited as problems the need to locate qualified testing companies in 

the EU and the need to deal with member-country regulations that differ from EU 

requirements.

Bioproducts and Renewable Products 

SMEs reported that several tariff-related barriers on biofuels reduced their exports to the 

EU. These included an EU antidumping duty on U.S. bioethanol imposed in 2013; EU 

antidumping and countervailing duty orders that apply to all U.S. biodiesel blends; and

changes in HS classifications resulting in higher duties. 

7 Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and 

Exporting Companies, Exhibit 7, 2013; Commission calculations. The known value is the portion of U.S. 

exports that Census was able to link to a specific firm. Thus, it is a subset of total U.S. exports.

xv

 
Apparel

An apparel industry association contended that a recent sharp increase in the EU duty on 

U.S. exports of women’s denim jeans—from 12 percent to 38 percent—damages U.S. 

producers’ ability to export to the EU. The increase in duty is part of a retaliatory action 

taken by the EU following litigation at the World Trade Organization. Many of these 

producers are SMEs, which supplied about 94 percent of the known value of U.S. apparel

exports to the EU in 2010–11.8

Machinery, Electronics, Electrical Equipment, 

Transportation, and Miscellaneous Manufacturing

SMEs in the machinery, electronics, electrical equipment, transportation, and 

miscellaneous manufacturing industries pointed to the safety certification process, the 

need to meet numerous regulations and standards, and complexities with the VAT as

principal barriers to exporting to the EU. 9 Complications obtaining Conformité 

Européenne (CE) certification were described as particular barriers for SMEs, as were 

inconsistencies in clearing goods through customs in different countries and at different 

times, and a lack of harmonized international standards. SME representatives reported 

that the VAT is difficult for them to navigate because it is complex and rates vary among 

EU countries. SMEs also described other standards-related concerns as being important,

including lack of mutual recognition for conformity assessment and divergent technical 

regulations between the United States and the EU, particularly REACH, the Restriction 

of Hazardous Substances Directive (RoHS), and the Waste Electrical and Electronic

Equipment Directive (WEEE). Other challenges that were highlighted included

differences between U.S. and EU intellectual property protection regimes, tariffs and 

market access problems for some products, divergent data privacy rules, and high-burden 

customs processes. 

Machinery and Equipment 

SME exporters of machinery and equipment stated that a variety of regulations and

standards, such as the multiple tests required to receive the CE mark10 and the directive 

for equipment used in potentially explosive environments, constrains their exports to the 

EU more than those of large firms. Obtaining the CE mark for a single piece of

machinery, they said, could require meeting the requirements of the EU’s safety-ofmachinery directive, the low-voltage directive, and other directives. They noted that the 

United States, in contrast, has “umbrella regulations” permitting manufacturers to obtain

a single certification of the whole product instead of a number of different certifications.

8 Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and 

Exporting Companies, Exhibit 7, 2013; Commission calculations. Note that the U.S. exports of apparel to the 

EU are fairly small.

9 Manufacturers are not the only SMEs in a given industry that face export barriers. Distributors, 

testers, resellers, legal and finance firms, business service providers, and many others are also directly 

affected by trade barriers in exporting to the EU. 10 The CE mark, which is required for many products marketed in the EU, signifies that the product 

conforms to applicable European laws with respect to safety, health, environment, and consumer protection.

xvi

 
Computers and Electronic Products 

SMEs exporting computers and electronic products said that REACH, RoHS, and various 

directives governing eligibility for the CE mark change frequently, draw on safety rules 

that are not always based on science, and have high compliance costs. SMEs’

representatives stated that these requirements weigh more heavily on SMEs, which

cannot typically dedicate full-time personnel to deal with certification and compliance. In 

addition, representatives of independent U.S. resellers (normally SMEs) asserted that 

trademark owners’ rights to control the sale of branded products in EU secondary

markets prevented U.S. exports to the EU. These representatives said that opening the EU 

secondary market could increase their exports by 30–50 percent.

Transportation Products 

Transportation products comprise motor vehicles, trailers, aerospace goods, trains, ships 

and boats, motorcycles, military vehicles, transportation equipment, and parts. SMEs in 

the motor vehicles industry described a number of barriers to trade, including

conventions in measuring truck length, rules on tailpipes, and the need for all motor 

vehicle parts to be certified. In addition, SME exporters of aerospace parts stated that

they must acquire certification from the European Aviation Safety Agency, where 

certification costs are reported to be among the highest in the world, and must also meet 

certain additional requirements in individual EU countries.

Other Manufactured Products 

SMEs producing medical devices, firefighting equipment, sporting goods, and toys cited 

a variety of barriers to exporting to the EU. SME makers of medical devices stated that 

the EU regulatory process is more consistent than that in the United States. Nevertheless, 

according to these exporters, the complexities of obtaining the CE mark, audits of 

facilities, and inconsistent, fast-changing regulations greatly increase the cost and time 

needed to export to the EU. SME exporters of other devices in this category likewise 

reported that the high costs of meeting safety standards and the difficulty of complying 

with many technical regulations constrain their exports.

Agriculture 

SMEs view EU barriers to U.S. agricultural exports as substantial. While SMEs account 

for only a small portion of direct agriculture exports, they supply many inputs to large 

exporting companies and are important exporters of some specialized and processed 

products. SMEs identified high tariffs, extensive EU regulations, and the difficulty in 

finding up-to-date information as their primary concerns. According to the literature, U.S. 

exporters of processed foods face the highest EU tariffs of any major sector; moreover,

the estimated price effects of EU nontariff measures on the food and beverages sector are 

the highest of any sector.

11

11 Francois et al., Reducing Transatlantic Boundaries to Trade and Investment, 2013, 14–20.

xvii

 
SMEs stated that the EU lacks a science-based focus in establishing sanitary and 

phytosanitary (SPS) measures, especially in regard to approval of genetically modified

(GM) traits. Industry representatives stated that regulations and testing requirements were 

stringent and often varied among different EU countries. Meeting standards and obtaining 

certification were reported to be difficult and expensive, especially those involving food 

safety. SMEs also reported that packaging issues and a lack of cohesive labeling 

requirements were additional obstacles to exporting agricultural products to the EU.

Corn 

The National Corn Growers Association expressed concerns over the EU’s treatment of 

GM traits, reporting that burdensome labeling requirements and unreasonable

expectations on “low-level presence” (LLP) of unapproved GM traits12 in their products 

limit their exports of corn to the EU.13 Furthermore, EU government bodies reportedly

delay approval of new GM traits after approval by EU scientific panels. An industry 

spokesman suggested that U.S. trade negotiators work with the European Food Safety 

Authority and the European Parliament to achieve higher levels of regulatory 

convergence and cooperation, harmonization, and mutual recognition of standards.

14

Dried Fruit 

According to SME representatives, the fruit industry faces several barriers on exports to 

the EU, most pertaining to pesticide limits and testing requirements for chemicals and 

heavy metals. For example, they reported that maximum residue levels (MRLs), or the 

allowable limit on pesticide residues remaining on a crop, differ in various EU countries, 

which makes it difficult for producers to be consistent with their pesticide applications.

Animal Feed 

SMEs reported that barriers faced by the animal feed industry center around the lack of 

harmonization between the United States and the EU, as well as strict EU regulations on 

traceability. The EU requires exporters to submit certifications concerning certain inputs, 

such as dioxin and additives that originate from marine products, before their products

can enter the EU, but neither the U.S. Department of Agriculture (USDA) nor any other 

U.S. agency has the ability to certify them. As a result of these and other regulations, U.S. 

SMEs state that their exports to the EU are held up for extensive testing, which results in

additional costs. 

Cheese 

An SME cheese maker stated that it is primarily concerned about the EU’s protected 

designations of origin (PDOs), which identify a good as originating in a specific 

geographic location and having a particular level of quality.15 The SME cheese exporter

12 European Commission, “Questions and Answers,” June 24, 2011. 13 National Corn Growers Association, written submission to the USITC, August 23, 2013, 2. 14 Johnson, Statement to the House Committee on Small Business, June 26, 2013, 2. 15 PDOs are defined as being produced or processed in a specific area. They are similar to protected 

geographic indicators (PGIs), though PGIs must be produced or processed in a specific area and use a method 

or stage of production unique to that area.

xviii

 
contends that many PDOs (such as muenster and feta) have become generic terms and 

should no longer be protected. 

Wheat 

Although wheat exporters are mainly large companies, most growers are SMEs. The U.S. 

Wheat Associates and the National Association of Wheat Growers reported that EU trade 

barriers faced by the wheat industry include the EU’s non-science-based risk assessments

and the EU’s lack of acceptance of U.S. certifications.16 Specifically, they said that the 

EU does not accept the U.S. Federal Grain Inspection Service (FGIS) certification of

mycotoxin tests for deoxynivalenol and ochratoxin, and also does not accept USDA’s

certification of absence of Karnal bunt disease, even though virtually all countries outside 

the EU accept it.17

Nuts 

Trade barriers reported by representatives of SMEs in the nut industry principally 

concern extensive testing required by the EU, frequent changes in allowable residue 

levels, and GM and other EU food safety rules that are not science based. For example,

SMEs reported that the EU testing requirements for aflatoxin, a naturally occurring 

substance, were changed without notice. SMEs also reported problems with EU testing 

results, with products already internally tested for aflatoxin initially failing EU tests and 

then passing when retested.

Meat 

According to SMEs in the poultry industry, restrictions related to poultry processing

effectively ban any U.S. poultry from being exported to the EU. The lamb industry also 

stated that there is an effective ban on exports of U.S. lamb to the EU due to the high 

costs of obtaining food safety certifications and related issues.

Services 

Despite efforts to reach firms across all industries, fewer services SMEs than goodsproducing SMEs participated in the Commission’s roundtables or communicated with the 

Commission through other means. Recent literature in this area indicates that nontariff 

measures affecting U.S.-EU trade in services may be less severe than those affecting 

trade in goods. Nevertheless, the BCTT has identified several objectives for the TTIP 

negotiators to consider in order to improve services trade, including regulatory 

cooperation and removing licensing, quotas, and other impediments to trade. 18

16 U.S. Wheat Associates and National Association of Wheat Growers, written submission, September

25, 2013. 17 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013; U.S. Wheat 

Associates and National Association of Wheat Growers, written submission, May 10, 2013. 18 U.S. Chamber of Commerce for the Business Coalition for Transatlantic Trade (BCTT), Services 

Working Group, written submission to the USITC, December 2, 2013.

xix

 
Additionally, SMEs and other interested parties representing professional and 

information services reported that the following measures impede their exports to the EU:

• lack of mutual recognition of medical credentials and varying licensing and 

credentialing requirements between EU member countries, which make

practicing medicine in the EU difficult for U.S. doctors; 

• licensing issues related to lack of reciprocity in recognizing engineering 

licenses, which act as barriers to trade in engineering services;

• lack of transparency in EU regulations on testing and different testing 

standards between the United States and the EU, which make understanding 

and complying with EU standards difficult and costly for U.S. SME providers 

of testing services;

• broadcasting and film quotas, language dubbing requirements, and government 

subsidies, which reduce trade opportunities, increase costs, and create 

competitive disadvantages for U.S. SME exporters of audiovisual services,

while issues related to intellectual property and piracy undermine revenues and 

the financing of independent filmmakers.

xx
Bibliography

European Commission. “Commission Proposes Rules to Help Protect against the Theft of Confidential 

Business Information.” Press release, November 28, 2013. http://europa.eu/rapid/pressrelease_IP-13-1176_en.htm?locale=en.

———. “Questions and Answers on the Low Level Presence (LLP) of GMOs in Feed Imports.” Press 

release, June 24, 2011. http://europa.eu/rapid/press-release_MEMO-11-451_en.htm.

———. “The EU Single Market: FAQs,” November 11, 

2013. http://ec.europa.eu/internal_market/indprop/patent/faqs/index_en.htm#maincontentSec11.

Francois, Joseph, Miriam Manchin, Hanna Norberg, Olga Pindyuk, and Patrick Tomberger. Reducing 

Transatlantic Barriers to Trade and Investment: An Economic Assessment. London: Centre for 

Economic Policy Research, March 2013.

Johnson, Pam. National Corn Growers Association. Statement to the United States House Committee on 

Small Business. Ready to Export: Small Business Policy Recommendations for USTR, June 26, 

2013.

National Corn Growers Association. Written submission to the U.S. International Trade Commission in 

connection with inv. no. 332-541, Trade Barriers That U.S. Small and Medium-Sized Enterprises 

Perceive as Affecting Exports to the European Union, August 23, 2013.

U.S. Bureau of the Census (Census). Profile of U.S. Importing and Exporting Companies, 2010–2011, 

April 5, 2013.

U.S. Chamber of Commerce for the Business Coalition for Transatlantic Trade (BCTT), Services

Working Group. Written submission to the U.S. International Trade Commission in connection 

with inv. no. 332-541, Trade Barriers That U.S. Small and Medium-sized Enterprises Perceive as 

Affecting Exports to the European Union, December 2, 2013.

———. Regulatory Cooperation Working Group. Written submission to the U.S. International Trade 

Commission in connection with inv. no. 332-541, Trade Barriers That U.S. Small and Mediumsized Enterprises Perceive as Affecting Exports to the European Union, December 2, 2013.

U.S. International Trade Commission (USITC). Small and Medium-Sized Enterprises: Characteristics 

and Performance. USITC Publication 4189. Washington, DC: USITC, November 

2010. http://www.usitc.gov/publications/332/pub4189.pdf.

U.S. Wheat Associates and National Association of Wheat Growers. Written submission to the USITC in 

connection with inv. no. 332-541, Trade Barriers That U.S. Small and Medium-sized Enterprises 

Perceive as Affecting Exports to the European Union [originally submitted to USTR, Docket 

number USTR-2013-0019], September 25, 2013.

World Bank, World Development Indicators. http://data.worldbank.org/data-catalog/world-developmentindicators (accessed November 25, 2013).

World Trade Organization (WTO). “Trade Policy Review: European Union.” July 

2013. http://www.wto.org/english/tratop_e/tpr_e/tp384_e.htm. 

xxi

CHAPTER 1

Introduction

Purpose and Scope 

U.S. small and medium-sized enterprises (SMEs) account for about half of the 

nonagricultural output of the U.S. economy. Their share of exports, however, is much 

lower—slightly less than a third.

1 Although some SMEs produce goods or services that 

are not readily tradable, that is not the only reason for the disparity. A previous study has 

shown that many impediments to exporting appear to fall disproportionately on small 

exporters.2 SMEs report that eliminating or reducing those impediments would enable 

them to increase their exports.

One of the United States’ largest and richest trade partners is the European Union (EU). 

This report catalogs trade barriers that U.S. SMEs perceive as disproportionately 

impeding their exports to the EU, compared to larger U.S. exporters to this important 

market. It also includes suggestions by SMEs on ways to increase their participation in 

transatlantic trade. In the letter requesting this report, the U.S. Trade Representative

stated that the United States is seeking to enhance the participation of SMEs in 

transatlantic trade and to address barriers that may disproportionately affect SMEs 

exporting to the EU in the negotiations for the Transatlantic Trade and Investment 

Partnership (TTIP).

3

This report, by the U.S. International Trade Commission (Commission or USITC), 

defines SMEs as firms with less than 500 U.S.-based employees, following the definition 

used in a previous Commission report on the role of SMEs in U.S. exports.

4 The present

report also uses the Commission’s prior definition of “disproportionate effect on SMEs.”5

A disproportionate effect implies that a trade measure affects SMEs more than large 

firms, even though impediments typically do not explicitly discriminate against SMEs. 

Trade measures may have a disproportionate effect in diverse ways. Complying with EU 

standards, for instance, imposes fixed costs that do not vary with the amount traded and

must be borne to enter the market, regardless of how much exports contribute to a firm’s 

revenues. Large exporters can more easily spread fixed costs over their sales volumes 

than small exporters. SMEs reported that to gain access to the EU market they had to deal 

with a variety of nontariff measures (NTMs)—for example, the EU regulation for 

chemicals, which typically requires expensive testing. Thus, although NTMs increase the 

1 USITC, Small and Medium-Sized Enterprises: Overview, January 2010, 2-9 and 3-1. 2 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6-1. 3 See appendixes A and B for the request letter from the USTR and Federal Register notices associated 

with this investigation. 4 Note that the Commission’s third report in a series of three interrelated reports on U.S. SMEs used 

only the employee-based definition used here, while the others in the series also applied revenue thresholds. 

USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010. 5 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6-2. 

1-1

 
costs of both small and large firms, they have the potential to affect SMEs 

disproportionately and may make it infeasible for some SMEs to export to the EU.

6

In some cases, tariffs, too, may have a disproportionate effect on SMEs. Although tariffs 

increase in tandem with sales, some sectors have much higher tariff rates than others. 

When most firms in such a sector are SMEs, then these comparatively high tariffs affect 

SMEs more than large firms overall, particularly large multiproduct exporters that may 

face lower tariffs on some products.

The Commission collected original primary data for this report through a variety of 

methods, which are described in more detail in the next section. These methods, 

including holding roundtable discussions, soliciting written submissions, and conducting 

a hearing, relied on the voluntary participation of SMEs. A benefit of this approach is that 

SMEs were able to provide information and views directly to the Commission and 

Commission staff. 

The need to rely on SMEs’ voluntary statements influenced the scope of this report in 

certain ways. The Commission sought the participation of a broad range of SMEs in 

agriculture, manufacturing, and services by inviting them to attend the roundtables and

offering them an opportunity to provide feedback through other channels. However,

manufacturing SMEs and manufacturing associations participated more actively than 

those in other sectors. Accordingly, the amount of information provided in this report on 

different sectors varies depending upon the extent to which SMEs in a given sector 

provided information and views.

Not all responding SMEs and related industry associations singled out barriers that they 

specifically perceived as disproportionately affecting SMEs compared to large firms. For 

example, in some instances, SMEs and industry associations reported barriers that they 

viewed as important, without asserting that those barriers had a disproportionate effect on

SMEs. This omission was most evident in agriculture, where large firms are generally the 

main exporters, even though most growers are SMEs. This report includes both barriers

cited by SMEs as affecting their ability to export to the EU relative to large firms and 

barriers more generally identified by U.S. exporters without claiming a disproportionate 

impact on SMEs.

This report also provides specially tabulated U.S. Census Bureau (Census) data on SME 

exports of manufactured products to the EU.

Approach

To gather information from SMEs and other interested parties on trade barriers affecting 

SME exports to the EU within the investigation’s time frame, the Commission (1) held 

roundtable meetings with SMEs across the United States; (2) held a public hearing in 

Washington, DC (on November 20, 2013) and a public meeting in California (on 

September 26, 2013); (3) sent letters inviting interested parties to provide information

and views; and (4) reviewed the relevant literature regarding trade barriers faced by 

6 David Ellison, owner of an SME that exports test kits to the EU, expressed this idea by stating that 

with only 10 employees, he does not want to have to dedicate full-time employees to navigating regulations. 

He said that doing so would leave fewer employees available for sales or distribution tasks—a substantial 

cost for a small firm. USITC, hearing transcript, November 20, 2013, 157–58.

1-2

 
SMEs including suggestions on ways to increase SME participation in transatlantic trade. 

Additionally, as mentioned above, the Commission obtained specially tabulated Census 

data on SME exports to the EU.

Roundtables

The Commission organized more than two dozen roundtable meetings with SMEs to hear 

their perceptions of barriers that disproportionately affect their exports to the EU. At the 

outset of this investigation, Commission staff met with the Small Business 

Administration (SBA) and the Department of Commerce (U.S. Commercial Service) in 

Washington, DC, to ask for the help of SBA’s field offices and the Department of 

Commerce’s U.S. Export Assistance Centers in facilitating meetings with SMEs. Both 

agencies worked with the Commission in setting up the roundtables: selecting locations; 

identifying and reaching out to local companies; and either hosting the roundtables at 

their offices or finding alternative venues. 

Through various avenues, the Commission made every effort to include services, 

agriculture, and manufacturing SMEs in the roundtable meetings. Besides the outreach 

done by the SBA offices and the U.S. Export Assistance Centers, the Commission 

provided information about the roundtables through a webpage dedicated to the study and 

worked with associations and other entities, such as the U.S. Chamber of Commerce,

which invited companies to join the discussions. Although several sector-specific 

roundtables were held in areas with clusters of SMEs in particular industries, SMEs in a 

variety of industries attended most roundtables.

The Commission held 28 roundtable meetings during September 2013 in 21 locations in 

17 states, focusing on areas with concentrations of SMEs (see table 1.1 for roundtable 

dates and locations). Two Commission analysts or economists moderated each 

roundtable. Collectively, the roundtables yielded a large amount of material that is the 

principal source of information for this investigation.7

TABLE 1.1 Commission roundtable dates and locations

Day/month City

Number of 

roundtables Day/month City

Number of 

roundtables

 9 Sep Lathrup Village, MI 1 20 Sep Salt Lake City 1

10 Sep Cleveland 1 23 Sep Philadelphia 2

11 Sep Minneapolis 2 23 Sep Los Angeles 1

12 Sep Milwaukee 2 24 Sep New York City 2

13 Sep Chicago 1 24 Sep Santa Ana, CA 1

16 Sep Raleigh 2 25 Sep Bethpage, NY 1

17 Sep Centennial, CO 1 25 Sep Sacramento 2

18 Sep Albuquerque 1 26 Sep Boston 1

18 Sep Atlanta 1 27 Sep Smithfield, RI 1

19 Sep Miami 1 27 Sep Fresno 1

19 Sep Houston 2

Source: Compiled by Commission staff.

7 Roundtables cited throughout this report refer to USITC roundtables, unless otherwise noted.

1-3

 
Washington, DC, Hearing and Field Hearing in California

To gather further information, the Commission held a public hearing in Washington, DC,

on November 20, 2013. A public field hearing near San Jose, CA, was also scheduled for

September 26, 2013, but later canceled due to lack of participation, and an informal 

meeting was held instead. The Commission conducted extensive outreach to SMEs, 

government organizations, associations, and other entities to invite them to participate in 

the hearings. To encourage SME participation in particular, the Commission provided 

simplified procedures for filing a request to appear at the hearing. Five groups

participated in the Washington, DC, hearing: (1) the U.S. Chamber of Commerce; (2) the 

Society of Chemical Manufacturers and Affiliates; (3) ASTM International; 

(4) Government Relations, LLC; and (5) the Owners’ Rights Initiative (which provided 

testimony supported by the Association of Service and Computer Dealers International 

and the North American Association of Telecommunications Dealers, and by Radwell 

International).

8

Letter Sent to SMEs

The Commission also sent letters by U.S. mail to SMEs asking them to report their 

experiences with trade barriers that disproportionately affect their exports to the EU. The 

approximately 4,000 recipient firms were identified using a proprietary database.9 The 

letters referred companies to the investigation’s webpage (where they could find more 

information about the study and ways to respond to the Commission) and invited SMEs 

to participate in the Commission’s hearings, submit a formal statement, or communicate 

informally with the Commission via a dedicated phone number or email address. Only 

16 usable responses were received as a result of the letter solicitation. 10

Review of the Literature

The Commission also reviewed the relevant literature on trade barriers including

suggestions on ways to enhance SMEs’ participation in transatlantic trade. This literature, 

including the Commission’s prior reports on SMEs, does not typically focus exclusively

on barriers encountered by U.S. SMEs exporting to the EU. As such, the literature was 

primarily useful for background information. 

Statistics on SME Trade with the EU

At the request of the Commission, Census compiled a special tabulation using data from 

its export trade information and the Business Register.11 These data show the value of 

SME merchandise exports to the EU and the number of SMEs exporting to the EU for 

8 See appendix D for a summary of the positions of interested parties. 9 Bureau van Dijk, Orbis database, August 27, 2013. The search included active U.S. companies that 

had up to 500 employees and that were not subsidiaries of larger companies (i.e., they were what Orbis calls 

“Global Ultimate Owners”). 10 The lapse in federal government appropriations and resulting furlough of October 1–16, 2013, a 

period during which the Commission’s email servers were shut down, likely contributed to the low number of

responses, as the due date for receiving responses to the letter was October 15, 2013. 11 The Business Register is a confidential, restricted-use database of U.S. business establishments and 

companies maintained by Census. For more information, see 

https://www.census.gov/econ/overview/mu0600.html.

1-4

 
2010 and 2011. This report presents these data in summary form later in this chapter, and 

subsequent chapters present more detailed data (at the 3-digit North America Industry 

Classification System level) for sectors that SMEs reported as facing substantial barriers 

to exporting to the EU.

Organization

This report contains six chapters. After describing the purpose, scope, and approach of 

this report, chapter 1 concludes with a brief overview of the importance of the EU market 

and SME trade with the EU, as well as a summary of EU trade barriers that may 

disproportionately affect the ability of SMEs to export there. SMEs reported a number of 

barriers that may be relevant to this study. This information is organized in chapters 2 

through 6 by special issue and by sectors.

Chapter 2 includes an overview of issues related to regulations and standards that affect 

various manufacturing and agricultural sectors. The chapter also examines intellectual 

property rights as well as finance-related and logistics issues that may affect SMEs in 

many industries when exporting to the EU.

Chapters 3 and 4 examine trade barriers that disproportionately affect SMEs exporting 

manufactured goods to the EU. Chapter 3 encompasses the chemical and apparel 

industries, including pharmaceuticals, plastic resins, cosmetics, and denim, among others. 

Chapter 4 covers industries manufacturing machinery, electronics, transportation

equipment, and other miscellaneous products. 

Chapter 5 reports on trade barriers cited by SMEs in the agricultural sector, including 

SMEs exporting dried fruit, animal feed, cheese, wheat, corn, nuts, and meat. 

Finally, chapter 6 covers services firms, including SME exporters in professional, 

scientific, and technical services as well as information services. 

Importance of the EU Market and SME Trade

The EU is an important market for many U.S. businesses, including U.S. SMEs. The 

EU’s size, which has risen to 28 countries; its purchasing power, accounting for 27–

28 percent of world GDP during 2010–12;12 and its relative stability all contribute to its 

attractiveness as an export destination. As a result, the EU is the most important 

destination for U.S. merchandise exports after the United States’ North American Free 

Trade Agreement (NAFTA) partners, Canada and Mexico.

13

The first Commission report on SMEs reported that U.S. SMEs accounted for about 

30 percent by known value of U.S. merchandise exports between 1997 and 2007 and that 

12 World Bank, World Development Indicators (accessed November 25, 2013). Also, the EU, as a 

single entity, is considered to be the world’s largest trading bloc. World Trade Organization, Trade Policy 

Review: European Union, 2013, 9. 13 For example, the EU accounted for about 18 percent of U.S. merchandise exports during 2010–12, 

while the similar figure for NAFTA is 30 percent. USITC DataWeb /USDOC (accessed November 25, 2013).

1-5

 
Canada and Mexico were the largest markets for those exports.14 Data for 2010 and 2011 

show that the SME share of the known value of merchandise exports to all destinations 

had grown to 33 percent in 2011, and that the share of SME exports to the EU accounted 

for approximately 30 percent of the total known value of exports to the EU (table 1.2). A 

distinctive feature of the data is that large firms account for most of the value of these 

exports, even though the numbers of SME exporters far exceed those of large firms.

The EU is an important export destination for U.S. SMEs, as their merchandise exports to 

the EU totaled $67 billion in 2010 and $76 billion in 2011 (table 1.2). By value, U.S.

SME exports to the EU represented about 17.5 percent of total U.S. SME exports, which 

is slightly less than the share of all U.S. exports that go to the EU. In terms of individual 

firms, the share of all U.S. SME exporters that export to the EU has been about 

32 percent, which is similar to the share for all U.S. exporters.

TABLE 1.2 The known value of U.S. exports and the number of exporters, by all U.S. exports and U.S. SME exports,

and by all destinations and the EU15

All destinations EU EU shares (%)

2010

All U.S. exports, known value (million $) 1,140,406 223,795 19.6

U.S. SME exports, known value (million $) 384,940 67,311 17.5

 SME share (%) 33.8 30.1 –

Number of known exporters 293,988 96,393 32.8

Number of known SME exporters 287,498 92,261 32.1

 SME share (%) 97.8 95.7 –

2011

All U.S. exports, known value (million $) 1,319,942 252,612 19.1

U.S. SME exports, known value (million $) 440,099 76,490 17.4

 SME share (%) 33.3 30.3 –

Number of known exporters 302,260 98,841 32.7

Number of known SME exporters 295,594 94,584 32.0

 SME share (%) 97.8 95.7 –

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

Barriers to Accessing the EU Market

This section on trade barriers to accessing the EU market is based on a review of the 

relevant literature. 

EU Tariffs

The EU generally applies tariffs at the most-favored-nation (MFN) rate to both World 

Trade Organization (WTO) members and non-WTO members alike, although certain EU 

trade agreements may provide better rates to the signatories of those agreements. In 2013, 

about a quarter of the EU’s 9,376 tariff lines (at the 8-digit Harmonized System level) 

were duty free, and about 9 percent had tariffs above zero but less than 2 percent; the 

14 USITC, Small and Medium-Sized Enterprises: Overview, January 2010, 3-1. 15 The known value is the portion of U.S. exports that Census was able to link to a specific company.

Thus, it is a subset of total U.S. exports.

1-6

 
simple average ad valorem MFN tariff rate was 6.5 percent.16 Tariffs on agricultural 

products, where seasonal duties may apply, are higher than those on manufactured goods. 

The EU uses a complex system to set tariffs on processed agricultural products, based on 

the content of milk fats, proteins, sugar, and starch found in the product; this approach 

results in a huge number of possible tariffs.17

EU tariff levels are low in most sectors and comparable to those on similar products 

exported from the EU to the United States except in the motor vehicles and processed 

food sectors.18 The simple average EU tariff on motor vehicles and parts (8.0 percent) is 

about eight times the U.S. tariff on comparable products. The average EU tariff on 

processed foods (14.6 percent) is more than four times the similar average U.S. tariff.

Based on survey data from a previous SME study, the Commission found that

manufacturing SMEs consider high tariffs to be greater obstacles to exporting than large 

manufacturers do.

19 In that study, the Commission combined data on applied tariffs with 

detailed information on merchandise exports by firm size, and found comparatively high 

tariffs in certain industries—namely, apparel and certain processed food industries—

where U.S. SMEs account for a high share of exports relative to large U.S. exporters.

20

EU NTMs

The EU and its individual member countries have adopted a large number of technical 

regulations and conformity assessment procedures. 21 Many, but not all, of these

requirements have been harmonized at the EU level; thus, at least in principle, goods 

lawfully produced in or imported into one EU country can be marketed in another EU 

country, even if they do not comply with the technical regulations of the destination 

country. 22 However, the large number of technical regulations can make marketing

particularly complex. For example, between January 2011 and February 2013, the EU 

notified 154 technical regulations and conformity assessment procedures to the WTO.23

These notifications covered a wide variety of items, including household appliances, 

electric and electronic equipment, biocides, machinery, motor vehicles and parts, 

measuring devices, chemicals, food, cosmetics, and textiles. In addition, individual EU 

member countries made 97 such notifications during this period.

Some WTO members have pointed out that the large number of EU technical regulations 

and conformity assessment procedures can create obstacles to trade, especially for foreign 

SMEs.24 In response, the EU created its “SME test” to analyze the effects of legislative 

proposals on SMEs. 25 The SME test requires consultations with SMEs or their 

representative organizations, such as the Network of SME Envoys, which limits

16 WTO, Trade Policy Review: European Union, 2013, 44–45. An ad valorem tariff is a tariff imposed 

on a percentage basis on the value of a good or service. 17 WTO, Trade Policy Review: European Union, 2013, 48. 18 Francois et al., Reducing Transatlantic Barriers to Trade, 2013, 14. EU tariffs on most sectors were 

slightly higher than the equivalent U.S. tariffs. 19 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6–12. 20 Ibid., 6–15. 21 Conformity assessment is the process of ensuring that goods and services and the processes used to 

create them meet certain regulations and standards; it is discussed in more detail in chapter 2. 22 WTO, Trade Policy Review: European Union, 2013, 57. EC Regulation No. 764/2008 states this 

mutual recognition principle. 23 WTO, Trade Policy Review: European Union, 2013, 58. 24 Ibid. 25 The SME test is explained in Europa, “SME Test,” October 10, 2013.

1-7

 
participation to EU entities, or the Enterprise Europe Network, which allows foreign 

participation. The test estimates the impact of legislative changes on SMEs and 

recommends mitigating measures if appropriate. The Commission found few evaluations

of the effectiveness of the SME test in alleviating the compliance burden on foreign 

SMEs. However, the Association of European Chambers of Commerce and Industry

(Eurochambres) reported that the overall quality of the SME tests is disappointing.

According to Eurochambres, almost 75 percent of the impact assessments that it reviewed 

lacked a thorough cost-benefit analysis of the regulation’s effects on SMEs.

26

In an earlier SME study, the Commission summarized the views of U.S. SMEs regarding

impediments to trade in all markets and ways to overcome them.27 U.S. SMEs reported 

that major obstacles included foreign government regulations—particularly labeling rules

and sanitary and phytosanitary regulations—and SMEs’ limited knowledge of foreign 

markets. In that study, SMEs stated that regulations were problematic because of the 

burden and cost of compliance and also because of the lack of uniform procedures across 

EU countries. Regulatory burdens included extra record keeping, testing, and certification 

requirements, and—for agricultural products—the need to tailor production practices to a 

particular market. 

In another previous SME study, the Commission reported findings from a survey that 

identified trade barriers and other impediments that disproportionately affect the export 

performance of U.S. SMEs.28 The survey gathered the opinions of small and large firms 

on 19 potential impediments to trade, of which 7 were business impediments, 5 were 

foreign-policy measures or NTMs, 3 were domestic policy measures, and 4 were 

combinations of the previous measures. SMEs were more likely than large firms to rate

most impediments as having a severe negative effect on their exports. The impediments 

that appeared to weigh on SMEs most disproportionately were “insufficient intellectual 

property protection,” “foreign taxation,” and “obtaining financing.”29

Though it did not differentiate results by business size, a recent study reported that NTMs 

impose substantial barriers to transatlantic trade in a number of sectors. Based on an 

index of the perceived restrictiveness of NTMs created from a survey, the researchers 

found that U.S. exporters to the EU in the chemicals, cosmetics, and biotechnology 

sectors face the highest NTMs. 30 The researchers then integrated the index with other 

data and econometrically estimated the price effect of the NTMs. Using this approach, 

they concluded, in addition, that the greatest price increases imposed on U.S. exports by 

EU NTMs were on food and beverages (56.8 percent), motor vehicles and parts 

(25.5 percent), and other transport equipment (18.8 percent).31

Another recent study examined trade barriers faced by SMEs exporting in global markets 

along with organizational impediments, such as a lack of experience and networks.32 It 

found that U.S. SMEs encounter a broad range of EU barriers, such as domestic laws, 

data privacy rules, local-protection measures, ownership control regulations, product 

26 The report is summarized in Eurochambres, “Commission Still a Long Way,” November 25, 2013. 27 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 3-12.

Reported barriers were not specific to the EU. 28 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6-1. 29 Ibid., 6-10. 30 Francois et al., Reducing Transatlantic Barriers to Trade, 2013, 16–17. They surveyed both EU and 

U.S. firms and created indexes for EU exports to the United States and for U.S. exports to the EU. 31 Francois et al., Reducing Transatlantic Barriers to Trade, 2013, 19–20. 32 Lucy, Lepage, and Ghosh, “Going Global,” 2011, 21–36.

1-8

 
restrictions, tariffs, taxes and tax laws, and trade protection measures.

33 The study noted, 

however, that the last three barriers—tariffs, taxes and tax laws, and trade protection

measures—were common challenges facing SME exporters to NAFTA partners and the 

BRIC countries, as well as the EU.34

Congressional testimony given by an SME owner provided a firm-specific perspective on

exporting to the EU. 35 The owner of this SME, which provides business consulting

services and shipping for other SMEs, cited many trade barriers affecting SME exports to 

specific countries in the EU. These barriers largely involve customs regulations and 

restrictions. For example, Italian customs regulations require the Italian Ministry of Arts 

to inspect all imported artwork, which delays delivery by a minimum of 10 days.36 Also, 

nonprescription vitamins exported to Germany must be shipped to a German pharmacy 

with a German doctor’s prescription and a copy of the pharmacy order.37 The owner 

added that delays in customs clearance are especially onerous for SMEs because they 

typically are not paid until the customer receives his/her merchandise, and SMEs rarely 

have the financial resources to wait long for payment. 38 In this regard, the owner 

suggested that the U.S. government negotiate and enforce fair international rules in 

services and customs procedures to improve the situation.

Suggested Ways to Enhance SME Participation in Trade

There are very few studies that focus on ways to enhance the participation of U.S. SMEs

in transatlantic trade. This section briefly summarizes two general studies that suggest 

ways for SMEs to improve their own export performance or for governments to assist 

their SMEs to increase exports. It also includes recommendations for improving

transatlantic trade from the Business Coalition for Transatlantic Trade. 

An earlier Commission study on SMEs presented approaches that SMEs reported using to 

overcome trade barriers and increase exports. The top three among these strategies were

(1) creating formal or informal coalitions of firms in the same industry, (2) collaborating 

with a larger firm, and (3) using U.S. government programs to assist exporters.39

Overcoming the barriers to trade with the EU reportedly requires substantial time and 

money, which SMEs often lack.40 Researchers proposed the following recommendations

to help improve the export performance of SMEs: 

• SMEs should be active participants in the trade policy process.

• Home governments should assist their SMEs to understand foreign markets 

better.

33 Lucy, Lepage, and Ghosh, “Going Global,” 2011, 27. 34 The BRIC countries are Brazil, Russia, India, and China. 35 Huberman, Statement to the House Committee on Small Business, June 26, 2013. 36 Ibid., 1. 37 Ibid., 2. 38 This is consistent with results from a survey by the National Small Business Association, in which its 

members who export stated that getting paid was their most significant concern. National Small Business 

Association, “2013 Small Business Exporting Survey,” 2013, 8. 39 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 3-20. 40 Fliess and Busquets, The Role of Trade Barriers, 2006, 10.

1-9

 
• SMEs should work with their home governments to identify trade barriers that 

can be acted upon.

• Home governments should negotiate trade arrangements (such as the WTO 

Information Technology Agreement) to reduce SMEs’ compliance costs.

• Governments should keep the constraints of SMEs in mind when developing 

regulations.

41

The Regulatory Cooperation Working Group of the Business Coalition for Transatlantic 

Trade has proposed several objectives for the TTIP negotiations to enhance transatlantic 

trade for SMEs:

42

• Ensure that regulations are risk-based, evidence-based, and incorporate costbenefit analysis.

• Ensure that regulators aim for compatibility and equivalence wherever possible.

• Seek regulatory cooperation including improved transparency and stakeholder 

consultation.

• Seek to establish common definitions of international standards.

• Develop detailed sector-specific regulatory coherence and cooperation 

commitments where possible. 

41 Fliess and Busquets, The Role of Trade Barriers, 2006, 11, 16–17. 42 U.S. Chamber of Commerce for the Business Coalition for Transatlantic Trade (BCCT), Regulatory 

Cooperation Group, written submission to the USITC, December 2, 2013. The U.S. Chamber of Commerce 

submitted objectives for the TTIP negotiations in other areas as well, including services (covered in chapter 6 

of this report), digital trade, intellectual property, and competition.

1-10

 
Bibliography

Bureau van Dijk. Orbis Companies Database (accessed August 27, 2013).

Eurochambres. “Commission Still a Long Way from ‘Thinking Small First,’” November 25, 

2013. http://www.eubusiness.com/Members/EUROCHAMBRES/thinking-small-first/.

Europa. “SME Test,” October 10, 2013. http://ec.europa.eu/enterprise/policies/sme/small-businessact/sme-test/index_en.htm.

Huberman, Mariana. Owner, UPS Store #5259. Statement to the United States House Committee on 

Small Business. Ready to Export: Small Business Policy Recommendations for USTR, June 26, 

2013.

Lucy, Denise M., Françoise O. Lepage, and Jayati Ghosh. “Going Global: U.S.-based SMEs’ Change 

Imperatives.” Revue Sciences de Gestion 80 (2011): 21–36.

Fliess, Barbara, and Carlos Busquets. “The Role of Trade Barriers in SME Internationalisation.” OECD 

Trade Policy Working Paper No. 45. Paris: OECD, 2006. 

Francois, Joseph, Miriam Manchin, Hanna Norberg, Olga Pindyuk, and Patrick Tomberger. Reducing 

Transatlantic Barriers to Trade and Investment: An Economic Assessment. London: Centre for 

Economic Policy Research, 2013.

National Small Business Association (NSBA). “2013 Small Business Exporting Survey.” NSBA, 2013, 8.

U.S. Bureau of the Census (Census). Profile of U.S. Importing and Exporting Companies, 2010–2011, 

April 5, 2013.

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Working Group. Written submission to the U.S. International Trade Commission in connection 

with inv. no. 332-541, Trade Barriers That U.S. Small and Medium-sized Enterprises Perceive as 

Affecting Exports to the European Union, December 2, 2013.

———. Digital Trade Working Group. Written submission to the U.S. International Trade Commission 

in connection with inv. no. 332-541, Trade Barriers That U.S. Small and Medium-sized 

Enterprises Perceive as Affecting Exports to the European Union, December 2, 2013.

———. Intellectual Property Working Group. Written submission to the U.S. International Trade 

Commission in connection with inv. no. 332-541, Trade Barriers That U.S. Small and Mediumsized Enterprises Perceive as Affecting Exports to the European Union, December 2, 2013.

———. Regulatory Cooperation Working Group. Written submission to the U.S. International Trade 

Commission in connection with inv. no. 332-541, Trade Barriers That U.S. Small and Mediumsized Enterprises Perceive as Affecting Exports to the European Union, December 2, 2013.

———. Services Working Group. Written submission to the U.S. International Trade Commission in 

connection with inv. no. 332-541, Trade Barriers That U.S. Small and Medium-sized Enterprises 

Perceive as Affecting Exports to the European Union, December 2, 2013.

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U.S. International Trade Commission (USITC). Hearing transcript in connection with inv. no. 332-541, 

Trade Barriers that U.S. Small and Medium-sized Enterprises Perceive as Affecting Exports to 

the European Union, November 20, 2013.

———. Small and Medium-Sized Enterprises: Characteristics and Performance. USITC Publication 

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Publication 4189. Washington, DC: USITC, January 2010.

———. Small and Medium-Sized Enterprises: U.S. and EU Export Activities and Barriers and 

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July 2010.

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1-12
2-1 

CHAPTER 2 

Cross-cutting Trade Barriers and Issues 

This chapter summarizes information and views provided by small and medium-sized 

enterprises (SMEs) and other interested parties, who described four cross-cutting trade 

barriers as disproportionately affecting the ability of U.S. SMEs to export to the 

European Union (EU) compared to larger U.S. exporters (see also list, table 2.1): 

 SMEs frequently cited challenges in complying with EU standards and 

regulations as a major barrier to their exports to the EU. SMEs’ perspectives on 

this point were also shared by other interested parties, including the U.S. 

Chamber of Commerce and the National Association of Manufacturers (NAM), 

among others. 

 SMEs also cited the difficulty of protecting trade secrets and the high cost of 

patenting in the EU as obstacles to trade. 

 In addition, SMEs cited logistics difficulties when exporting to the EU, including 

problems in meeting customs and tax requirements and in handling shipping and 

distribution. Of particular concern were problems in determining the correct 

classification of their products or in valuing their products for purposes of the 

EU’s value-added tax (VAT) system. 

 Finally, while SMEs indicated that finance-related issues were not critical 

obstacles in exporting to the EU, they stated that longer payment terms in the EU, 

inadequate protection against nonpayment by customers, higher fees for payment 

transactions, and differences in legal and regulatory frameworks add to the costs 

of doing business in the EU market (compared with the U.S. market). 

U.S. government assistance programs were recognized by SMEs and other interested 

parties as helpful but in need of streamlining and wider dissemination. 

This chapter begins with an overview of standards as they relate to SMEs and their 

exports to the EU. In the chapters that follow, details on industry- or product-specific 

standards will be discussed. The second section of this chapter examines IP issues. 

The third and fourth sections describe the logistical and financial issues, respectively, 

cited by U.S. SMEs exporting to the EU. 

 
2-2 

TABLE 2.1 Cross-cutting trade barriers and issues 

Subject area Trade barrier/issue Specific challenges reported by U.S. SMEs and others 

Standards and 

regulations 

Standards and technical 

regulations 

Different regulatory approaches in the United States and the EU; U.S. 

SMEs’ lack of participation in development of EU standards; 

compliance with standards costly and time-intensive for U.S. SMEs 

Conformity assessment 

procedures 

Lack of national treatment of U.S. certification bodies; high cost of 

procedures, including testing for Conformité Européenne (CE) 

marking 

IP rights 

issues 

Trade secrets Inadequate protection of U.S. SMEs’ trade secrets, particularly in the 

regulatory and marketing approval process 

Patent protection High cost of obtaining patent protection in each member state; 

member states’ divergent standards 

Logistical 

issues 

Harmonized System (HS) 

classification 

Challenges in determining correct classification for exports, given that 

HS codes vary between the United States and the EU, and for certain 

products HS codes vary among EU members; reclassifications result 

in higher duties and taxes; and incorrect classifications may lead to 

customs delays 

EU's value-added tax (VAT) Complexity of VAT and difficulties with providing criteria 

(documentation and residency) for receiving credits, rendering 

compliance difficult 

Shipping/distributing 

products in the EU 

Unreliable international deliveries by some domestic postal services in 

the EU; challenges in distributing products; added costs of working 

with private couriers and distributors 

Financerelated 

issues 

Payment terms Longer typical payment terms in the EU versus the United States; 

added costs from financing receivables for longer periods 

Protection against 

nonpayment by customers 

Higher sales costs due to need to protect against nonpayment (e.g., 

through export credit insurance) 

Payment transaction fees 

Regulatory and legal 

framework 

Higher transaction costs for payments from the EU to the United 

States than for domestic payments because of higher bank fees (for 

currency conversion and wire transfers) 

Various differences in regulatory and legal framework between the EU 

and the U.S. pose obstacles to exporting 

Source: USITC compilation from roundtable transcripts, hearing transcripts, written submissions, and email 

messages. 

Standards and Regulations 

Standards, technical regulations, and conformity assessment procedures in the EU were 

among the trade barriers most frequently mentioned by U.S. SMEs during this 

investigation (box 2.1). 1 Industry representatives indicated that there are substantial 

differences between the regulatory systems in the United States and the EU, and that 

these differences result in significant barriers that make it disproportionately difficult for 

U.S. SMEs seeking to enter the European market.2

 SMEs expressed similar concerns 

 1

 The terms “standard” and “regulation” are used in this report according to the definitions from the 

World Trade Organization (WTO) Agreement on Technical Barriers to Trade (TBT Agreement) where 

possible. However, where submissions or roundtable transcripts were unclear as to whether the barrier was 

related to a standard or technical regulation, the terminology used in this report is that used by industry 

representatives. 2

 USITC, hearing transcript, November 20, 2013, 9–10 (testimony of Marjorie Chorlins, U.S. Chamber 

of Commerce); ANSI, written submission to the USITC, October 23, 2013, 7–8; ASTM, written submission 

to the USITC, n.d., 1–2 (accessed January 9, 2014); USITC, hearing transcript, November 20, 2013, 60–61 

(testimony of Jeff Grove, ASTM International). 
2-3 

BOX 2.1 Standards, technical regulations, and conformity assessment 

The following definitions of standard, technical regulation, and conformity assessment are from the World Trade 

Organization (WTO) Agreement on Technical Barriers to Trade (TBT Agreement). The primary difference between a 

standard and a technical regulation is that compliance with a standard is voluntary, while compliance with a technical 

regulation is mandatory. 

 Standard: “Document approved by a recognized body, that provides, for common and repeated use, rules, 

guidelines or characteristics for products or related processes and production methods, with which compliance is 

not mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labeling 

requirements as they apply to a product, process or production method.” 

 Technical regulation: “Document which lays down product characteristics or their related processes and 

production methods, including the applicable administrative provisions, with which compliance is mandatory. It 

may also include or deal exclusively with terminology, symbols, packaging, marking or labeling requirements as 

they apply to a product, process or production method.” 

 Conformity assessment procedures: “Any procedure used, directly or indirectly, to determine that relevant 

requirements in technical regulations or standards are fulfilled. . . . Conformity assessment procedures include, 

inter alia, procedures for sampling, testing and inspection; evaluation, verification and assurance of conformity; 

registration, accreditation and approval as well as their combinations.”a

_____________ 

a

 WTO, Agreement on Technical Barriers to Trade, Annex I, http://www.wto.org/english/docs_e/legal_e/17-

tbt_e.htm. 

during previous USITC investigations. 3 In a 2010 Commission survey, a higher 

percentage of large U.S. firms than small firms reported that foreign regulations are a 

burden; however, among those firms that reported foreign regulations are a burden, a 

larger percentage of U.S. SMEs (almost 90 percent) reported that they are a major 

burden.4

SMEs may have more difficulty adapting to standards-related measures in other 

countries/regions for a number of reasons, including the cost and staff time required.5

According to an EU report, even SMEs based in the EU are less likely to play a role in 

the process of developing European standards than large firms, due to factors such as a 

lack of awareness of the process and the cost of participating. In addition, the EU may be 

less likely to use international standards due to the challenges of identifying, obtaining, 

and implementing the right ones.6

 This section provides a general overview of the EU’s 

approach to technical standards, regulations, and conformity assessment and their impact 

on SMEs.7

 

 3

 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 3–12 to 3–

15; USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6–18 to 6–23. 4

 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6–20. 5

 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6–21; USITC, 

hearing transcript, November 20, 2013, 9–10 (testimony of Marjorie Chorlins, U.S. Chamber of Commerce); 

industry representative, email message to USITC staff, September 17, 2013. 6

 European Commission, Using Standards to Support Growth, 10, 29–32; de Vries et al., “SME Access 

to European Standardization,” August 2009, 11–16. 7

 More detail on measures in specific sectors will be discussed later in the report. 
2-4 

Different Regulatory Approaches in the EU and the United States 

According to the American National Standards Institute (ANSI), U.S. regulations tend to 

incorporate the standards that best fit regulatory needs, regardless of where or by whom 

the standard was developed.8

 This includes standards developed abroad. ANSI stated 

that: 

 “U.S. law and policy call for federal agencies to base technical regulations on 

voluntary consensus standards developed by the private sector—and, in 

particular, relevant international standards—wherever possible, rather than 

creating government-unique standards. U.S. regulators are given flexibility to 

select the standards that suit their regulatory objectives.”9

 

ASTM International (ASTM) further notes that EU-based SMEs participate in the 

development of standards by U.S.-based standards development organizations, and that 

U.S. regulators use standards from a range of global standards bodies, such as the U.S.-

based American Society of Mechanical Engineers (ASME) and the Switzerland-based 

International Organization for Standardization (ISO).10

In the EU, however, under the New Approach Directives adopted in 1985, the three 

European standards organizations—CEN (European Committee for Standardization), 

CENELEC (European Committee for Electrotechnical Standardization) and ETSI 

(European Telecommunications Standards Institute)—develop the technical 

specifications for products, and products that meet the standards established by these 

organizations are presumed to be compliant with the relevant regulation (box 2.2). This 

indirect referencing of standards, according to ASTM, is “exclusive to European 

standards and those harmonized through the ISO and IEC.” 11 The EU officially 

recognizes only the ISO, International Electrotechnical Commission (IEC), and 

International Telecommunication Union (ITU)—all based in Switzerland—as 

international standards bodies, and does not recognize U.S.-based private sector standards 

development organizations.12 There is no process that would either enable the use of 

standards developed by organizations based in the United States or extend the 

presumption of compliance to these standards.13 In addition, it is difficult for U.S. SMEs 

to participate in European standards development, which, according to ASTM, “is limited 

primarily to European experts working through their national standards bodies to reach a 

European consensus.”14

Industry representatives also pointed to differences between the EU and U.S. approaches 

to regulations in terms of their transparency and responsiveness to public comments on 

regulations. According to the U.S. Chamber of Commerce, the U.S. process for 

 8

 ANSI, written submission to the USITC, October 23, 2013, 7. 9

 Ibid. 

10 ASTM, written submission to the USITC, n.d., 2 (accessed January 9, 2014); USITC, hearing 

transcript, November 20, 2013, 61–62 (testimony of Jeff Grove, ASTM International). 11 ASTM, written submission to the USITC, n.d., 2 (accessed January 9, 2014). 12 USITC, hearing transcript, November 20, 2013, 61–62 (testimony of Jeff Grove, ASTM 

International); ANSI, written submission to the USITC, October 23, 2013, 7. 13 ASTM, written submission to the USITC, n.d., 2 (accessed January 9, 2014); USITC, hearing 

transcript, November 20, 2013, 103–104 (testimony of Jeff Grove, ASTM International). Also ASTM states 

that it has developed some 12,000 standards that are used currently around the world. 

http://www.astm.org/ABOUT/overview.html (accessed February 24, 2014). 14 USITC, hearing transcript, November 20, 2013, 62 (testimony of Jeff Grove, ASTM International); 

ASTM, written submission to the USITC, n.d., 2 (accessed January 9, 2014). 
2-5 

BOX 2.2 The “Old Approach” and “New Approach” in the EU 

In the EU, technical regulations can be developed under either the “Old Approach” or the “New Approach”: 

 Old Approach: EU regulations include the specific product standards that must be met. This approach applies to 

sectors such as motor vehicles and chemicals. 

 New Approach: The European Commission defines the “essential requirements” for products, and the technical 

specifications for meeting these “essential requirements” are developed by one of three European standards 

bodies—CEN (European Committee for Standardization), CENELEC (European Committee for Electrotechnical 

Standardization) and ETSI (European Telecommunications Standards Institute). Products that meet the 

standards developed by these bodies are presumed to comply with the “essential requirements.” These 

standards are not mandatory, but if a producer chooses not to use the standards, according to the European 

Commission the “producer has an obligation to prove his products are conformant to the essential 

requirements.”a

_____________ 

Sources: ANSI, written submission to the USITC, October 23, 2013, 7; European Commission, “The ‘New Approach,’” 

n.d. (accessed November 5, 2013); CENELEC, “New Approach Directives,” n.d. (accessed November 5, 2013); U.S. 

Department of Commerce, “Which Product Groups Are Covered?” n.d. (accessed November 5, 2013). 

a

 European Commission, “The ‘New Approach,’” n.d. (accessed November 5, 2013). 

developing regulations is more transparent, and stakeholders have more input into the 

regulations. 15 ANSI expressed the view that European regulators need to more fully 

consider stakeholder comments when developing regulations.16 NAM similarly raised 

concerns about the lack of transparency in the EU’s “implementation and the 

development of regulations and directions.” 

NAM also expressed concern about the use of the “precautionary principle” in 

developing regulations. 17 NAM stated that following this principle “leads to regulatory 

outcomes that are contrary to basic science, risk assessment and cost-benefit principles” 

and that pose barriers to U.S. exports. Even after regulations are implemented, according 

to the Society of Chemical Manufacturers and Affiliates (SOCMA), difficulty in 

communicating with EU regulatory agencies and a lack of transparency by these agencies 

can create challenges for SMEs.18 

 15 USITC, hearing transcript, November 20, 2013, 45–46 (testimony of Marjorie Chorlins, U.S. 

Chamber of Commerce). 16 ANSI, written submission to the USITC, October 23, 2013, 8. 17 The precautionary principle, according the European Commission, applies to possible risks to the 

environment or human, animal, or plant health. The precautionary principle comes into effect “when a 

phenomenon, product or process may have a dangerous effect,” but scientific evaluation “does not allow the 

risk to be determined with sufficient certainty.” In the absence of scientific certainty, the relevant authorities 

may still choose to act, including implementing measures to address this potential risk. The use of the 

precautionary principle can have an impact on firms and products sold in the market, since in “the case of an 

action being taken under the precautionary principle, the producer, manufacturer or importer may be required 

to prove the absence of danger.” NAM added that it remains concerned about EU regulations that lack 

technical justification and are not proportional with their intended consumer or environmental benefits. 

NAM, written submission to the USITC, October 23, 2013, 3–4; Europa, “The Precautionary Principle,” 

April 12, 2011. 18 USITC, hearing transcript, November 19, 2013, 69–75 (testimony of William E. Allmond, SOCMA). 
2-6 

Conformity Assessment Procedures and the Conformité Européenne 

Marking Perceived as Barriers to SME Exports 

Conformity assessment procedures were also widely cited by industry representatives as 

a barrier to U.S. exports to the EU (box 2.3). One barrier relates to the organizations that 

are allowed to provide testing and certification services. ANSI indicated that U.S. 

conformity assessment providers are not treated the same as providers within the EU, and 

that if the EU were to enable foreign firms to provide the same services as national firms, 

the move would make it easier for foreign manufacturers to export to the EU.19 NAM 

stated that the EU uses different processes in accrediting U.S. conformity assessment 

bodies than it does for EU bodies. Furthermore, according to NAM, “all avenues for 

obtaining required third-party certification for EU market access exclude U.S. testing 

laboratories from the final stage of product certification,” resulting in additional testing 

costs for U.S. manufacturers and delaying the sale of their products in the EU.20

Conformity assessment procedures, including testing related to the Conformité 

Européenne (CE) marking, were reported to add significant costs that are especially 

burdensome for SMEs.21 U.S. companies, for example, report spending thousands or tens 

BOX 2.3 CE marking 

A CE marking “indicates a product complies with the essential requirements of the applicable European laws or 

directives with respect to safety, health, environment, and consumer protection.”a Besides attesting that the product 

meets all applicable laws and regulations, the marking shows that the product can be sold in the European Economic 

Area—that is, the EU and the European Free Trade Association (EFTA)—and Turkey. The CE marking applies to a 

wide range of goods (e.g., medical devices, toys, pressure vessels, and measuring instruments), but it is not required 

for all products. 

Manufacturers are required to ensure conformity assessment and to attach the CE marking. They must conduct or 

arrange for the conformity assessment; prepare technical documentation on the product’s conformity assessment; 

prepare and sign an “EU declaration of conformity” (which must be available upon request); and attach the CE 

marking. Third-party certification may be required for the CE marking, but for many products, manufacturers can selfcertify that their products meet the relevant requirements. 

Distributors are required to verify that products have the CE marking and that manufacturers have the relevant 

documentation. Importers are required to ensure that manufacturers have followed the appropriate conformity 

assessment process and that documentation is available. 

_____________ 

Sources: USDOC, “CE Marking—Home,” April 12, 2011; USDOC, “CE Marking—Program Overview,” March 7, 2013; 

UL, “CE Marking Information,” n.d. (accessed October 31, 2013); European Commission. “CE Marking—Basics and 

FAQs,” n.d. (accessed October 31, 2013); UK, Department for Business, Innovation and Skills, “CE Marking,” 

October 8, 2012. 

a

 UL, “CE Marking Information,” n.d. (accessed October 31, 2013). 

 19 ANSI, written submission to the USITC, October 23, 2013, 8. 20 NAM, written submission to the USITC, October 23, 2013. 21 USITC, hearing transcript, November 20, 2013, 62–63, 155–156 (testimony of Jeff Grove, ASTM 

International); USITC, hearing transcript, November 20, 2013, 9–10 (testimony of Marjorie Chorlins, U.S. 

Chamber of Commerce); USITC, hearing transcript, November 20, 2013, 69–71 (testimony of William E. 

Allmond, SOCMA). 
2-7 

of thousands of dollars for CE testing.22 In addition, companies must create a technical 

file documenting that the product complies with all essential requirements in the EU 

directive, which European agencies can request to inspect.23 

Intellectual Property Issues Important to U.S. SMEs 

Exporting to the EU 

The basic insight underlying intellectual property (IP) rights is that the development of 

innovative products and processes can be expensive, time- and labor-intensive, and risky; 

however, once the innovations exist, often they can be copied at just a fraction of their 

original cost. 24 IP rights are intended to protect against unauthorized copying so that 

innovators can recoup their investments and earn a profit; without this framework, 

incentives to innovate may be undermined.25 As NAM stated in its written submission, 

“IP rights—such as patents, copyrights, trademarks, test data and trade secrets—drive 

innovation and economic growth.”26 

Although IP protection in the EU is generally considered strong,27 there are still problems 

in several areas. SMEs reported that manufacturers need more robust protection of trade 

secrets, particularly the confidential information that firms compile to obtain regulatory 

approval. SME representatives also noted that the high cost of patenting in the EU, and 

divergent patenting standards across EU member states, can create substantial obstacles 

to trade. By contrast, representatives of U.S. independent resellers asserted that trademark 

owners’ rights to control the sale of branded products within the EU are too strong and 

can act as a barrier to U.S. exports of new and used electronic equipment. This issue is 

addressed in more detail in the electronics section of chapter 4, as it mostly deals with 

sales of used branded electronic items. 

Increased Protection of Trade Secrets and Regulatory Data 

Industry representatives particularly cited the need for increased protection for trade 

secrets, a subject which they said has not been addressed extensively in trade 

agreements. 28 Trade secrets are broadly defined to include business information that 

derives economic value from not being generally known or readily ascertainable, and that 

 22 Industry representatives, email message to USITC staff, September 6, 2013, and September 24, 2013; 

USITC, hearing transcript, November 20, 2013, 62–63 (testimony of Jeff Grove, ASTM International). 23 USITC, hearing transcript, November 20, 2013, 164–65 (testimony of Jeff Grove, ASTM 

International). 24 Graham et al., “High Technology Entrepreneurs,” 2009, 1259. 25 Similarly, trademark rights give additional support to innovation by protecting firms’ investments in 

the reputation of their products and helping consumers differentiate among products. See, e.g., U.S. 

Department of Commerce, “Intellectual Property and the U.S. Economy,” March 2012, 1; Qualitex Co. v. 

Jacobson Prods. Co., 514 U.S. 159, 163 (1995); Graham et al., “High Technology Entrepreneurs,” 2009, 

1259. 26 NAM, written submission to the USITC, October 23, 2013, 2; U.S. Chamber of Commerce, written 

submission to the USITC, November 20, 2013, 2. See also U.S. Department of Commerce, “Intellectual 

Property and the U.S. Economy,” March 2012, 1. 27 NAM, written submission to the USITC, October 23, 2013, 2; U.S. Chamber of Commerce, written 

submission to the USITC, November 20, 2013, 2. 28 NAM, written submission to the USITC, October 23, 2013, 2; USITC, hearing transcript, November 

20, 2013, 87 (testimony of William Allmond, Society of Chemical Manufacturers & Affiliates). 
2-8 

has been subject to reasonable efforts to maintain its secrecy.29 Such efforts may include, 

for example, internal security procedures and contracts with employees and others that 

restrict disclosure of trade-secret information. Industry representatives identified trade 

secrets as particularly important to SMEs because, unlike patents, they can be protected 

without registration or filing formalities and are perceived to be less expensive to 

maintain and enforce.30 One industry representative noted that his firm does not own a 

single patent because of the expenses involved in obtaining and defending a patent in the 

event of a challenge.31 

Industry representatives specifically highlighted the need to ensure that trade secret 

information submitted to obtain regulatory or marketing approval of their products is 

protected from unauthorized disclosure. For example, under the EU’s new Cosmetics 

Regulation (EU Regulation 1223/2009), which came into effect in July 2013, firms 

reportedly must provide regulators with detailed information about their products, 

formulas, ingredients, and manufacturing processes.32 Industry representatives consider 

many of these facts to be trade secrets; companies generally require that employees with 

access to such information sign strict nondisclosure agreements. However, the new 

regulation reportedly will increase third-party access to the information, and U.S. firms 

consequently fear that it will increase the risk of disclosure to competitors.33 Industry 

representatives raised similar concerns about the need to share trade-secret information 

with EU regulatory representatives to comply with the requirements of the EU’s 

Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) 

regulation.34 

Industry representatives recommended that the United States and the EU work 

cooperatively with each other to ensure the effective protection of trade secrets in the EU, 

the United States, and other countries.35 On a positive note, on November 28, 2013, the 

EU proposed new rules to help strengthen protections against trade-secret theft. The draft 

directive includes a common definition of trade secrets, and is intended to make it easier 

for victims of trade-secret theft to obtain effective relief in all EU member states.36 

A Unified System for EU Patent Protection 

Industry representatives identified the high cost of patent protection in the EU as one of 

the most substantial IP barriers that SMEs face in Europe.37 Reportedly, patenting costs 

 29 The particular definition of trade secrets varies across EU member states and also by state in the 

United States, although the Uniform Trade Secrets Act has increased consistency across the 46 U.S. states 

that have adopted it. European Commission, “Study on Trade Secrets,” April 2013, 4; Albert, “Trade Secrets 

in the United States,” July/August 2010, 93. 30 NAM, written submission to the USITC, October 23, 2013, 2; Hall et al., “The Choice between 

Formal and Informal Intellectual Property,” April 2012, 37–38. 31 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 32 European Commission, “Health and Consumers, Regulatory Framework,” November 26, 2013. 33 Industry representatives, roundtable discussions, Centennial, CO, September 17, 2013; Philadelphia, 

PA, September 23, 2013; and Sacramento CA, September 25, 2013. 34 Industry representatives, roundtable discussion, Houston, TX, September 19, 2013; USITC, hearing 

transcript, November 20, 2013, 87 (testimony of William Allmond, Society of Chemical Manufacturers & 

Affiliates). 35 NAM, written submission to the USITC, October 23, 2013, 2–3. 36 European Commission, “Commission Proposes Rules,” November 28, 2013. 37 Industry representatives, roundtable discussions, Albuquerque, NM, September 18, 2013, and Salt 

Lake City, UT, September 20, 2013. 
2-9 

are much higher than in other markets because of the need to obtain protection in each 

member state, and because patenting and enforcement standards diverge across the EU. 

The European Commission estimates that obtaining EU-wide patent protection costs 

approximately $48,000 (€36,000), most of which goes to translation and local fees in the 

member countries, compared to approximately $2,600 in the United States.38 Moreover, 

this estimate does not take into account the cost of litigation in the event that a patent is 

challenged in one or more EU member states. These costs can be prohibitively high for 

SMEs, who often have limited legal and financial resources.39

To address the high costs and complexity of obtaining patent protection, the EU has taken 

initial steps to create a “unitary patent package” that would be available at an affordable 

cost and on a one-stop-shop basis in all participating member states. The EU also 

contemplates unified and specialized jurisdiction for patent cases, to avoid the high costs 

of duplicative and inconsistent litigation across member states.40 According to one SME 

representative, the implementation of unitary patent protection in the EU would be a 

“dream,” bringing substantial market access benefits to SMEs.41 

Logistical Issues, Including Customs, Tax Requirements, 

Shipping, and Distribution 

According to interviews with industry representatives, U.S.-based SMEs that export to 

the EU often lack adequate resources to successfully navigate the complex and 

sometimes inconsistent EU customs environment. 42 SMEs find it challenging to 

overcome large and often critical information gaps about three areas in particular: EU 

product classification requirements under the World Customs Organization (WCO) 

Harmonized Description and Coding System, or “Harmonized System” (HS); 43 the 

assessment of duties and taxes on EU imports; and the criteria for receiving credits under 

the EU’s VAT system. In some cases, the time-consuming process of researching and 

complying with EU customs and documentation requirements has deterred U.S. SMEs 

from exporting to the EU;44 in other cases, U.S. SMEs have sought export assistance from 

large, well-established logistic services providers, such as FedEx and UPS,45 which have 

expertise in customs management and a commercial presence in many, if not all, EU 

countries.46

 38 European Commission, “The EU Single Market, FAQs,” November 11, 2013. 39 While the Patent Cooperation Treaty streamlines the process for filing for patent protection in 

multiple countries, applicants must still take action in each country in which they seek the actual grant of the 

patent. 40 European Commission, “The EU Single Market: FAQs,” November 11, 2013. 41 Industry representative, roundtable discussion, Salt Lake City, UT, September 20, 2013. 42 Industry representatives, roundtable discussions, Houston, TX, September 19, 2013, and Philadelphia, 

PA, September 23, 2013. 43 The HS is designed to standardize trade procedures across the more than 200 countries to which it 

applies. According to the WCO, it is also “used by governments, international organizations and the private 

sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of 

origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts, 

and economic research and analysis.” For further information, see WCO, “What Is the Harmonized System?” 

n.d. (accessed November 5, 2013). 44 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 45 Industry representative, roundtable discussion, Houston, TX, September 19, 2013. 46 Industry representative, interview by USITC staff, Washington, DC, November 1, 2013. 
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U.S. SMEs Encounter Problems Understanding and Complying 

with EU Customs Requirements 

Product Classification 

U.S. SMEs that export to the EU report challenges in determining the correct HS 

classification to use on customs forms (and, by extension, the amount of duties and taxes 

to be paid on their exports). This problem is made worse by the fact that the last four 

digits used in 10-digit HS codes may differ by country, including between the United 

States and the EU. 47 SMEs and other industry representatives reported that in some 

instances, U.S. exports to the EU are reclassified by EU customs officials (using a 

broader product description under a 6-digit HS code), and that this sometimes results in 

higher duties and taxes for U.S. exporters or their customers. They also said that in some 

cases, HS classifications differ from one EU country to another and that, in other 

instances, incorrect or unrecognized HS codes on products arriving at EU ports of entry 

lead to customs delays and extended warehousing of U.S. exports.48 Both scenarios are 

costly to the exporter and can be particularly hard on U.S. SMEs.49 

Roundtable participants cited several examples of difficulty with HS classification issues 

in the EU. One U.S. manufacturer of retail security devices noted that the closest HS 

description for the type of product that it sells is smoke alarms. To remedy this issue, the 

company assigns an HS code to each component of the security devices that it exports 

(e.g., PCB ports in injection molded plastic and pull cabling). A firm representative 

commented that although this unconventional approach may make the company 

vulnerable to adverse judgments by EU customs officials, the company has not found a 

more effective way to address its dilemma. 50 An SME representative in the 

semiconductor industry said that one of its biggest challenges in exporting is uncertainty 

with customs. Another company representative said that although his firm is a known 

exporter and has frequent and regular shipments, when a shipment is held up for 

additional examination, it can be delayed for almost a month. The representative said that 

the process is inconsistent from port to port and shipment to shipment, so it is difficult for 

the SME to predict when there will be an issue.51 A representative of yet another firm 

stated that it has issues determining tariff classifications because its products contain both 

U.S. and Chinese content. It suggested that U.S. exporters would benefit from greater 

clarity in EU customs procedures.52

 47 Industry representative, interview by USITC staff, Washington, DC, November 1, 2013. 48 Industry representative, interview by USITC staff, Washington, DC, November 1, 2013. Industry 

representatives report that, in cases where it is unclear what the proper HS classification of a particular 

product is, an exporter may apply for a “ruling” by the customs administration of the country to which it is 

exporting. However, there is no reciprocity between countries with respect to these rulings, so that if the same 

product is exported to a third country, that country’s customs administration may assign the product yet 

another HS code. For example, the HS code for certain orthodontic equipment is not consistent across EU 

member states, which has implications on the various duties assessed on the product. Highland Metals, Inc., 

written submission to the USITC, September 24, 2013. 49 Industry representative, roundtable discussion, Houston, TX, September 19, 2013. 50 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013. 51 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 52 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 
2-11 

Duties and Taxes on EU imports 

Lack of clear information concerning duties and taxes on goods imported into the EU is 

also problematic for U.S. SMEs. 53 An SME exporter said that the inconsistent and 

sometimes opaque application of the HS code among EU countries can pose difficulties 

for both SME exporters and the logistics firms with which they partner because the 

customs duties assessed may be different than those originally anticipated.54 Without an 

accurate estimate of the “landed costs” of exports to the EU (which include both customsrelated duties and taxes, and transportation costs), U.S. SME exporters reported that they 

may be at a competitive disadvantage when pricing their products for the EU market.55

Because of the uncertainty about the precise amount of taxes and duties assessed on EU 

exports, many SMEs reportedly elect to have such fees paid by their EU customers once 

the products have cleared customs. Nonetheless, certain EU customers may prefer that 

these fees be paid before the goods ship, which creates fiscal uncertainty for U.S. 

exporters.56

EU’s VAT System 

Nearly 30 U.S. SMEs that participated in the Commission’s roundtables cited difficulties 

in meeting the documentation and other requirements of the EU’s VAT system.57 The 

VAT is a form of consumption tax on goods and services placed on the value that is 

added to a product at each stage of production and at final sale. The standard VAT rate 

varies by EU member, ranging from 15 percent to 25 percent (these rates are publicly 

available to both EU and non-EU residents). 

SMEs commented that the complexity of the VAT ledger system, and the requirement for 

transactions to take place between EU entities, pose challenges to U.S. exporters.58 For 

example, a U.S. manufacturer of sporting goods noted that it took the company nearly 

one year to comply with documentation and residency requirements pertaining to VATs. 

The company hired both an EU-based sales manager and a consultant to oversee VATrelated issues.59 Separately, a producer of technical equipment suggested that it would be 

 53 Industry representative, roundtable discussion, Bethpage, NY, September 25, 2013. 54 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 55 Industry representatives, roundtable discussion, Fresno, CA, September 27, 2013. One industry 

representative voiced concern over the lack of a central location within the EU to get information on all of the 

duties and taxes that a customer in the EU pays to receive the imported product. The lack of such a central 

source of information makes it difficult for the exporter to ascertain how price-competitive his company’s 

products are relative to those offered by EU-based manufacturers. 56 Industry representative, interview by USITC staff, Washington, DC, November 1, 2013. Returns of 

computer servers that have been repaired may also cause problems, as duties may be assessed twice if EU 

customs officials determine that a particular item that has been reexported to the EU contains value-added 

content. The issue is also applicable to consumer products that have warranties, because EU customs rules 

regarding the reexport of products or the export of replacement products are not always consistently applied 

across EU countries. Industry representative, roundtable discussion, Salt Lake City, UT, September 25, 2013. 57 The EU VAT legislation in effect since January 1, 2007, is Council Directive 2006/112/EC, which is 

a recast of the Sixth VAT Directive as amended over the years. The Sixth Directive, issued in 1977, sought to 

harmonize the national VAT systems by providing a uniform basis of assessment. For more information, see 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2006L0112:20110101:EN:HTML and 

European Commission, “Taxation and Customs Union: General Overview,” January 16, 2014. 58 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 59 Industry representative, roundtable discussion, Salt Lake City, UT, September 25, 2013. The 

manufacturer in this case exports directly to small retail shops rather than through a distributor, so the 

company must pay higher taxes and is responsible for coordinating VAT paperwork for many different 

shipments. 
2-12 

helpful if there were more public resources available for obtaining information on 

product eligibility and company enrollment requirements related to the VAT, as it is 

financially burdensome for SMEs to hire consultants for this purpose.60 In some cases, a 

U.S. exporter without a commercial presence in the EU will employ an EU-based “fiscal 

representative” to allow the U.S. firm, and its EU customers, to participate in the VAT 

system. 61 However, hiring EU representatives to serve in this capacity can be costprohibitive for U.S. SMEs.62 

U.S. SMEs Highlight Challenges with the Transportation and 

Distribution of Products in the EU 

Apart from customs issues, industry representatives also stated that the low reliability and 

high costs of shipping represent significant barriers to exporting to the EU. They 

commented that domestic postal services in the EU can be undependable for international 

deliveries: delays of six to eight weeks are common; items are often lost; and tracking 

methods are not trustworthy. Industry representatives said that they found the postal 

services in France, Germany, and Italy to be particularly problematic. They also stated 

that fees and duties beyond standard shipping costs can be cost prohibitive in certain 

countries, such as Romania. Cost and reliability problems of EU postal systems have 

forced industry representatives to use private couriers for shipping, which results in 

higher costs that are harder for small businesses to absorb. 63 Another industry 

representative that exports to the EU from the U.S. West Coast cited the amount of time 

needed to transport machinery to Europe as a trade barrier, in particular because such 

exports are routed through New Jersey or through Rotterdam (in the Netherlands) before 

reaching other countries in the EU. According to this representative, it generally used to 

take between 35 and 45 days for goods to be shipped from the West Coast to Europe, but 

recently this amount has increased to more than 60 days. The representative suspects that 

customs processing accounts for the additional delay, which hampers timely delivery of a 

seasonal product to his EU customers.64 

U.S. SMEs also noted challenges pertaining to the distribution of products in the EU.65

Although several U.S. SMEs reported that they benefit from working directly with EU 

distributors who have knowledge of EU product requirements, as well as of the local 

language, culture, and business practices, they noted that these partnerships have certain 

disadvantages. For instance, a representative of a food manufacturing firm stated that 

hiring a local distributor in the EU added to the company’s supply chain costs, which 

ultimately increased the prices of its products in the EU. 66 Another representative 

commented that U.S. exporters sometimes encounter difficulties terminating distribution 

agreements with EU entities: such agreements often contain opaque language that may 

 60 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. A 

representative of a chemicals firm said that Greece and Italy reportedly delay refunding VATs to qualified 

entities by as much as eight years due to these countries’ precarious financial situation. Industry 

representatives, roundtable discussion, Houston, TX, September 19, 2013. 61 Industry representative, roundtable discussion, Houston, TX, September 19, 2013; industry 

representative, interview by USITC staff, Washington, DC, November 1, 2013. 62 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013. 63 Industry representative, email message to USITC staff, October 10, 2013. 64 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 65 Industry representative, roundtable discussion, Houston, TX, September 19, 2013. 66 Industry representative, roundtable discussion, Atlanta, GA, September 13, 2013. 
2-13 

inadvertently commit U.S. exporters to paying their distributors after the agreements have 

expired.67 

Private and Public Entities Assist U.S. SMEs Exporting to the EU 

As noted, large logistics firms often assist U.S. SMEs in understanding and complying 

with EU customs requirements.68 These firms maintain sophisticated databases that help 

users to access customs information online, including global tariff rates. 69 They also 

employ account representatives with country-specific knowledge of import and export 

procedures, who can provide guidance on these matters to their clients. 70 In written 

testimony to the Commission, the U.S. Chamber of Commerce said that FedEx, UPS, and 

DHL offer education and training seminars to help SMEs learn how to establish an export 

business and fulfill customs requirements. According to the testimony, other companies, 

such as Amazon and eBay, also provide support to U.S. SME exporters that sell their 

products through the Internet. In March 2012, eBay launched a program to facilitate the 

increased participation of U.S. and EU SMEs in Web-based transatlantic trade. The 

program introduces a “policy roadmap” for lowering e-commerce trade barriers between 

the United States and the EU. The U.S. Chamber of Commerce also highlighted the work 

of the U.S. Foreign Commercial Service’s “Gold Key” program, which, among other 

things, links U.S. exporters with potential overseas distributors.71 

Finance-related Issues Faced by SMEs Exporting to Europe 

At the roundtable discussions held in September 2013, many SMEs mentioned that 

finance-related issues were sometimes challenging when exporting to the EU.72 The 

financial issues cited related principally to longer payment terms, more expensive 

protection against nonpayment, higher payment transaction fees, and differences in 

regulatory and legal frameworks. However, nearly all of these SMEs said that the major 

trade impediments they faced were non-financial. Export trade advisers and consultants 

concurred that the most difficult problems for exporters were not related to banking and 

finance, but rather to regulatory compliance for their products. Overall, SMEs reported 

 67 Industry representative, roundtable discussion, Smithfield, RI, September 27, 2013. 68 One SME exporter sought out a capable freight forwarder to overcome issues with warranty products 

and reimportation/reexportation. The freight forwarder provided assistance to the SME with EU customs 

procedures and paperwork. The SME noted that there are companies that specialize in the temporary 

reimportation/reexportation of commercial samples for exhibitions, fairs, and trade shows and that will do 

customs facilitation for a small fee; these companies generally produce good results. Industry representative, 

telephone interview by USITC staff, September 17, 2013. 69 Under its Directorate-General for Trade, the European Commission maintains a customs database 

called the Exporter’s Guide to Import Formalities (EGIF). Industry representatives commented that 

information on EGIF is both more current and more accessible than that contained in a similar customs 

database available through the U.S. government website export.gov. Industry representatives suggest that as a 

result, U.S. exporters may be at a disadvantage vis-à-vis their European counterparts when gathering customs 

information. Industry representative, interview by USITC staff, Washington, DC, November 1, 2013. 70 Industry representative, interview by USITC staff, November 1, 2013. 71 U.S. Chamber of Commerce, written submission to the USITC, October 8, 2013, 4; industry 

representative, interview by USITC staff, Washington, DC, November 1, 2013. 72 U.S. firms that sell financial services to EU customers did not participate in the roundtables or make 

a submission; thus, this section does not address trade barriers that such firms might face in exporting to the 

EU. Instead, this section describes financial issues reported by firms primarily exporting merchandise to the 

EU and by SMEs’ financial services and trade consultants. 
2-14 

that they are able to conduct business with banks in the EU without impediment. 73

Nevertheless, several industry participants cited some market practices and business 

conventions, especially with regard to the rights of creditors and debtors and the taking of 

collateral, that make it more difficult for them to sell in Europe than in the United States. 

Longer Payment Terms in the EU 

A U.S. supplier will likely sell on “open account” terms in order to be competitive in the 

European marketplace. 74 Several roundtable participants said that payment terms are 

conventionally longer in EU markets than in the United States. One industry consultant 

explained that typical payment terms in the EU are around 90 days, while they are 

normally closer to 45 days in the United States. This means that a U.S. firm exporting to 

the EU would likely have to finance its receivables for an additional 45 days, which 

entails an extra cost.75

Protection against Nonpayment 

As with most sales transactions, nonpayment is a concern for SMEs exporting to the EU. 

SME representatives discussed three ways a U.S. exporter can protect itself against 

nonpayment in foreign markets, but each approach is likely to be more expensive than 

selling at home. The first is to try to confirm the creditworthiness of purchasers by vetting 

them in advance. This was not judged to be a severe problem; one participant noted that it 

is much easier to vet a customer in the EU than, for example, in China. There are private 

credit-reporting services in the EU, just as in the United States, that sellers can use to 

assess the creditworthiness of their customers. Also, the U.S. Foreign Commercial 

Service offers a vetting service to help U.S. firms find suitable counterparties in foreign 

markets.76 

Second, several participants said that using letters of credit gave absolute security of 

payment, but added that these were expensive for exporters. A major reason for their 

costliness, according to these participants, is that local European banks charge fees to 

convert a U.S. letter of credit into a local bank guarantee conforming to local law (adding 

3–5 percent to the cost of the project), on top of the fees charged by the U.S. bank issuing 

the letter of credit. (Market convention has changed in recent years, and EU customers no 

longer accept U.S.-issued letters of credit.)77 

Finally, export credit insurance policies, like letters of credit, are available from both 

private and public sources. Examples include the American International Group, Inc. 

(AIG) and the U.S. Export-Import Bank. However, participants stated that market 

 73 Industry representatives, roundtable discussions, Cleveland, OH, September 10, 2013; Salt Lake City, 

UT, September 20, 2013; Smithfield, RI, September 27, 2013; and Cleveland, OH, September 10, 2013. 74 In the “open account” method of settling payment for trade transactions, the supplier ships required 

goods to the buyer who, after receiving the goods and checking the related shipping documents, credits the 

supplier’s account in their books with the invoice amount. The account is then settled by the buyer sending a 

bank draft or wire transfer remittance in favor of the exporter. 75 Industry representatives, roundtable discussions, Raleigh, NC, September 16, 2013; Salt Lake City, 

UT, September 20, 2013; Smithfield, RI, September 27, 2013; and New York, NY, September 24, 2013. 76 Industry representatives, roundtable discussions, Raleigh, NC, September 16, 2013; Salt Lake City, 

UT, September 20, 2013; and New York, NY, September 24, 2013. 77 Industry representatives, roundtable discussions, Centennial, CO, September 17, 2013, and Miami, 

FL, September 19, 2013. 
2-15 

policies may be prohibitively expensive for small exporters because insurers often 

impose a minimum premium amount, no matter what the value of the shipment.78

Industry representatives identified several strategies that producers can use to deal with 

nonpayment by customers after the fact: an exporter can try to renegotiate payment terms, 

file a claim with a bank that has issued a letter of credit or guaranteed the receivable, file 

an insurance claim if the receivable was insured, or sue the customer in the jurisdiction of 

the purchase contract (i.e., the local EU market). One U.S. exporter described how it 

succeeded in resolving nonpayment situations by renegotiating payment terms, but it 

noted that payments were slower from customers in countries with difficult economic 

conditions, such as Greece or Spain.79 Lawsuits were described as extremely costly and 

unlikely to be pursued by SMEs. 

Payment Transaction Fees 

SMEs said that payment transaction fees, even if payments are made as agreed and on 

time, are likely to be higher in the EU than in the United States. Banking representatives 

explained that wire transfer fees are now charged to both the sender and the receiver, 

rather than being absorbed by the bank. In addition, most U.S. banks will only accept 

payments made over the Society for Worldwide Interbank Financial Telecommunication 

(SWIFT)80 network (because its higher security fulfills requirements of U.S. anti-moneylaundering regulations), while EU counterparties often prefer to send payments through 

the local bank payment networks, where the fees are lower. However, payments sent to 

the United States from local networks sometimes get lost, although security will be 

improved in the new EU-wide Single Euro Payments Area (SEPA) network. In addition, 

these payments have the potential to be canceled by the sender. U.S. exporters therefore 

have to consider the need to pay higher SWIFT fees when they negotiate terms with their 

EU customers.81 

Additional Obstacles Related to Regulatory and Legal Frameworks 

SMEs and their financial services and trade consultants cited other differences in 

regulatory and legal frameworks between the United States and the EU (including EU 

national markets) that also make exporting from the United States to the EU somewhat 

more complex than doing business at home. For example, according to participants, 

product liability insurance requirements for suppliers are more onerous in the EU than in 

the United States, and they vary from country to country. Taxation of certain inputs and 

VAT compliance is also a challenging issue for SMEs. The EU’s more stringent privacy 

 78 Industry representatives, roundtable discussion, Smithfield, RI, September 27, 2013. 79 Industry representative, roundtable discussion, Salt Lake City, UT, September 20, 2013. 80 SWIFT is a member-owned cooperative that provides communication services to over 10,000 banks, 

securities institutions, and corporations in over 200 countries, enabling members to exchange automated 

financial information reliably and securely. 81 Before 2014, the EU payments landscape was complex, with local Automated Clearing House (ACH) 

payment networks in 17 European national markets, each requiring separate accounts by companies. 

Beginning on February 1, 2014, the EU’s SEPA initiative will harmonize how retail payments denominated 

in euros between EU counterparties are processed, and errors are likely to be significantly reduced by the 

introduction of a unique bank ID system; note, however, that SEPA does not include payments to parties 

outside the EU. Boston Consulting Group, “Global Payments 2013,” September 24, 2013; J.P. Morgan 

Treasury Services, “SEPA Compliance for U.S. Corporations” (accessed December 6, 2013); industry 

representatives, roundtable discussions, Smithfield, RI, September 27, 2013; Salt Lake City, UT, September 

20, 2013; and New York, NY, September 24, 2013. 
2-16 

regime was mentioned by a few roundtable participants, but generally was not deemed a 

significant issue. However, according to one participant, the United States’ anti-moneylaundering and know-your-client regulations have made some EU and Swiss banks less 

willing to work with U.S. companies.82 The risk of adverse currency movements reducing 

the value of export sales, as well as the transaction costs associated with currency 

conversion and hedging, are also ever-present problems that, in the view of participants, 

need to be addressed. Participants felt that recent U.S. financial regulations with respect 

to using foreign-exchange options have restricted currency-hedging opportunities for 

companies.83

U.S. Government Assistance 

Financial assistance is available to U.S. exporters from the Small Business 

Administration (SBA) and the U.S. Export-Import Bank. As indicated above, bank 

guarantees or letters of credit are available from the private sector, as are export credit 

insurance vehicles to lock in expected export receivables payments, but these are often 

costly. The SBA provides U.S. companies with funding to fulfill foreign sales contracts.84

The SBA guarantees working capital loans (for foreign receivable financing, purchase 

order financing, etc.) up to $5 million, which allows up to $30 million of financing per 

year based on a 60-day payment cycle. The Export-Import Bank’s export credit insurance 

program and working capital financing program also help provide SMEs with necessary 

financial protection as they engage in exporting.85 Export credit insurance is helpful when 

trying to secure a SBA working capital loan or a private sector bank guarantee, and the 

U.S. Export-Import Bank is able to offer this at a discounted price to SMEs (usually less 

than one-half of 1 percent of loan value).86 While there are minimum U.S. local-content 

requirements for covered exports, industry representatives indicate that this is normally 

not an important issue for SMEs. 87 Industry representatives also say that while 

undertaking export credit insurance agreements might remove some flexibility for the 

exporter in situations of nonpayment (i.e., they are forced to file a claim against the 

 82 Several U.S. banking laws and regulations have provisions to help law enforcement detect financial 

fraud and embezzlement, to identify schemes by U.S. persons involving tax evasion, money laundering, 

terrorist financing and other criminal activities. The key U.S. anti-money-laundering laws and regulations are 

the Bank Secrecy Act of 1970 (BSA) and the Uniting and Strengthening America by Providing Appropriate 

Tools Required to Intercept and Obstruct Terrorism Act of 2001 (known as the USA PATRIOT Act). U.S. 

anti-money laundering rules require reporting from U.S. branches and agencies of foreign banks about 

customer accounts if there is potentially “suspicious activity,” i.e. activity with no business purpose or 

apparent lawful purpose. At the same time, all U.S. holders of foreign bank accounts (both individuals and 

corporate) must file a report of their foreign bank and financial accounts (FBAR). In addition, the Foreign 

Account Tax Compliance Act 2010 (FATCA) requires foreign banks to report to the IRS information about 

financial accounts held by U.S. taxpayers or by entities in which U.S. taxpayers hold a substantial interest.” 

Protiviti Consulting, Guide to U.S. Anti-Money Laundering Requirements, 2012. 83 Industry representatives, roundtable discussions, Smithfield, RI, September 27, 2013; Santa Ana, CA, 

September 24, 2013; Philadelphia, PA, September 23, 2013; Salt Lake City, UT, September 20, 2013; and 

Miami, FL, September 19, 2013. 84 Industry representatives, roundtable discussions, Raleigh, NC, September 16, 2013; Salt Lake City, 

UT, September 20, 2013; New York, NY, September 24, 2013; Centennial, CO, September 17, 2013; and 

Smithfield, RI, September 27, 2013. 85 See the U.S. Export-Import Bank’s website for a description of the types of financial assistance it can 

provide to SMEs at http://www.exim.gov/products/. 86 Industry representatives, roundtable discussions, Raleigh, NC, September 16, 2013; Salt Lake City, 

UT, September 20, 2013; New York, NY, September 24, 2013; and Miami, FL, September 19, 2013. 87 Industry representatives, roundtable discussions, Raleigh, NC, September 16, 2013, and Los Angeles, 

CA, September 23, 2013. 
2-17 

customer and cannot renegotiate payment terms with them), they view the advantages as 

outweighing this drawback, especially for very large sales contracts.88

Several industry representatives noted that it would be helpful to have information about 

SBA, U.S. Export-Import Bank, and other government programs made more widely 

available. The website www.export.gov was viewed as very helpful, but some 

participants expressed concern that many SMEs are not aware of all the types of 

assistance offered. Improving communication with SMEs about available government 

assistance was seen as particularly important to encouraging companies to start exporting 

for the first time.89 Statements from the U.S. Chamber of Commerce reinforce this point. 

They note the U.S. Government Accountability Office (GAO) findings that “the 

17 federal agencies with export promotion programs could be made more effective 

through better coordination, elimination of duplicative activities, and better allocation of 

resources.” 90 They found helpful the new collaborative initiative by several federal 

agencies to combine their trade financing programs and export marketing services into a 

one-stop platform—“U.S. Global Solutions.” However, they noted that this program was 

still only in its pilot phase (scheduled to be completed in early 2014).91 

 88 Industry representatives, roundtable discussion, Raleigh, NC, September 16, 2013. 89 Industry representatives, roundtable discussions, Raleigh, NC, September 16, 2013; Cleveland, OH, 

September 10, 2013; New York, NY, September 24, 2013; Miami, FL, September 19, 2013; Centennial, CO, 

September 17, 2013; and Philadelphia, PA, September 23, 2013. 90 U.S. Chamber of Commerce, written submission to the USITC, October 8, 2013, 6; U.S. Government 

Accountability Office (GAO), “Export Promotion: Better Information Needed about Federal Resources,” July 

17, 2013. 91 U.S. Chamber of Commerce, written submission to the USITC, October 8, 2013, 7. 
2-18 

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(accessed November 5, 2013). 
CHAPTER 3

Chemicals and Apparel

Overview

Although the U.S. chemical and apparel industries have different characteristics, SMEs in 

both industries reported difficulty complying with the EU chemical regulatory system.

The U.S. chemical industry includes large multinational companies (MNCs) and SMEs

that produce a wide variety of products using both traditional and emerging technologies 

(e.g., biotechnology and nanotechnology). Many SMEs in the sector not only contribute 

to MNCs’ supply chains but also export goods themselves. As noted in the Commission’s

January 2010 report on SMEs, the U.S. chemical industry was one of the United States’ 

largest exporting sectors in 2007; SMEs accounted for about one-quarter of the sector’s 

world exports in that year.1 In contrast, the U.S. apparel sector, which uses natural and 

manmade fibers along with chemicals to make a wide variety of garments, is small and 

has been in decline during recent years. Apparel exports in 2010–11 were dominated by 

SMEs, in terms of both the number of exporters and the known value of exports. 

SMEs and industry associations listed the following trade barriers as affecting SMEs’ 

exports of chemicals to the EU: the EU’s Registration, Evaluation, Authorisation and 

Restriction of Chemicals (REACH) regulation; tariff classifications under the 

international Harmonized System (HS); EU legal definitions, particularly those that differ 

from U.S. definitions; the process for obtaining Conformité Européenne (CE) marks; and 

rules related to the use of advanced materials and emerging technologies, such as 

biotechnology and nanotechnology. While REACH was identified as a substantial trade 

barrier by most chemical and apparel industry SMEs participating in this study, other 

nontariff measures (NTMs) discussed in this chapter also potentially affect SMEs 

disproportionately.

Apparel companies and related industry organizations also expressed concern about 

REACH and about high tariffs, particularly those relating to women’s premium denim 

jeans. As SMEs account for most apparel exports to the EU, such tariffs can have a 

disproportionate effect on small companies. SMEs in both sectors also reported issues 

addressed in more detail in other chapters of this report, including inconsistent levels of

value-added taxes (VATs) and other taxes in different EU countries (chapter 2); problems 

related to certificates of resale (chapter 4); and the varying levels of documentation 

required by EU member states (chapter 2).

1 USITC, Small and Medium-Sized Enterprises: Overview, 3-11.

3-1

 
Chemicals and Related Emerging Technologies 

The U.S. chemical industry is the world’s second largest, 2 accounting for about 

15 percent of the global industry in 2012. 3 The industry produces a wide variety of 

chemicals—e.g., adhesives, dyes and pigments, pesticides, pharmaceuticals, cosmetics, 

and plastics resins—that are used in all segments of the U.S. economy. U.S. chemical 

shipments were valued at almost $800 billion in 2012, continuing more than a decade of 

growth (with the exception of a decline in 2009 because of the global economic 

slowdown). 4 Sector employment levels, however, averaged about 785,000 annually 

during 2010–12, the lowest in a decade.5

Technologies used by the sector range from conventional chemical processes to 

multidisciplinary emerging technologies such as biotechnology and nanotechnology 

(box 3.1), with companies often integrating conventional and novel production processes 

in individual product lines. Companies participating in this study represented a diverse 

set of product groupings, including, among others, biologicals and other pharmaceuticals, 

biobased and renewable chemicals, biocides, colorants, cosmetics and other personal care 

products, industrial chemicals, lubricants, plastics, specialty intermediate chemicals, and 

various nanomaterials and other nanotechnology products.

2 For purposes of this study, the U.S. chemical industry encompasses all firms included in the North 

American Industrial Classification System (NAICS) code 325. 3 American Chemistry Council (ACC), Guide to the Business of Chemistry 2013, 2013, iii, 9. 4 ACC, Guide to the Business of Chemistry 2013, 2013, 9, 41. ACC defines shipments as “equivalent to 

the term ‘turnover,’ or value of output.” 5 ACC, Guide to the Business of Chemistry 2013, 2013, iii, 9.

BOX 3.1 Use of biotechnology and nanotechnology in the chemical sector

Biotechnology: According to the Biotechnology Industry Organization (BIO), “At its simplest, biotechnology is 

technology based on biology.”a Products are made using biological products and/or processes. The three major 

segments of the biotechnology industry includeb (1) healthcare (in the EU, this is referred to as “red 

biotechnology”)—the production of biopharmaceuticals and other medical products; (2) agricultural (“green 

biotechnology”)—the production/modification/improvement of products, plants, or animals or the development of 

microorganisms for specific agricultural uses; and (3) industrial biotechnology (“white biotechnology”)—the 

production of bioproducts such as biofuels and biobased chemicals. 

Nanotechnology: Refers to the application of science and engineering at the nanoscale in a wide variety of 

sectors to create novel products, tools, and technologies using unique properties of matter that emerge at that 

scale.c A number of U.S. SMEs are beginning to commercialize and export nanotechnology products along the 

entire value chain, ranging from upstream nanomaterials (e.g., carbon nanotubes) to downstream products such 

as solar cells, pharmaceuticals, cosmetics, and nanocomposites.d

_______________________________

a BIO, “What Is Biotechnology?” (accessed October 4, 2013). b BIO, “Glossary of Agricultural Biotechnology Terms,” February 14, 2011; EuropaBio, “What Is 

Biotechnology?” (accessed September 25, 2013). c The nanoscale ranges from about 1 nanometer to about 100 nanometers (a nanometer is one-billionth of a 

meter). Products incorporating nanomaterials and nanoprocesses include advanced composites, highperformance batteries, automotive electronics in hybrid vehicles, and cancer treatments, among others. d Nanotechnology can be applied across a variety of sectors, ranging from chemicals to electronics to 

aerospace, to name a few.

3-2

 
The EU is a major trading partner for the U.S. chemical industry. In 2010–11, about a 

third of the known value of U.S. exports of chemicals (both by all exporters and by SME 

exporters) were to the EU (table 3.1), and over half of all U.S. firms exporting chemicals

exported to the EU. SMEs accounted for about 15–21 percent, by known value, of 

U.S. exports of chemicals in 2010–11 and represented over 90 percent of the number of 

companies exporting, both overall and to the EU.

TABLE 3.1 The known value of U.S. exports and the number of exporters of chemicals (NAICS 325), by all U.S. 

exports and U.S. SME exports, and by all destinations and the EU6

All destinations EU EU shares (%)

2010

All exports, known value (million $) 121,468 43,748 36.0

U.S. SME exports, known value (million $) 20,553 6,566 31.9

 SME share (%) 16.9 15.0 –

Number of known exporters 4,904 2,624 53.5

Number of known SME exporters 4,703 2,435 51.8

 SME share (%) 95.9 92.8 –

2011

All exports, known value (million $) 124,821 38,038 30.5

U.S. SME exports, known value (million $) 23,317 8,065 34.6

 SME share (%) 18.7 21.2 –

Number of known exporters 4,959 2,689 54.2

Number of known SME exporters 4,751 2,502 52.7

 SME share (%) 95.8 93.0 –

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

Trade Barriers Related to Chemicals

REACH

A large number of SMEs in the chemicals sector, including producers of biobased 

chemicals and nanomaterials, cited REACH (box 3.2) as disproportionately affecting 

their exports to the EU. The Society of Chemical Manufacturers and Affiliates 

(SOCMA), a U.S. trade association, 7 reported that REACH reduced exports by 

U.S. SMEs to the EU. SOCMA and numerous SMEs stated that REACH has a 

disproportionate effect on SMEs versus larger companies—a view 

6 The known value is the portion of U.S. exports that Census was able to link to a specific company.

Thus, it is a subset of total U.S. exports. 7 SOCMA’s members are batch, custom, and specialty chemical manufacturers; in 2013, over 

90 percent of SOCMA’s North American members were SMEs. SOCMA website, 

http://www.socma.com/assets/File/socma1/PDFfiles/membership/SOCMA-Member-List-for-print.pdf

(accessed November 7, 2013). These data refer to 2013 and can change annually.

3-3

 
BOX 3.2 Background information: REACH and the chemical industry

REACH entered into force June 1, 2007. According to the European Chemicals Agency (ECHA), in principle REACH 

applies to all chemical substances and, therefore, affects most companies operating in the EU.a SOCMA states in its 

testimony that REACH is different from the U.S. chemical regulatory system in that it was “founded on the 

precautionary principle rather than the U.S. risk-based approach to regulation.”b As one source defines it: under the 

precautionary principle, a product is not allowed/approved if there is a chance it can cause harm; in comparison, a riskbased approach “attempts to balance potential for harm against the potential for benefits.”c

Under REACH, U.S. companies need to register the chemical substances they export to the EU and are required to 

have EU representation, usually in the form of an “Only Representative” (OR).d Costs for ORs can vary, largely 

depending on their cost structures and the number of products covered. For example, although polymers are exempt 

from registration, a U.S. chemical company marketing a polymer with 10 inputs in the EU has to register each input as 

individual substances, even if those substances are already registered by another U.S. company, significantly raising 

registration and OR costs.e

Registration dates run through 2018 and are phased in by tonnage and toxicity levels. Phase 1, implemented 

December 1, 2010, covers products shipped in quantities either greater than 1,000 metric tons per year (mtpy), if the 

product does not pose certain hazards defined under the Chemical Hazard Information and Packaging for Supply 

(CHIP) regulations; or greater than 100 mtpy, if the product is classified under CHIP as being hazardous to aquatic 

organisms; or greater than 1 mtpy, if the product is classified under CHIP as a carcinogen, mutagen, or reproductive 

toxicant.f Phase 2, effective June 1, 2013, covers all products shipped in quantities between 100 and 1,000 mtpy. 

When Phase 3 is implemented (June 1, 2018), the quantity levels will be reduced to 1 mtpy or greater.g

REACH’s broad coverage not only affects manufacturers of specific chemicals but also companies in the consuming 

sectors, such as textiles and automotive and airplane parts. (For example, as cited in the Commission’s July 

2010 report, General Motors had to ensure that the thousands of parts it imports into the EU from SMEs and others in

its global supply chain meet REACH requirements.) Of the 3,215 companies that registered products for the 

2013 deadline, ECHA reports that 34 percent were characterized as “micro, small or medium-sized companies”; 

moreover, of the 9,084 registrations, about a quarter “were made by ‘only representatives' on behalf of non-European 

companies.”h Most other registrations would have been submitted by EU companies.

The high costs of complying with REACH have reportedly caused companies to exit the EU market, resulting in a 

market shakeout. Registration costs vary greatly depending on variables such as tonnage shipped, the amount of data 

needed, the number of companies that may group together for a product, and the number of products each company 

must register. Cost estimates presented in the Commission’s July 2010 SME report ranged from about $1 million to 

place a product on market once to as much as $5 million over several years per product (an amount that reportedly 

could, however, be divided among companies participating as a group).i

_________________

a ECHA, “Understanding REACH,” n.d. (accessed December 28, 2013). b SOCMA, prehearing submission to the USITC, September 20, 2013.

c DeLisi, email message to USITC staff, October 29, 2013. 

d If a U.S. firm does not have a legal presence in the EU, it must appoint an Only Representative (OR) to carry out 

the required registration of imported substances under article 8(1) of REACH. The OR is a legal entity established in 

the EU that has sufficient background in the practical handling of substances and the necessary information to fulfill all 

registration obligations. The OR is then responsible for fulfilling all obligations under REACH for the imported 

substances that the firm appointed the OR to cover. ECHA, “Guidance on Registration,” May 2012. Various EU 

consulting firms and laboratories offer these types of services. e Some examples of costs are presented in this box and throughout this chapter. f

“Basically, chemicals manufactured or imported in large volumes and certain substances with particularly 

hazardous properties will need to be registered earlier than those manufactured or imported in smaller volumes.” UK, 

Health and Safety Executive (HSE), REACH—Pre-registration, November 2012. See this document for more 

information about the CHIP classifications. 

g UK, HSE, REACH—Pre-registration, November 2012. h ECHA, “REACH 2013” (accessed November 27, 2013). The EU generally identifies SMEs as having less than 

250 employees (versus 500 as in the United States). Also, although no information is available about the size of the 

companies represented by ORs, it is likely that many of them are SMEs, as larger firms would generally already have 

representation in the EU. (EU definition cited in USITC, Small and Medium-Sized Enterprises: U.S. and EU Export 

Activities, July 2010, 2–3.) i USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 2010, 4-13.

3-4
SOCMA says was also expressed by the European Commission in reporting on its review 

of REACH—and said that REACH poses diverse challenges to SMEs:

8

SOCMA stated that REACH is “very expensive and time consuming for all chemical 

companies doing business in the EU,” adding that “Bloomberg Government estimated 

that the regulatory costs [under REACH] add 22.2 percent to the goods tariff on 

chemicals.”

• SMEs in various segments of the chemical industry, including SOCMA members, 

stated that the requirement for non-EU companies to be represented in the EU by an 

“Only Representative” (OR; see box 3.2) was expensive and provided little benefit

to them.

9

• Compliance and testing costs associated with REACH, which can vary widely, were 

also described as trade barriers that caused some companies to exit the EU market.

10

According to SOCMA and individual SMEs in the chemicals sector, whereas some 

SMEs reportedly can incur costs of as much as $2 million over five years, 

companies exporting less than 10 metric tons per year to the EU may still be liable 

for as much as $40,000 in testing costs. 11 An SME with one registered, nonhazardous chemical reported a one-time payment of $200,000 for registration and 

testing and then $35,000 annually for their OR. The SME stated that it paid these 

additional costs from cash reserves that would have otherwise been reinvested in its 

plant. It added that the costs incurred had a disproportionate impact on it, as a larger 

company could instead “spread [the cost] over a diverse product line.”12 An apparel 

company stated that tests required by REACH on individual pieces of apparel can 

exceed $1,000 per item.13 Companies also noted they had hired consultants to help 

them comply with REACH.

14

8 SOCMA, prehearing submission to the USITC, September 20, 2013; Dickson of Nation Ford 

Chemical, written submission to the USITC, September 5, 2013; industry representatives, roundtable 

discussions, Milwaukee, WI, September 12, 2013; Houston, TX, September 19, 2013; Los Angeles, CA, 

September 23, 2013; New York, NY, and Santa Ana, CA, September 24, 2013; Sacramento, CA, 

September 25, 2013; Boston, MA, September 26, 2013; and Smithfield, RI, September 27, 2013; Thyfault, 

written submission to the USITC, December 1, 2013. Additional sources are noted below as appropriate. 

Most of the participating companies citing REACH were involved in chemicals, but some companies in other 

sectors—such as apparel—also mentioned concerns about REACH, including its testing requirements. SMEs 

also reported concern that countries outside the EU are adopting EU precautionary principles and legislation 

(e.g., REACH) as part of their chemical regulation system. Krygsman, written submission to the USITC, 

September 30, 2013; USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, July 

2010, 4–13; Hepeng Jia, “China Updates Chemical Legislation,” April 1, 2010. 9 SOCMA, prehearing submission to the USITC, September 20, 2013; industry representatives, 

roundtable discussions, Milwaukee, WI, September 12, 2013; Houston, TX, September 19, 2013; Los 

Angeles, CA, September 23, 2013; New York, NY, September 24, 2013; Sacramento, CA, September 25, 

2013; Boston, MA, September 26, 2013; and Smithfield, RI, September 27, 2013. 10 The costs included are said to relate to testing, translating documents like material safety data sheets 

(MSDSs) into multiple languages, compliance (e.g., exposure and environmental impact studies), 

participating in a Substance Information Exchange Forum (SIEF), and hiring the requisite OR. 11 SOCMA, prehearing submission to the USITC, September 20, 2013; industry representative, 

telephone interview by USITC staff, September 20, 2013; industry representatives, roundtable discussions, 

Milwaukee, WI, September 12, 2013, and Santa Ana, CA, September 24, 2013. 12 Dickson of Nation Ford Chemical, written submission to the USITC, September 5, 2013. 

Mr. Dickson stated that Nation Ford approached REACH compliance proactively by not only learning about 

the system but also hiring a consultant and treating compliance as a priority. 13 Industry representative, roundtable discussion, Los Angeles, CA, September 23, 2013. 14 Dickson of Nation Ford Chemical, written submission to the USITC, September 5, 2013; industry 

representatives, roundtable discussions, Los Angeles, CA, September 23, 2013, and Santa Ana, CA, 

September 24, 2013.

3-5

 
• The cost related to registering chemical additives, which can either be the product 

exported or may account for less than 1 percent by weight of the exported product, 

can be prohibitive for an SME and may discourage the SME from entering the EU 

market. The impact on SMEs is said to be disproportionate, as the larger firms can 

more readily absorb the additional costs.15

• SMEs stated that they have to reveal too much about their products under REACH, 

including products protected worldwide by trade secrets.

16

• U.S. SMEs reported that it is very difficult to communicate with the European 

Chemicals Agency (ECHA). Issues cited include slow response times and difficulty

both in obtaining answers and having ECHA follow up on previous requests.

17

• An opaque rulemaking process is also an issue for U.S. SMES.18 SOCMA states, “In 

this, and likely soon to be many similar instances, ECHA will be taking an action on 

substances which will have worldwide implications, without any input from U.S. 

companies.” 

In addition, SMEs reported that the Substance Information Exchange Forums (SIEFs) 

maintained under REACH hinder SME exports to the EU. Reported goals of the SIEFs 

are to foster the exchange of information, among companies, about specific products and 

their classification and labeling and also to facilitate the preparation of the lead 

registration dossier using this information through a consensus approach.

19 All companies 

registering the same product(s)—whether large companies or SMEs—are legally required 

to join the SIEFs and share data, potentially resulting in very large groups. A REACH 

requirement is that a “lead registrant” will be identified to produce the dossier, which will 

be the primary reference document. As stated by one source, the lead registrant for a 

given product would likely be a large supplier of the product.

20 SOCMA and other 

industry representatives state that although SIEFs are intended to prevent duplication of 

testing and other costs, SIEFs can hinder competition in that SMEs may have challenges 

accessing the necessary information and negotiating with the larger companies in a 

SIEF.21 Also, as mentioned by one source, nothing compels the larger companies in a 

SIEF to cooperate with the smaller companies or to do so in a timely fashion.22 Another 

concern raised by SOCMA is that some SMEs have reportedly been required to join a 

SIEF even when their product is not exactly the same as that covered by the SIEF, which 

creates issues related to the hazard classification of the product.

15 Industry representative, telephone interview by USITC staff, August 29, 2013. This issue would also 

affect non-SMEs who are small-volume traders. 16 Industry representatives, roundtable discussions, Centennial, CO, September 17, 2013, and Houston, 

TX, September 19, 2013. 17 SOCMA, prehearing submission to the USITC, September 20, 2013; industry representative, 

telephone interview by USITC staff, September 20, 2013; industry representative, roundtable discussion, 

Raleigh, NC, September 16, 2013. 18 SOCMA, prehearing submission to the USITC, September 20, 2013; industry representative, 

roundtable discussion, Raleigh, NC, September 16, 2013. 19 UK, HSE, REACH - Substance Information Exchange Forum, Nov 2012. The document also states 

that SIEFs will end as of June 1, 2018. 20 Ibid. 21 SOCMA, prehearing submission to the USITC, September 20, 2013; industry representatives, 

telephone interviews by USITC staff, August 29 and September 20, 2013. 22 Industry representative, telephone interview by USITC staff, August 29, 2013. 

3-6

 
SMEs also reported that the level of detail needed for EU material safety data sheets 

(MSDSs) is very burdensome for them. Each chemical is required to have an MSDS for 

each market in the language of that market. The MSDS contains safety information 

related to the product for employees and emergency personnel (including the product’s 

physical characteristics, handling and storage specifics, toxicity information, necessary 

protective equipment, disposal, etc.). 23 Although the MSDS requirements were 

implemented in the EU in 2009 under the regulation on classification, labeling, and 

packaging of substances and mixtures24 rather than REACH, requirements for extensive 

additional information have recently been implemented simultaneously with REACH that 

take information directly from REACH dossiers.

25 Sources cited EU MSDS requirements 

that differ from those of other countries, particularly regarding the amount of required

additional information. One company said that SMEs not only have to “create a unique 

MSDS for each product [in English] for the EU” but then have to translate this EU 

document into the national languages of the member states in which the product is sold, 

with translations reportedly costing about $200 per language.26

SOCMA also states that REACH’s pending phase 3 deadline in 2018 will have a big 

impact on SMEs:27

But the majority of [SOCMA’s] members’ products exported to the 

EU will fall in the 2018 deadline when the quantity threshold falls to 

1 metric ton . . . per year. This smaller quantity threshold makes it 

much more difficult to amortize compliance costs at a rate that will 

make sense, even though the data requirements are lower. It is highly 

unlikely that our member companies will be able to follow through 

with registration dossiers for all of the substances that they initially 

pre-registered. 

Many SMEs in the chemical industry are reportedly deciding that REACH’s “no data, no 

market” approach is too complex and the costs too high, and are either not entering the 

EU market or leaving it.28 As an example, SOCMA described a member company that 

was marketing a product derived from renewable inputs. The company is said to have 

chosen to forego the EU market because of the costs associated with REACH and, 

instead, has focused on markets in the United States, Asia, and South America. (The firm 

decided this despite the fact that, as noted by SOCMA, the renewable chemical was 

potentially a safer alternative to its petrochemical-based counterpart—a goal purportedly 

espoused by REACH.) A chemical company involved in nanomaterials stated that it 

made a similar decision not to export to the EU because of the complexity of the 

23 Oregon OSHA, “Oregon OSHA Factsheet Plus: What Is a Material Safety Data Sheet (MSDS)?” 

February 2008. 24 Regulation EC No. 1272/2008. 25 DeLisi, email message to USITC staff, November 8, 2013. 26 Dickson of Nation Ford Chemical, written submission to the USITC, September 5, 2013. Also, 

industry representatives, roundtable discussions, Milwaukee, WI, September 12, 2013; Raleigh, NC, 

September 16, 2013; Houston, TX, and Miami, FL, September 19, 2013; DeLisi, email message to USITC 

staff, November 8, 2013. 27 Many SMEs export small quantities of product to the EU, and in 2018 shipments over 1 metric ton 

per year will become subject to REACH. SOCMA, prehearing submission to the USITC, September 20, 2013.

See box 3.2 for more information on REACH’s three phases. 28 SOCMA, prehearing submission to the USITC, September 20, 2013; industry representatives, 

roundtable discussions, Milwaukee, WI, September 12, 2013, and Sacramento, CA, September 25, 2013.

3-7

 
regulations, even though it believes that there is a market in the EU for its 

products/technology.

29

Regulations/directives and Other Regulatory Issues

Chemicals are also subject to other regulations and directives besides REACH, both at an 

EU level and at a member state level. These requirements are cited by U.S. SMEs as 

trade barriers in that the regulations and directives not only adhere to the precautionary 

principle (versus the U.S. risk-based regulatory approach) but can also overlap and create

contradictory results. (The precautionary principle is discussed in box 3.2.)

The multiple and diverse EU and member state requirements reportedly have a negative 

effect on SMEs. For example, the EU requires more test results than the United States, 

often at different/multiple times within the product-approval cycles.

30 The multiple 

requirements also force SMEs to hire additional staff to keep up with and to appeal (as 

necessary) changes/differences within the EU (e.g., reconciling labeling requirements),

31

and increase the costs for compliance. In addition to paying administrative fees, one SME 

said that to register biocides:

Acute toxicology, product chemistry and ecotoxicity data for each

formulation are necessary in the EU at an average cost of

75[,000]–100,000 euros [about $100,000–$140,000] 32 per product

whereas, aside from California, only fees and a copy of [the]

product label are required in the U.S. for state registration. Cost[s]

for registering one biocide formulation in the continental U.S. are 

approximately $11,000 versus the multiple registration costs in the

EU.33

Separately, some SMEs reported being reluctant to export nanotechnology products to the 

EU, despite favorable test results for those products,

34 because they regard the status of

EU regulations about nanotechnology as uncertain.

35 Similar regulatory concerns were 

cited in regard to U.S. exports of biologics.36 One SME also cited a lack of harmonization 

in EU testing standards, resulting in laboratories using different—and not always 

compatible—testing methods, at costs ranging from about $500 per test for individual 

heavy metals to about $30,000 for individual biological species. The EU also requires 

such tests to be repeated over certain intervals, adding to the costs.37 Concerns related to

29 Industry representative, email message to USITC staff, September 23, 2013. 30 Industry representatives, roundtable discussion, Milwaukee, WI, September 12, 2013; Albuquerque, 

NM, September 18, 2013; Los Angeles, CA, September 23, 2013; and Santa Ana, CA, September 24, 2013. 31 Industry representatives, roundtable discussions, Milwaukee, WI, September 12, 2013; Centennial, 

CO, September 17, 2013; Los Angeles, CA, September 23, 2013; and Santa Ana, CA, September 24, 2013. 32 Using exchange rates as of January 8, 2014. 33 Krygsman, written submission to the USITC, September 30, 2013. 34 Industry representatives, roundtable discussion, Albuquerque, NM, September 18, 2013. 35 Ibid. 36 Industry representative, roundtable discussion, Albuquerque, NM, September 18, 2013. The SME 

stated that such certification was available in the United States at the state level, but added that different EU 

countries have different requirements and are reluctant to accept documentation from U.S. states as opposed 

to the federal government. 37 The EU reportedly requires testing for individual heavy metals. Industry representatives, roundtable 

discussion, Albuquerque, NM, September 18, 2013.

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biocides, cosmetics, and endocrine disruptors are described next, but all chemicals are 

subject to REACH and other regulations and directives in the EU.38 

Biocides

Biocides are covered by EU legislation such as the Biocidal Products Regulation (BPR)

and the Water Framework Directive (WFD).39 One SME in the chemical industry states 

that even if a biocide is approved under the BPR, its use can be restricted or revoked if it 

does not meet the criteria of the WFD.40 The SME also states that the EU requires each 

active ingredient to be registered by product type/application, imposing additional costs 

of as much as €2 million (about $2.7 million)

41 for each active ingredient; this amount 

would be multiplied by the number of active ingredients that individual companies 

register.42 The SME in question, for example, “support[s] seven active substances and 

multiple product types,” and characterizes the costs as “excessive.”43 Each member state 

also requires registration of products (e.g., product formulations containing biocides), 

including products already registered in other states, and maintains different legal 

procedures.44

Cosmetics 

Concerns were also raised by SMEs about a new cosmetics regulation effective July 11, 

2013.

45 SMEs have cited requirements to submit details about their products that are 

considered trade secrets; substantial testing requirements (and a reported related lack of 

clarity about those requirements); bans on animal testing that conflict with those of some 

other countries; and large expenditures related to compliance.46 One SME involved with 

personal care products mentioned that it was currently not selling an entire product line in 

the EU because of prospective changes in 2014–15 in labeling requirements for 

cosmetics; the company stated that even sales in 2013 would have required recalling and 

relabeling each container in the affected line.47 Another SME said that it had recently

been notified that its products would be taken off store shelves because the product 

labeling did not include an EU address. 

38 Industry representatives, roundtable discussions, Chicago, IL, September 13, 2013, and Centennial, 

CO, September 17, 2013. 39 The BPR is Regulation (EU) No. 528/2012 of the European Parliament and of the Council of 22 May 

2012 Concerning the Making Available on the Market and Use of Biocidal Products. The WFD is Directive 

2000/60/EC of the European Parliament and of the Council Establishing a Framework for the Community 

Action in the Field of Water Policy. 40 Krygsman, written submission to the USITC, September 30, 2013. 41 Using exchange rates as of January 8, 2013. 42 Krygsman, written submission to the USITC, September 30, 2013. 43 Ibid. 44 Industry representative, roundtable discussion, Milwaukee, WI, September 12, 2013. 45 The new regulation is Regulation (EC) No. 1223/2009 of the European Parliament and of the Council 

of 30 November 2009 on Cosmetic Products. 46 Industry representatives, roundtable discussions, Centennial, CO, September 17, 2013; Los Angeles, 

CA, September 23, 2013; and Santa Ana, CA, September 24, 2013. 47 Industry representative, roundtable discussion, Los Angeles, CA, September 23, 2013.

3-9

 
SMEs in this sector also reported:

48

• Excessive time and costs related to testing required by the cosmetics regulation 

(about $2,000–$2,500 per product, with separate testing for each color in a 

product line); 

• Difficulties finding qualified testing companies in the EU; 

• Changes in member state requirements that differ from EU-wide requirements 

(e.g., unlike the rest of the EU, Germany no longer allows zinc in sunscreens, so 

the company involved cannot sell its products in Germany until it reformulates 

them); and 

• Additional costs associated with hiring consultants (with one SME citing a cost of 

$15,000 per year for four products) and paying a representative in the EU.49

Endocrine disruptors 

Endocrine disruptors are defined as “chemicals that may interfere with the body’s 

endocrine system and produce adverse developmental, reproductive, neurological, and 

immune effects in both humans and wildlife.” 50 One SME states that whereas the

U.S. Environmental Protection Agency has an established evaluation process for 

endocrine disruptors (including definitions and testing), the EU is just starting to develop 

its process. The EU’s approach is expected to be applied across the entire EU chemical 

regulatory system (e.g., through REACH).

51 The SME states:52

While it would be advantageous for the EU community to

evaluate and utilize an approach similar to the U.S., this is not

happening. Rather the EU is considering different criteria to assess

these compounds. Not only are they “re-inventing the wheel”

member states have proposed the use of the precautionary

principle in the evaluation of endocrine screening tests which will

again force many products off the market needlessly.

 

Obtaining a CE Mark

An SME that manufactures pipeline coatings, construction waterproofing, and anticorrosion products reported problems obtaining a CE mark (for more information on the 

CE mark, see box 2.3). The company stated that the process is costly and does not always 

work for non-European companies with innovative products, thereby limiting its access

to the EU market. The company stated that obtaining the CE mark requires meeting

“defined tests linked to European standards and [Harmonized Schedule] codes,” and that 

its innovative products “are excluded under that methodology” because they do not 

48 Industry representative, roundtable discussion, Los Angeles, CA, September 23, 2013. 49 Industry representatives, roundtable discussion, Los Angeles, CA, September 23, 2013, and Santa 

Ana, CA, September 24, 2013. 50 HHS, National Institutes of Health, National Institute of Environmental Health Sciences, “Endocrine 

Disruptors,” June 5, 2013. 51 Industry representative, telephone interview by USITC staff, January 9, 2014. 52 Krygsman, written submission to the USITC, September 30, 2013. 

3-10

 
conform with existing EU standards and do not match the expected HS classification. The 

SME said that whereas almost 9 percent of its sales are exports, only about 0.1 percent of 

these exports are to the EU. The SME further noted that “it has been our company’s 

experience that the very nature of the European product approval system, which includes 

rigid definitions of testing parameters, impedes innovation and free market competition 

for U.S. exporters.”53

Harmonized Schedule (HS) Classifications

Industry representatives said that EU member countries sometimes misinterpreted HS 

classifications of products involving emerging technologies and/or advanced materials. 

Such errors can delay entry of goods, particularly causing problems for time-sensitive 

products (e.g., perishable or radioactive products, including biologics). 54 SMEs also

reported that changes in HS classifications for biofuels resulted in higher duties.

55

EU Definitions

Several sources stated that EU legal definitions can also act as trade barriers, presenting 

challenges to SMEs. The definition of an SME itself, whether for tax purposes or in terms 

of the SME’s relationship to other companies, was cited as an issue. For tax purposes, the 

EU requires that SMEs have a legal entity in the EU to make sales within the EU (an EU 

“legal entity” is said to be similar to the OR under REACH). This requirement reportedly 

results in many complications for SMEs and requires additional time and expense, 

particularly if a company hires someone to help them with this process.56 In defining 

SMEs, the EU considers a company’s headcount and revenue, and also its partnership 

links. For example, one SME producing biobased chemicals stated that it has a subsidiary 

in the EU. But because the U.S. SME is involved with a large company in a joint venture

in a third country, the EU subsidiary is not considered to be an SME and is ineligible for 

SME benefits (e.g., funding).57

Companies also noted that definitions of terms such as “hazardous” created challenges 

for SMEs. A chemical SME involved in nanomaterials, for example, said that the EU and 

the United States define “hazardous” differently. The company says that it would have to 

change its product formulations—removing materials defined by the EU as 

“hazardous”—to market the products in the EU. The SME adds that the costs of changing 

the formulations would outweigh the benefits of participating in the EU market, 

especially if the costs of participating in REACH are factored in, and the company chose 

not to export product to the EU.58 An SME in the renewable energy sector mentioned that 

differing definitions also exist for the term “commercially ready.” The SME noted that 

these differences can require firms to complete costly duplicative studies and/or tests to 

qualify for various commercial readiness programs in the EU and the United States.59

53 Muncaster, written submission to the USITC, September 6, 2013. 54 Industry representatives, roundtable discussion, Raleigh, NC, September 16, 2013. 55 Thyfault, written submissions to the USITC, September 11, 2013, 6–7, and December 1, 2013. 56 Industry representative, telephone interview by USITC staff, August 29, 2013. 57 Ibid., August 28, 2013. 58 Industry representative, email message to USITC staff, dated September 23, 2013. 59 Industry representative, telephone interview by USITC staff, August 7, 2013. 

3-11

 
Barriers Associated with Bioproducts and Renewable Products 

SMEs exporting biobased chemicals to the EU cited REACH as a major trade barrier (see 

the section above on REACH for more information). In addition, the following EU trade 

barriers related to biofuels were said to reduce exports of biofuels to the EU:

60

• The EU antidumping duty imposed in February 2013 on U.S. exports of 

bioethanol, which was said to be in addition to the duty of €102 (almost $140)

61

per 1,000 liters.

62

• The inclusion since 2011 of all biodiesel blends under 2009 EU antidumping and 

countervailing duty measures that originally only covered biodiesel blends 

containing 20 percent or more of biofuels.63

• The imposition in the EU of nontariff barriers (NTBs) such as the EU’s 

Renewable Energy Directive, which requires biofuels to meet sustainability 

criteria that impose extra costs and liability, as well as caps on first-generation 

biofuels. These NTBs could temper two-way trade between the United States and 

the EU in bioethanol and biodiesel.64

Apparel 

The U.S. apparel industry has been declining in recent years. 65 During 2006–12, 

U.S. shipments decreased from $30.4 billion to less than $13.0 billion, and the number of 

employees fell from almost 200,000 to 148,000.

66 The decline has largely been attributed 

to the combined impact of outsourcing of apparel manufacturing to low-cost overseas 

producers, fueled by the elimination of U.S. quotas on apparel imports in January 2005,

and the increase in trade preference programs. Low-cost imports from China, the largest 

foreign apparel supplier, and more recently from Vietnam, a small but fast-growing 

apparel supplier, have taken over most of the U.S. market.

67 In turn, U.S. producers are 

focusing on specific markets, including high-end fashion and niche markets; 

U.S. government defense contracts under the Berry Amendment; and performance 

60 Thyfault, written submissions to the USITC, September 11, 2013, 6–7, and December 1, 2013. 61 Using exchange rates as of January 8, 2014. 62 Council Implementing Regulation (EU) No. 157/2013 of 18 February 2013 imposing a definitive 

antidumping duty on imports of bioethanol originating in the United States of America. In regard to biofuels, 

industry representatives also note that the predominance of biodiesel in the EU (versus bioethanol in the 

United States) will also affect EU import levels of bioethanol. Thyfault, written submission to the USITC, 

December 1, 2013. 63 Thyfault, written submission to the USITC, December 1, 2013. Regulation 193/2009 and Regulation 

194/2009. 64 Thyfault, written submission to the USITC, December 1, 2013. 65 For purposes of this study, the U.S. apparel manufacturing encompasses all firms in NAICS 315. 66 Census, M3 Survey (accessed January 10, 2014); U.S. Department of Labor, Bureau of Labor 

Statistics, Quarterly Census of Employment and Wages (accessed July 2, 2013). 67 China’s growth has slowed recently as its competitiveness vis-à-vis other low-cost suppliers 

weakened because of its stronger currency and rising material and labor costs. Fangqing, “Sourcing Shifts,” 

June 3, 2013.

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textiles for medical and industrial purposes requiring specialized materials such as 

nonwoven, antiballistic, or flame-resistant fabrics.68

In 2010–11, almost all U.S. exporters of apparel to all destinations (about 97–99 percent 

by number of exporters) were SMEs, including exporters of apparel to the EU (table 3.2).

Apparel was also somewhat unique in that SMEs accounted for the majority of the 

sector’s exports by known value during those years, including almost all the known value 

of EU exports (about 94 percent). Most such exports, however, did not go to the EU; the 

EU accounted for less than 9 percent of the known value of all U.S. apparel exports and 

for less than 11 percent of the known value of U.S. SME apparel exports for this period.

TABLE 3.2 The known value of U.S. exports and the number of exporters of apparel (NAICS 315), by all 

U.S. exports and U.S. SME exports, and by all destinations and the EU69

All destinations EU EU shares (%)

2010

All U.S. exports, known value (million $) 1,409 116 8.2

U.S. SME exports, known value (million $) 1,031 109 10.6

 SME share (%) 73.2 94.0 –

Number of known exporters 1,453 542 37.3

Number of known SME exporters 1,434 528 36.8

 SME share (%) 98.7 97.4 –

2011

All U.S. exports, known value (million $) 1,902 112 5.9

U.S. SME exports, known value (million $) 1,199 105 8.8

 SME share (%) 63.0 93.8 –

Number of known exporters 1,512 534 35.3

Number of known SME exporters 1,495 524 34.8

 SME share (%) 98.9 98.1 –

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

The apparel industry makes a variety of knit and woven products, but as stated above, 

one strategy that it has employed in the face of international competition is to focus on 

niche or specialty markets. An example is the premium denim jeans market. Although 

several large manufacturers of denim apparel are located throughout the country, they

generally make denim work clothes and casual sportswear.

70 In contrast, many apparel

SMEs are concentrated in California, particularly Los Angeles. This area has become a 

major location for manufacturers of premium denim apparel, particularly premium denim 

jeans.

71 These SMEs are reportedly becoming important global suppliers.72

68 USITC, The Economic Effects of Significant U.S. Import Restraints, 2013, 2-17. 69 The known value is the portion of U.S. exports that Census was able to link to a specific company.

Thus, it is a subset of total U.S. exports. 70 Industry representatives, telephone interviews by USITC staff, Washington, DC, September 3–4, 

2013. 71 According to the California Fashion Association, companies in Southern California produce 

75 percent of the premium denim market. “Premium” refers to higher-priced apparel that sells in upscale 

department and specialty stores. 72 California Fashion Association, written submissions to the USITC, September 11, 2013.

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Trade Barriers Related to Apparel 

Apparel companies and an industry association stated that high tariffs, particularly those 

on premium denim jeans, impede SME apparel exports to the EU. SMEs in the apparel 

industry also cited REACH as a trade barrier, due to the chemicals (such as dyes) in 

fabric used to make garments. A third set of barriers involved differences in customs 

clearance procedures in different EU countries and problems with computing the VAT, 

which are described in more detail in chapter 2.73

The California Fashion Association (CFA) and an apparel company alleged that

additional EU duties of 26 percent on women’s premium denim jeans, on top of the 

already somewhat high duties of 12 percent (for a total of 38 percent), would effectively 

price U.S. exports of those items out of the EU market.74 The additional duties were part 

of a retaliatory action taken by the EU following litigation at the World Trade 

Organization (WTO) related to the U.S. Byrd Amendment. 75 According to the CFA,

“The resulting rise in cost will likely put U.S.-made jeans out of [EU consumers’]

financial reach, and the growth of California denim brands in EU markets is doubtful for 

at least the next full year.”76

Suggested Ways to Enhance SME Participation in Trade 

Several industry associations and SMEs made suggestions concerning modifications to 

EU regulations or standards or changes in U.S. assistance programs that, they say, would

increase exports by U.S. SMEs.

SOCMA, the chemical society, states in its prehearing submission that “[Our] members 

understand [REACH] is a regulatory reality and this legislation will not be repealed. 

However, there are ways to make this legislation more workable.” 77 In particular, 

SOCMA suggests several ways to make REACH more accessible for SMEs, including

creating a position for a small-business ombudsman within ECHA and other regulatory 

73 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 74 Industry representative, roundtable discussion, Los Angeles, CA, September 23, 2013; CFA, written 

submissions to the USITC, September 11, 2013. The participant in this roundtable was from a large firm, but 

stated that the effects of the additional EU tariff were especially difficult for small companies. 75 The Byrd Amendment (the Continued Dumping and Subsidy Offset Act of 2000) authorized U.S. 

Customs and Border Protection to distribute antidumping and countervailing duties assessed on or after 

October 1, 2000, pursuant to antidumping and countervailing duty orders in effect on or after January 1, 

1999. The duties were distributed to firms in the domestic industry that supported the original petition that 

resulted in the orders. The EU, Japan, and several other WTO members challenged the Byrd Amendment 

under the WTO Dispute Settlement Understanding, and in 2003 a WTO panel and the WTO Appellate Body 

found the Byrd Amendment to be inconsistent with U.S. WTO obligations. In 2005, the EU and several other 

WTO members began applying retaliatory measures in the form of additional duties on imports of certain 

U.S. goods. The United States repealed the Byrd Amendment in 2006, but continues to distribute previously 

collected duties. The EU periodically notifies the United States of new lists of goods subject to retaliatory 

duties, and the list announced by the EU in May 2013 included women or girls’ cotton denim trousers and 

breeches. See USDOC, ITA, “Current Retaliatory Actions: Byrd Amendment,” July 29, 2013; WTO, 

“Dispute DS217: United States—Continued Dumping and Subsidy Offset Act of 2000” (accessed January 23, 

2014).76 CFA, written submissions to the USITC, September 11, 2013. CFA’s submission consisted of letters 

that it had sent to Ambassador Froman (USTR) and Senator Feinstein. 77 SOCMA, prehearing submission to the USITC, September 20, 2013. 

3-14

 
agencies within the member states; 78 making ECHA staff more available to SMEs; 

increasing transparency; and following up on regulatory review. Suggestions from other 

SMEs include mutual recognition of testing, approval, and certifications (e.g., good 

manufacturing practices), as well as harmonized labeling. 79 SOCMA also cited 

recommendations published by the European Commission (EC) in its May 2, 2013, 

review of REACH. The EC recommended that ECHA give more guidance to SMEs 

regarding REACH, and called for increased communication between industry and 

European entities; continued EU monitoring of costs; and an emphasis on greater 

collaboration between ECHA and the industry on protecting intellectual property as 

information is exchanged under REACH. (See the SOCMA submission for more details 

about the EC recommendations.)80

Several organizations suggested ways to enhance U.S. SMEs’ exports of bioproducts and 

renewable products to the EU. The National Corn Growers Association (NCGA) 

emphasized the importance of biotechnology and value-added bioproducts, such as 

biobased chemicals made from renewable resources, stating: “From a corn grower’s 

perspective, new trade initiatives will result in benefits far beyond increasing 

international markets for U.S. corn. NCGA recognizes any opportunity to increase access 

to downstream, value-added products as a benefit to the U.S. economy.” Recommending 

“EU acceptance of internationally agreed standards and the adoption of science-based 

risk assessments,” NCGA also stated that “trade disruptions caused by barriers to 

biotechnology stand to hurt the entire value chain, from technology developers to grain 

exporters and international customers.”81

An SME in the renewable energy sector also states that some export assistance programs 

in the energy sector are not well coordinated with the Small Business Administration’s 

programs for technology companies that have commercialized products or are in the 

process of commercializing products. The company said that small companies need 

technical assistance (e.g., via workshops, webinars, etc.) in having their technology 

evaluated for commercial readiness and in understanding the terminology used.82

78 See also Muncaster, written submission to the USITC, September 6, 2013. 79 Industry representatives, roundtable discussion, Milwaukee, WI, September 12, 2013. 80 SOCMA, prehearing submission to the USITC, September 20, 2013. 81 Johnson, written submission to the USITC, August 23, 2013. These recommendations generally 

discuss the downstream, value-added derivatives from corn. The trade barriers directly addressing corn are 

discussed in chapter 5. 82 Industry representative, telephone interview by USITC staff, August 7, 2013. 

3-15

 
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2013).

3-18
CHAPTER 4

Machinery, Electronics, Electrical 

Equipment, Transportation, and 

Miscellaneous Manufacturing

Overview

U.S. manufacturers whose products are covered in chapter 33 of the North American

Industry Classification System (NAICS) fabricate a broad spectrum of goods, ranging 

from heavy machinery to sporting goods to automobiles to medical devices. This chapter 

describes trade barriers that U.S. small and medium-sized enterprises (SMEs) in

fabricated metal manufacturing (NAICS code 332); machinery manufacturing (NAICS

333); computer and electronic product manufacturing (NAICS 334); electrical equipment, 

appliance, and component manufacturing (NAICS 335); transportation equipment 

manufacturing (NAICS 336); and miscellaneous manufacturing (NAICS 339) perceive as

disproportionately affecting their exports to the European Union (EU) compared to larger 

U.S. exporters. The value added to the U.S. economy in these industries totaled 

$808.7 billion in 2011, making up 35.2 percent of total U.S. manufacturing value added 

and 5.3 percent of U.S. gross domestic product (GDP) in 2011,

1 while their workforce in 

the same year numbered 3.9 million employees compared to 10.6 million in all U.S. 

manufacturing industries. 2 SME manufacturers made up 91.8 percent of all domestic 

establishments in these industries in 2011.

3

As indicated in chapter 1, manufacturing SMEs and manufacturing associations 

responded in greater numbers to the Commission’s outreach efforts than those in other 

industries. Many of those SMEs and associations represent manufacturing industries that 

are included in this chapter. Barriers in these industries can be particularly troublesome 

for SMEs because manufactured products tend to be more complex than many other 

goods. For example, some SMEs reported barriers for each component in the supply 

chain, rather than just for the final product. Some SMEs reported that they find barriers to 

exporting to the EU insurmountable and therefore focus on other markets. A number also

reported encountering costly nontariff measures (NTMs) when exporting to the EU. For 

example, according to one research study, NTMs impose the second-highest costs on the 

1 Calculations use value-added data from the U.S. Census Bureau’s Annual Survey of Manufactures 

and GDP data from the U.S. Department of Commerce’s Bureau of Economic Analysis. Total manufacturing 

value added refers to products found in NAICS chapters 31–33. 2 Census, Annual Survey of Manufactures (accessed January 2, 2014). Employment figures refer to 

NAICS 332–336 and 339 and NAICS 31–33, respectively. 3 Industry SME shares are based on data from Census Statistics of U.S. Businesses (SUSB) and 

correspond to NAICS 332–336 and 339. Although SMEs account for over 90 percent of all establishments in 

the industries that are the focus of this chapter (NAICS 332–336 and 339), these NAICS codes cover only 

establishments that manufacture products. Goods manufacturers are not the only SMEs in a given 

manufacturing industry that face potential export barriers; there are also distributors, testers, resellers, legal 

and finance firms, business service providers, and many others elsewhere classified who are also directly 

affected by trade barriers in exporting to the EU.

4-1

 
motor vehicles industry of any U.S. industry exporting to the EU, and NTMs impose 

higher costs on almost all U.S. manufacturers exporting to the EU than on their services 

industry counterparts.

4

SMEs with a foreign affiliate abroad reported that their physical presence in another 

country allowed them to more easily navigate potential trade barriers. However, SMEs 

are less likely than large firms to sell products through foreign affiliates rather than to 

export them directly.

5 As is true in many other industries, SMEs in the U.S. machinery, 

electronics, transportation, electrical equipment, and miscellaneous manufacturing sectors 

account for a high share of exporting establishments and a sizable share of export value6

(97.2 percent of all exporting establishments and 14.7 percent of all export value in 

2011).

7 Additionally, because many products in these manufacturing industries contain 

component parts and can have complex supply chains, even SMEs that never export 

directly can be affected by NTMs in the EU if they are part of a supply chain that faces 

barriers.

SMEs most often cited standards and regulations as affecting their ability to export to the 

EU, and accordingly this chapter focuses on such measures. For example, many SMEs 

cited differences between U.S. and EU standards and technical regulations, and 

difficulties meeting EU requirements, as negatively affecting their exports to the EU.8

The U.S. Chamber of Commerce and the National Association of Manufacturers, whose

members include a large number of exporting SMEs, expressed similar concerns, citing a

lack of mutual recognition for conformity assessments and different technical regulations 

between the United States and the EU as factors limiting SME exports.9 One technical 

regulation widely cited by firms in the manufacturing sector as posing compliance 

challenges for exporting SMEs is the Conformité Européenne (CE) mark.

10 Other crossindustry regulations noted by U.S. SMEs include the Regulation on Registration, 

Evaluation, Authorisation and Restriction of Chemicals (REACH), the Restriction of 

Hazardous Substances (RoHS) Directive, and the Waste Electrical and Electronic

Equipment (WEEE) Directive.

In addition to technical regulations and standards, SMEs and industry associations

provided feedback on other issues that create obstacles to exporting to the EU. The U.S. 

Chamber of Commerce cited tariff barriers as being a challenge that disproportionately 

affects SMEs. 11 The National Association of Manufacturers reported that U.S. 

manufacturing SMEs view tariffs and market access for some products, differences 

between U.S. and EU intellectual property protection regimes, divergent data privacy 

4 Francois et al., “Reducing Transatlantic Barriers to Trade and Investment,” March 2013.

5 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 4–6. 6 The share of SME export value varies across industries; see tables in chapters 1, 3, and 5 on the 

known value of U.S. exports and the number of exporters. 7 Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and 

Exporting Companies, Exhibit 7, 2013; and Commission calculations. 8 See discussion of standards and technical regulations in chapter 2.

9 U.S. Chamber of Commerce, written submission to the USITC, October 8, 2013; NAM, written 

submission to the USITC, October 23, 2013. 10 As noted earlier, the CE mark is a visible marking denoting a guarantee by a given product’s 

manufacturer that the product meets all relevant EU regulations and directives for that product. CE marking 

requirements vary from product to product and range from safety regulations to conformity assessment rules. 

Manufacturers must test and ensure that products meet EU rules and put the CE marking on products before

exporting them to and/or selling them in the EU, and distributors and importers must ensure that products 

they plan to sell bear the manufacturer’s CE mark. European Commission, “CE Marking—Basics and FAQs”

(accessed November 26, 2013). CE mark certification is discussed in box 2.3. 11 U.S. Chamber of Commerce, written submission to the USITC, October 8, 2013.

4-2

 
rules, and high-burden customs processes as their biggest non-regulatory challenges.12

Other issues cited by associations and SMEs include preferences for local products, 

difficulty in bringing warranty or replacement products into the EU, visa concerns, and 

many industry-specific challenges, including those related to complying with the EU’s 

value-added tax (VAT) and customs inconsistencies (discussed more completely in 

chapter 2). 

This chapter contains five sections. The first four sections describe trade barriers reported 

by SMEs in the following industries: (1) machinery and equipment, (2) computers and 

electronic products, (3) transportation products, and (4) other manufactured products.13

The final section of this chapter concludes with suggestions from SMEs on how to 

strengthen U.S.-EU cooperation to enhance the participation of SMEs in transatlantic

trade.

Machinery and Equipment 

Products in the machinery and equipment sector include industrial, agricultural, mining, 

construction, commercial, metalworking, and manufacturing equipment, as well as 

engines; heating, ventilation, and air conditioning (HVAC) systems; and other generalpurpose machinery. “Machinery and equipment” is primarily covered by NAICS code 

333, “Machinery Manufacturing.” U.S. SME representatives across a variety of 

machinery industries provided information for this section. 

The machinery industry as a whole added $177.5 billion in value to the U.S. economy in 

2011, making up 7.7 percent of total manufacturing value added under NAICS 31–33 and 

1.0 percent of domestic GDP in 2011.14 Employment in the industry was 964,668 in that 

year.15 SMEs play a prominent role in manufacturing machinery and actively export to 

the EU. According to the U.S. Census Bureau (Census), 90.5 percent of domestic 

machinery manufacturing establishments were SMEs in 2011.

16 And as shown in table 

4.1, SMEs in this industry exported $3.4 billion in product to the EU in 2011, making up 

21.5 percent of the total known value of machinery exports to the EU in that year.17

12 NAM, written submission to the USITC, October 23, 2013. 13 Due to product similarities and the limited number of industry respondents providing feedback, 

comments from SMEs in NAICS 332 (Fabricated Metal Manufacturing) are discussed in the “other 

manufactured products” section of this chapter, and comments from SMEs in NAICS 335 (Electrical 

Equipment, Appliance, and Component Manufacturing) are discussed in the “transportation” section. 14 Calculations use data on value added from the U.S. Census Bureau’s Annual Survey of Manufactures 

and data on GDP from the U.S. Department of Commerce’s Bureau of Economic Analysis. 15 Census, Annual Survey of Manufactures (accessed December 30, 2013). 16 Based on data from Census, SUSB (accessed November 18, 2013). 17 Census export data for this NAICS code do not take into account peripheral businesses such as legal, 

financial, logistics, and business service providers that were also involved in the manufacture and export of 

those products.

4-3

 
TABLE 4.1 The known value of U.S. exports and the number of exporters for machinery manufacturing (NAICS 

333), by all U.S. exports and U.S. SME exports, and by all destinations and the EU

All destinations EU EU shares (%)

2010

All U.S. exports, known value (million $) 73,599 13,643 18.5

U.S. SME exports, known value (million $) 16,576 3,258 19.7

 SME share (%) 22.5 23.9 –

Number of known exporters 11,036 5,435 49.2

Number of known SME exporters 10,827 5,236 48.4

 SME share (%) 98.1 96.3 –

2011

All U.S. exports, known value (million $) 85,410 15,652 18.3

U.S. SME exports, known value (million $) 17,830 3,362 18.9

 SME share (%) 20.9 21.5 –

Number of known exporters 11,163 5,512 49.4

Number of known SME exporters 10,945 5,305 48.5

 SME share (%) 98.0 96.2 –

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

Trade Barriers Related to Machinery and Equipment

Many SME machinery-industry representatives cited difficulties complying with EU 

technical regulations as disproportionately impeding their exports to the EU. Multiple 

SME manufacturers cited other barriers as well, including visa and personnel concerns, 

local non-regulatory preferences for EU products, market information access, and 

differing enforcement procedures from country to country within the EU.

Standards and Technical Regulations Barriers 

In the machinery industry, SMEs cited a variety of technical regulations as barriers 

relevant to this study. Many SMEs specifically mentioned the CE mark and the 

Atmosphères Explosibles Directive (ATEX Directive 94/9/EC), though many other 

standards and regulations inhibited SME exporters as well.18 Issues associated with these 

rules included lack of harmonization with U.S. standards, high costs of testing and 

compliance, and different application of rules depending on whether the product’s 

country of origin is inside or outside the EU.

SMEs said that complying with these standards and regulations can be both costly and 

complex. One U.S. SME stated that when it was new to exporting, the volume of 

information it needed to learn about EU standards and exporting was overwhelming, and 

it was also required to buy copies of the applicable standards that concerned its 

products. 19 Initially, the company hired a third party to certify its machines, which 

resulted in extra costs per machine. To reduce that cost, the company learned how to selfcertify its products.

18 ATEX Directive 94/9/EC concerns “equipment and protective systems intended for use in potentially 

explosive atmospheres.” The full text of this directive is available at 

http://ec.europa.eu/enterprise/sectors/mechanical/documents/legislation/atex/index_en.htm. 19 Industry representative, email message to USITC staff (relayed by the Philadelphia USEAC), 

September 6, 2013.

4-4

 
Another SME exporter stated that even though it works with a U.S. Export Assistance 

Center (USEAC), both the SME and the USEAC have sometimes had difficulty 

determining if some of the SME’s products are required to have EU certifications.20

Conformité Européenne (CE) mark 21

CE markings are required for any product that falls within the scope of the Safety of 

Machinery Directive (98/37/EC) and is intended for sale within the EU. The directive is 

said to be broad in scope, covering any equipment that has moving parts, except manually 

operated machines. Also, some products may be covered by more than one directive (e.g., 

the Machinery, Electromagnetic Compatibility, and Low Voltage Directives). In that

case, the manufacturer must meet the CE marking requirements for all directives that 

apply to the product.22

In reference to complying with CE product certification markings for machinery, several 

industry SMEs reported that their limited resources put them at a competitive 

disadvantage with larger global companies trading in foreign markets because SMEs 

cannot achieve the same economies of scale. They stated that it costs SMEs the same to 

test their products and comply with regulations as it costs the larger manufacturer, but on 

a per-unit basis the SME’s cost is higher because they produce, test, and trade a smaller 

number of goods.23

One SME machinery exporter determined that the cost of third-party CE mark 

certification exceeded the total expected profits from a particular model of machine over 

the next five years. Therefore, it decided that it would not export the machine to the EU.24

A machinery-sector SME stated that in the United States, its product is regulated under 

an umbrella regulation that is the same throughout the United States. In the EU, although 

certification may be theoretically equivalent in different EU countries, certification was 

reported to often be based on different criteria in different EU member states.25

SMEs also experienced challenges with their inventory management when navigating EU 

country differences regarding the placement of CE marks on products. Some countries 

require exporters to print CE marks directly on the product’s packaging, while other 

countries accept stickers affixed to the packaging. As a result, a manufacturer may decide 

to keep a double inventory of the product.

26

20 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 21 CE markings are discussed in detail in chapter 2, box 2.3. 22 For CE marking information, see TÜV SUD America, “CE Marking Compliance Overview”

(accessed October 30, 2013), and Export.gov, “Safety of Machinery” (accessed October 30, 2013). 23 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013. 24 Cost of certification included the company’s personnel time as well as actual certification costs. 

Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. 25 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 26 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013.

4-5

 
ATEX 

Manufacturers of equipment and protective systems that are intended for use in

potentially explosive atmospheres are required to meet the ATEX 94/9/EC Directive.27

SME representatives expressed concerns that ATEX represents a barrier to exports 

because it is incompatible with equivalent regulations in the United States.

28 The ATEX 

directive does not allow the EU to accept outside certifications. One industry 

representative explained that the additional certification for the ATEX directive could 

cost $10,000 or more per product, which is a significant cost for small manufacturers to 

bear.

29

One machinery manufacturer described the difficulties it had meeting ATEX certification 

requirements for equipment manufactured in the United States for export to a customer in 

Spain. The equipment was delayed by 6–8 months, significantly driving up its price, and 

in the end it was never shipped to the intended purchaser. The product was kept in 

storage for a couple of years before being sold to a company in China.30 Another industry 

representative stated that ATEX product certification can vary among EU countries, 

creating additional burdens for SME exporters.

31

Parts regulations 

SMEs reported that the Pressure Equipment Directive (Directive 97/23/EC) and the 

regulations (EN 1822:2009) for classifying high-efficiency particulate air (HEPA) filters

were trade barriers that could disproportionately impede their exports. They stated that 

even if a company’s parts meet the EU requirements, it may also have to struggle to 

convince its European customers that its parts are compliant. They stated that these and 

other regulations have led them to source filters and other parts in the EU rather than in 

the United States.

32

Scope of guidelines 

One industry representative said that regulation guidelines are frequently overly broad or 

vague for new products whose descriptions fall between those of two or more regulated 

products, and it becomes a guessing game to decide which regulations apply and which 

do not. This situation results in repeated requirements for certification documentation, 

which adds to U.S. SMEs’ product costs. 33

27 TÜV SUD America, “How ATEX Can Benefit Your Business” (accessed November 4, 2013). 28 Industry representatives, roundtable discussions, Minneapolis, MN, September 11, 2013 and 

Philadelphia, Pennsylvania, September 23, 2013. 29 Industry representative, roundtable discussion, Philadelphia, Pennsylvania, September 23, 2013. 30 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 31 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 32 Industry representative, interview by USITC staff, Raleigh, NC, September 17, 2013; industry 

representative, email message to USITC staff, September 25, 2013. 33 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013.

4-6

 
Certification issues 

One U.S. trade association representing machinery producers stated that for U.S. 

exporters, self-certification of products is technically allowed, but customs and other 

officials appear to look more closely at products from outside the EU. The association 

said that having a third-party certification helps avoid the extra attention, but also

requires additional time and fees, resulting in higher overhead costs. The association said 

that EU firms that self-certify their products do not have to deal with this added burden of 

scrutiny.34

This association cited other EU regulations that U.S. machine tool exporters must comply 

with, including the WEEE and RoHS directives (box 4.1). To meet rules under those 

directives, the U.S. exporter must have third-party certification.35 In creating a product, 

the U.S. producer can either hire the third party for consultations during the design 

process to incorporate features that ensure compliance, or hire the third party to certify

the final product, making any adjustments the third party recommends.

36

Self-certification of products is possible, according to one SME in this industry, but the

process is not easy. This company has performed some internal testing, but for some 

types of tests, such as for noise, the SME contracts to outside parties for lack of the right

34 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013. 35 Third-party certification organizations that are subsidiaries of EU organizations have facilities in the 

United States. 36 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013.

BOX 4.1 Restriction of the Use of Certain Hazardous Substances (RoHS)

The Restriction of the Use of Certain Hazardous Substances (RoHS) Directive was commonly reported by SMEs to 

be a barrier. RoHS currently limits—to a specified maximum concentration—the amount of lead, mercury, cadmium, 

hexavalent chromium, polybrominated biphenyls, and polybrominated diphenyl ethers in electrical and electronic 

equipment. This equipment includes a range of products such as household appliances; information technology and 

telecommunications equipment; consumer equipment; lighting equipment; electrical and electronic tools; toys, leisure 

equipment, and sports equipment; and medical devices. 

RoHS permanently excludes some items from coverage (e.g., military and space equipment, large-scale industrial 

tools, and photovoltaic modules), and temporarily exempts others (e.g., certain compact fluorescent lamps and 

medical devices), though the exemption can be renewed. Manufacturers of products that are not excluded or 

exempted must ensure that their products meet the RoHS requirements and attach the CE marking to the product. 

Importers must ensure that manufacturers have followed the correct procedures and must include their own name on 

the product, maintain the relevant documentation, and make documentation available to the relevant authorities upon 

request. 

The RoHS 1 Directive was adopted in 2003 and went into effect in July 2006. The RoHS 2 Directive, which added 

electronic instrumentation and most medical devices to the coverage, was adopted in 2011, with EU member states 

required to adopt the necessary laws and regulations by January 2013. 

Sources: European Parliament and Council, Directive 2011/65/EU, July 1, 2011 (accessed September 5, 2013); 

European Parliament and Council, Directive 2002/95/EC, January 27, 2003 (accessed September 5, 2013); U.S. 

Department of Commerce website, “RoHS: Restriction of the Use of Certain Hazardous Substances,” May 16, 2013 

(accessed September 5, 2013).

4-7

 
equipment and personnel. The certification process must be performed on actual

production runs, not on prototypes. Further, the company reported it had to have safety 

and health instructions translated into 26 EU member country languages. Given the many 

requirements, the certification process usually takes six months or more.

37

Safety regulations 

SMEs stated that complying with EU product and safety regulations added significant 

costs to exporting that made it difficult for U.S. SMEs to compete in European markets. 

They stated that requirements to obtain CE certification for each component of certain 

products (e.g., those intended for use with hazardous materials or at high pressures) 

added major expenses and complications in the supply chain—even though the United 

States and EU regulations appear functionally equivalent. 38 U.S. SMEs also found 

difficulty in complying with regulations that differed among EU member states.

39

Different burdens for traded items compared to EU-produced items 

One SME reported that some EU companies whose products do not conform to EU 

standards are able to sell in the EU market because they do not pass through EU customs 

authorities and may therefore have a cost advantage over foreign firms.

40 One U.S. trade 

association representing machinery producers noted that EU producers do not have the 

same obligations as U.S. exporters to the EU, including required documentation, 

presenting a burden to exporting SMEs that their EU competitors do not face.

41

Other Barriers to Trade 

SMEs in the machinery industry experienced non-regulatory issues as well as the 

regulatory problems already mentioned. Particularly noteworthy were those pertaining to 

local preferences and to a firm’s lack of physical presence in country. “Home bias” came 

up in the form of inconsistent enforcement of rules as well as local residents’ interest in 

domestic products. Local presence was relevant as an issue when it came to business 

intelligence, marketing, inventory management, showing products, and obtaining 

employment visas.

One industry representative stated that the Danish Working Environment Authority 

seemed to unfairly target its company’s machinery for regulatory violations compared 

with products manufactured by their local or non-U.S. competitors. In the 

representative’s opinion, the competitor’s product did not come close to meeting the 

regulation requirements. 42 Another SME cited the Scandinavian countries, Germany, 

Italy, and Austria as having the most inconsistent enforcement of regulations between 

37 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 38 Industry representative, interview by USITC staff, Raleigh, NC, September 17, 2013; industry 

representative, roundtable discussion, Philadelphia, Pennsylvania, September 23, 2013; industry 

representative, email message to USITC staff, September 25, 2013. 39 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013. 40 Industry representative, email message to USITC staff, September 6, 2013. 41 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013. 42 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013.

4-8

 
U.S. products and locally manufactured products because these countries have strong 

local manufacturing caucuses.43

Significant pressure to “buy EU” was also cited as a barrier. An industry representative 

stated that this pressure to buy EU kept them from securing a sale to an Italian university,

despite the university’s preference for the SME’s model. The representative noted that its

industry-specific models are used around the world and believes the firm would have 

closed the deal except for the pressure on the university to buy EU products.

44

One machinery exporter stated that its customers have asked it to establish a presence on 

the ground in the EU. However, in each of the countries where this SME is setting up 

inventory, it must spend a lot of time and money on VAT and EU registrations, which 

imposes significant burdens on a small company.45

Another SME exporter stated that it is difficult to attract customers and perform market 

analysis without personnel on the ground in the EU.46 The same SME noted that it had 

investigated hiring employees in the EU, but the company’s lawyer advised against it 

because of costs and other problems connected with EU employment laws.47

The reluctance of EU authorities to extend short-term employment visas was also a 

barrier cited by machinery SMEs. For example, when a company sends a work team into 

the EU to install a piece of machinery, completion could be delayed due to unforeseeable 

environmental or work conditions. If the work permit expires before a project is 

completed, the company has to fly the team out of country and then fly them back in or 

fly in other technicians to take over, adding to business costs.48

Computers and Electronic Products 

Firms in the computer and electronic products industry (which is primarily covered by 

NAICS code 334) produce or export information and communications technology 

products, instrumentation, media, semiconductors, electronic components, consumer 

electronics, search and navigation systems, and other electronic goods. This section is 

based on information from SMEs in the computer and peripherals, communications, 

audiovisual equipment, semiconductor, instrument, and solar energy equipment industries 

that export to the EU.

The value added to GDP from the U.S. computers and electronics industry was 

$208.0 billion in 2011, which was 9.1 percent of the total value added by NAICS 

chapters 31–33 manufacturing and 1.4 percent of GDP. 49 Employment in the industry 

was 816,676 that year.50 As with other manufacturing sectors, SMEs comprise a large 

share of the industry (87.1 percent of domestic computer and electronics manufacturing 

43 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013. 44 Industry representative, email message to USITC staff, September 10, 2013. 45 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 46 Ibid. 47 Ibid. 48 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 49 Calculations use data on value added from the U.S. Census Bureau’s Annual Survey of Manufactures 

and data on GDP from the U.S. Department of Commerce’s Bureau of Economic Analysis. 50 Census, Annual Survey of Manufactures (accessed December 30, 2013).

4-9

 
establishments in 2011),

51 and approximately a quarter of sector exports to the EU were 

from SMEs (table 4.2). As shown in table 4.2, SMEs in this industry exported 

$4.9 billion in product to the EU in 2011, making up 25.7 percent of the total known 

value of computer and electronics exports to the EU in that year.52 

TABLE 4.2 The known value of U.S. exports and the number of exporters for computer and electronic product 

manufacturing (NAICS 334), by all U.S. exports and U.S. SME exports, and by all destinations and the EU

All destinations EU EU shares (%)

2010

All U.S. exports, known value (million $) 83,829 18,850 22.5

U.S. SME exports, known value (million $) 19,729 5,074 25.7

 SME share (%) 23.5 26.9

Number of known exporters 7,632 4,965 65.1

Number of known SME exporters 7,413 4,748 64

 SME share (%) 97.1 95.6

2011

All U.S. exports, known value (million $) 96,614 18,999 19.7

U.S. SME exports, known value (million $) 20,214 4,883 24.2

 SME share (%) 20.9 25.7

Number of known exporters 7,770 4,967 63.9

Number of known SME exporters 7,557 4,758 63.0

 SME share (%) 97.3 95.8

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

Trade Barriers Related to Computers and Electronic Products 

Because of the complexity and composition of their products, U.S. SMEs in this industry 

primarily reported standards and technical regulations as obstacles to exporting to the 

EU. In particular, representatives cited CE mark rules, REACH, and RoHS regulations as 

presenting difficulties. Other barriers cited included used electronics tariffs, preferential 

procurement (“buy EU”), and difficulties in exporting products with globally sourced 

components. 

Standards and Technical Regulations Barriers 

Industry representatives indicated that the CE mark, REACH, and RoHS pose obstacles 

because they differ from comparable U.S. regulations; change frequently, raising the cost 

of compliance; and involve safety rules that are not always science based. These 

representatives said that even when product regulations are comparable between the 

United States and EU, separate testing may be required to meet each region’s regulations, 

adding time and cost between production and sale. They reported that although these 

issues may be costly for larger firms, they are potentially prohibitive for SMEs because

the cost of certifying a product is often the same regardless of a firm’s size or revenue.

51 Based on data from Census, SUSB (accessed November 18, 2013). 52 Census export data for this NAICS code do not take into account peripheral businesses such as legal, 

financial, logistics, and business service providers that were also involved in the manufacture and export of 

those products.

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CE mark 

One SME manufacturer of small electronic products stated that certification costs are 

higher in the EU than in the United States, and disproportionately so for an SME. Goods 

sold in the EU must bear the CE mark, attesting that the electronic product bearing the 

mark conforms to electromagnetic compatibility regulations. Testing requirements for the 

CE mark for this manufacturer’s product differ from requirements in the United States. In 

addition, the CE mark requires compliance with more restrictive standards than the 

Federal Communications Commission (FCC) Part 15 regulations, a comparable 

certification system in the United States.

53

According to a communications equipment firm, obtaining the CE mark is burdensome in 

terms of cost and timing, because the required testing can take three to six months unless 

the company pays extra to have it completed more quickly. However, the firm said that 

the difficulties encountered in obtaining the CE mark are less severe than those related to 

receiving Underwriters Laboratories (UL) certification in the United States.

54

Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals

(REACH) 

Representatives of SMEs in the electronics industry stated that complying with REACH

requires keeping up with constantly evolving lists of restricted substances and of 

substances of potential concern. According to the representatives, these changes have a 

disproportionate effect on SMEs, which unlike large firms often cannot afford to have 

personnel devoted solely to REACH issues. The SMEs stated that new additions to the 

lists are not always science based and force the manufacturer to make expensive changes 

to the manufacturing and design of their electronic components if they wish to export to 

the EU.

55

Restriction of Hazardous Substances (RoHS)

A representative of an SME in this industry stated that the need to comply with RoHS 

causes some U.S. manufacturers to delay exporting to the EU until they can comply.56

The representative said that there is no U.S. equivalent to RoHS.

57 U.S. manufacturers 

were aware of the directive before it went into effect, and some larger U.S. manufacturers

reportedly were already making goods in compliance with this directive when it was 

implemented.

Country-specific standards and certification rules 

Electronics industry representatives said that individual EU countries sometimes have 

additional safety requirements that go beyond the CE certification. SME representatives

stated that country-level requirements are often not transparent and differ from one EU 

53 Industry representative, roundtable discussion, Albuquerque, NM, September 18, 2013. 54 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013. 55 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. This issue is 

discussed further in chapter 3 of this report. 56 For example, RoHS restricts the concentration that products can contain of six hazardous substances, 

including lead. Lead is a heavy metal element that is hazardous to humans if ingested; however, it is also a 

principal component in the solder used to connect electrical and electronic parts. 57 Industry representative, roundtable discussion, Albuquerque, NM, September 18, 2013.

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country to another. Often, their firms only discover the differences by hearing about them 

from their customers. These representatives further stated that the extra certifications add

delays to placing a product on the market and occasionally create the need to modify the 

product.58

Certification rules were also mentioned as an issue. A solar equipment producer stated 

that certain product component certification requirements differ among EU countries. For 

example, the producer stated that Italy has a unique standard for power conversion 

designed to benefit manufacturers who produce and operate only in this market.59

Other Barriers to Trade

Electronics industry SMEs stated that a preference for buying EU products for use in EUfunded projects—particularly environmental management projects—created difficulties 

for U.S. firms exporting to the EU. Industry representatives also stated that they 

occasionally experienced challenges in getting timely payment for goods sold.60

Industry representatives expressed concern that tariffs and taxes on used electronics 

create barriers to exporting to the EU. They stated that tariffs could be especially 

problematic for customer returns because the EU authorities do not always refund the 

tariffs paid by U.S. manufacturers when an EU customer returns a U.S. product.61

Problems were also reported in the area of trademarks. Representatives of U.S. 

independent resellers, who are predominantly SMEs, asserted at the Commission’s 

hearing and in written submissions that the EU’s trademark regime operates to block a 

substantial volume of potential U.S. exports of new and used branded electronic 

equipment.62 They reported that in the EU, “the trademark owner has the absolute right to 

block imports of genuine branded products, new or used, unless the branded product was 

first sold in the EU.”63 They contrasted this regionally delimited approach to trademark 

exhaustion with that of the United States, which reportedly recognizes an “international 

exhaustion” principle—that is, that trademark rights are exhausted upon a first sale 

regardless of location, subject to certain limitations.64

Representatives of independent electronics resellers estimated that if the EU were to open 

its secondary market to U.S. competition, their exports could increase by 30–50 percent. 

Moreover, they contended that the benefits of such an opening could extend beyond trade 

to the promotion of innovation and the environmentally sound management of products at 

the end of their working lives.

65

58 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013. 59 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013. 60 Industry representative, email message to USITC staff, September 16, 2013. 61 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013; industry 

representative, email message to USITC staff, October 10, 2013. 62 See Owners’ Rights Initiative (ORI) and the Association of Service and Computer Dealers 

International and the North American Association of Telecommunications Dealers (AscdiNatd), written 

testimony to the USITC, November 20, 2013; USITC, hearing transcript, November 20, 2013, 77–84 

(testimony of Joseph Marion, AscdiNatd, and Anthony Chwastyk, ORI, and Radwell International, Inc. 

(Radwell)); and ORI, AscdiNatd, and Radwell, post-hearing submission to the USITC, December 2, 2013. 63 ORI, AscdiNatd, and Radwell, post-hearing submission to the USITC, December 2, 2013, 5. 64 ORI, AscdiNatd, and Radwell, post-hearing submission to the USITC, December 2, 2013, 4–5; see 

also Calboli, “Market Integration,” 2011, 1249–50. 65 ORI, AscdiNatd, and Radwell, written testimony to the USITC, November 20, 2013, 6.

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Transportation Products 

Firms in this industry produce and export motor vehicles, trailers, aircraft, missiles and 

space vehicles, railroad rolling stock, ships and boats, motorcycles, military vehicles, and 

transportation equipment and parts. “Transportation products” are primarily covered by 

NAICS code 336, “Transportation Equipment Manufacturing.” However, this section 

also contains feedback from a small number of SME exporters of products in NAICS 

335, “Electrical Equipment, Appliance, and Component Manufacturing.” The following 

discussion is mainly based on information from U.S. SME representatives from the motor 

vehicles, parts and batteries, and aerospace industries.66

Transportation manufacturing, the largest of the industries discussed in this chapter, 

added $264.5 billion in value to the U.S. economy in 2011. That accounted for 

11.5 percent of manufacturing value and 1.8 percent of total GDP.

67 1,235,431 people 

were employed in the transportation equipment manufacturing industry in 2011.68

SMEs account for a significant share of the firms producing and exporting in this 

industry: in 2011, 82.1 percent of domestic transportation manufacturing establishments

were SMEs.

69 This share was, however, lower than the average share of SMEs among 

manufacturing sectors. Moreover, most exports to the EU were made by large firms that 

year. As shown in table 4.3, U.S. SMEs in this sector exported $1.7 billion in product to

the EU in 2011, making up only 3.9 percent of the known value of transportation 

equipment exports to the EU in that year.

TABLE 4.3 The known value of U.S. exports and the number of exporters for transportation equipment 

manufacturing (NAICS 336), by all U.S. exports and U.S. SME exports, and by all destinations and the EU

All destinations EU EU shares

2010

All U.S. exports, known value (million $) 160,346 30,618 19.1

U.S. SME exports, known value (million $) 8,957 1,332 14.9

 SME share (%) 5.6 4.4 –

Number of known exporters 4,308 2,045 47.5

Number of known SME exporters 4,036 1,827 45.3

 SME share (%) 93.7 89.3 –

2011

All U.S. exports, known value (million $) 195,784 42,723 21.8

U.S. SME exports, known value (million $) 10,082 1,669 16.6

 SME share (%) 5.1 3.9 –

Number of known exporters 4,485 2,086 46.5

Number of known SME exporters 4,188 1,852 44.2

 SME share (%) 93.4 88.8 –

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

66 Census export data for this NAICS code do not take into account peripheral businesses such as legal, 

financial, logistics, and business service providers that were also involved in the manufacture and export of 

those products. 67 Calculations use data on value added from the U.S. Census Bureau’s Annual Survey of Manufactures 

and data on GDP from the U.S. Department of Commerce’s Bureau of Economic Analysis. 68 Census, Annual Survey of Manufactures (accessed December 30, 2013). 69 Based on data from Census, SUSB (accessed November 18, 2013).

4-13

 
Trade Barriers Related to Transportation Goods 

In the transportation industry, the lack of harmonization of standards and testing rules,

both among EU member states and between the EU and the United States, was the most 

frequently cited barrier for SMEs attempting to export to the EU. SMEs in both the motor 

vehicle and aerospace industries stated that regulations and enforcement differed so much 

from country to country that trying to enter a new EU country after becoming established 

in another can be similar to trying to enter a brand-new market. SMEs reported that these 

barriers are especially difficult for SMEs with few exports, because they have fewer sales 

over which to spread the extra costs of meeting standards and conducting additional tests. 

Along with these barriers, SMEs cited additional costs for logistics and documentation as 

being obstacles to exporting. They also commented that while added costs are high in this 

sector, they are compounded by state support for domestic enterprise and preferential 

procurement. 

Motor Vehicle Barriers 

The motor vehicle industry includes automobile, truck, trailer, and parts manufacturing. 

SMEs in this industry cited a lack of harmonized standards and high costs of both 

logistics and regulation as barriers for SMEs hoping to export products to the EU.

Standards and technical regulations barriers 

SMEs cited differences in design standards and environmental regulations between the 

EU and United States as adding to the costs of exporting motor vehicles. Multiple 

manufacturers stated that EU and U.S. regulations share similar goals but use different 

testing standards to arrive at those goals, and these different approaches increase the cost 

of exporting. Some U.S. SME manufacturers also find that EU standards lack 

transparency and that some EU rules vary from member country to member country, 

confusing U.S. SME exporters.

Vehicle design rules 

Multiple SMEs in the motor vehicle industry cited standards and regulations as barriers to 

exporting to the EU. One firm reported that the EU and United States measure

commercial truck length differently, which has led to a problem with standards 

harmonization. Although manufacturers from each region create trucks that are the same 

length, U.S. design standards result in a U.S. truck with significantly less cargo space

than an EU truck. Such U.S.-made trucks do meet EU technical regulations, but because 

of the cargo space issue, most consumers of trucks in the EU do not wish to buy them. 

When U.S. firms maintain U.S. design standards but expand their trucks to include the 

same amount of cargo space as an EU truck, the EU requires them to add aerodynamic 

back flaps to the truck trailer. This SME has not found it cost-effective to export to the 

EU thus far.70

Similarly, another U.S. SME stated that vehicle rules on taillights differ slightly between 

the United States and EU, requiring U.S. exporters to convert or pay someone to convert 

70 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013.

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taillights to the EU format before a vehicle can be registered in the EU. The SME 

representative stated that this conversion can add $2,000–$3,000 to the price of a car.71

Parts certification 

An SME automotive parts manufacturer stated that the EU’s automotive parts 

certification requirements, most often dealt with through EU standards and testing 

organizations known as TÜVs (Technischer Überwachungsvereine), are a barrier for 

SMEs. All motor vehicle parts in the EU must be certified by a regulatory body through a 

process that can be time intensive and prohibitively expensive, especially for SMEs with 

limited financial resources. The firm also stated that TÜVs vary by region and can be 

territorial and inconsistent; according to the SME, a product approved in northern 

Germany may not be considered certified in southern Germany. The SME posited that 

this process gives local firms an advantage.72

Environmental regulation 

An SME parts manufacturer indicated that a new EU environmental regulation requiring 

firms to list and track all material inputs to its products is extremely time- and costintensive. Specifically, these regulations govern recyclable materials and inputs sourced 

from high-conflict regions of the world. They were implemented less than two years ago 

and impose a large cost on small firms. The manufacturer also reported uncertainty about 

how long it is required to maintain the database of its products’ material inputs.73

Aerospace Barriers 

The aerospace industry includes aircraft, space equipment, and parts manufacturing. SME 

manufacturers in this industry reported that inconsistently applied regulations and 

programs that aid their EU-based competitors are export barriers.

Standards and technical regulations barriers 

Difficulty complying with the standards and regulations administered by the European 

Aviation Safety Agency (EASA) is a major challenge to SMEs in the aerospace industry. 

Because EASA has not centralized certification requirements and individual member 

states maintain aviation regulatory agencies, firms in this industry struggle to implement 

EASA regulations and move compliant products from country to country. An SME in this 

industry also cited the cost of complying with “apostille” requirements (discussed below)

as a barrier to exporting.

EASA certification challenges 

An aerospace industry representative stated that the cost of obtaining certifications for 

aerospace parts in Europe is among the highest in the world. There are various challenges 

with EASA beyond the cost, including duplicative certification requirements, EASA 

staffing turnover, and diverging implementation of directives at the EU member state 

71 Industry representative, roundtable discussion, Miami, FL, September 19, 2013. 72 Industry representative, telephone interview by USITC staff, September 17, 2013. 73 Ibid.

4-15

 
level. EASA was established in 200274 and has not fully centralized all certification for 

all EU member states. As a result, companies must, in some cases, receive separate 

certifications from each country’s civil aviation authority to sell parts to airplane 

operators in that country. EASA is staffed with experts on assignment from member 

countries’ aviation authorities, and the responsible case officer may change at any point 

in the certification procedure. As a result, firms applying for certification may have to 

deal with many different representatives, disrupting the continuity of the process. 

Another challenge is that member states have discretion in how they implement EASA’s 

directives. Each country’s civil aviation authority issues its own aeronautical information 

publication, which may include slightly different requirements than those stated by 

EASA and other EU member states. This can cause confusion and rejection of 

applications in one country that are accepted in another.75

Apostille requirement 

An SME representative stated that EU governments require any official document to have 

an authentication or “apostille” to ensure recognition.76 An apostille is an international 

document certification, similar to notarization, for items being shared between countries 

party to the Hague Apostille Convention.77 This process has a minimal cost but adds 

time, and it creates an additional burden on SMEs that are trying to send official 

documents to European countries.78

Other barriers to trade 

Aerospace industry representatives alleged that many EU companies receive subsidies or 

state aid in various ways from their host governments. They said that this allows 

European companies to produce products at a lower cost and puts U.S. aerospace 

companies making similar products at a competitive disadvantage.79

An industry representative stated that the procurement rules of the European Space 

Agency favor European companies. As a result, U.S. SMEs are unable to sell satellite 

parts and components in Europe. This has continued to be the case, according to the 

representative, even though the EU passed Directive 2009/81/EC in 2009 to open defense 

procurement in Europe and create open and transparent markets. The representative said 

that this directive leaves substantial leeway for governments to exempt defense and 

security contracts from the rules of the directive.80

74 More information on the creation of EASA can be found at European Aviation Safety Agency, “The 

Centrepiece of the European Union’s Strategy,” n.d. (accessed November 18, 2013). 75 Industry representative, roundtable discussion, Albuquerque, NM, September 18, 2013; Aviation 

Suppliers Association, written submission to the USITC, September 20, 2013. 76 For more information on apostille requirements, see Hague Conference on Private International Law, 

The ABCs of Apostilles, n.d. (accessed November 12, 2013). 77 For example, see http://www.businessdictionary.com/definition/apostille.html. 78 Industry representative, roundtable discussion, Albuquerque, NM, September 18, 2013. 79 Industry representatives, roundtable discussions, Cleveland, OH, September 10, 2013, and Salt Lake 

City, UT, September 20, 2013. 80 Industry representative, roundtable discussion, Salt Lake City, UT, September 20, 2013.

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Other Manufactured Products 

Firms in this category produce and export products that do not fit clearly into the 

transportation, machinery, computers and electronics, or electric products categories.

Items in this category are quite varied: U.S. SME manufacturers in the medical devices, 

firearms, fire equipment, security systems, sporting goods, and children’s toys and 

equipment industries provided information for this report. “Other manufactured products”

are primarily covered by NAICS code 339, “Miscellaneous Manufacturing.”81

The miscellaneous manufacturing industry contributed $100.2 billion in value added, or 

0.6 percent, to the U.S. GDP in 2011. That represented 4.4 percent of all manufacturing 

value in that year. 82 NAICS 339 firms employed 564,709 individuals in the U.S. in 

2011. 83 SMEs account for a significant share of the miscellaneous manufacturing 

industry and exported over one-fourth the value of all exports to the EU in this sector. 

According to the Census Bureau, 95.4 percent of miscellaneous manufacturing firms 

were SME establishments in 2011.

84 As shown in table 4.4, SMEs in miscellaneous 

manufacturing exported $3.0 billion in product to the EU in 2011, making up 33.7 

percent of the total known value of miscellaneous manufacturing exports to the EU in 

that year.85

TABLE 4.4 The known value of U.S. exports and the number of exporters for miscellaneous manufacturing (NAICS 

339), by all U.S. exports and U.S. SME exports, and by all destinations and the EU

All destinations EU EU shares (%)

2010

All U.S. exports, known value (million $) 22,016 8,261 37.5

U.S. SME exports, known value (million $) 8,936 3,274 36.6

 SME share (%) 40.6 39.6 –

Number of known exporters 6,641 3,668 55.2

Number of known SME exporters 6,517 3,556 54.6

 SME share (%) 98.1 96.9 –

2011

All U.S. exports, known value (million $) 27,121 9,016 33.2

U.S. SME exports, known value (million $) 9,202 3,042 33.1

 SME share (%) 33.9 33.7 –

Number of known exporters 6,793 3,719 54.7

Number of known SME exporters 6,678 3,607 54.0

 SME share (%) 98.3 97.0 –

Source: Census, Foreign Trade Division, September 19, 2013; Census, Profile of U.S. Importing and Exporting 

Companies, Exhibit 7, 2013; and Commission calculations.

81 Due to product similarities and the limited number of industry respondents providing feedback,

comments from SMEs in NAICS 332 (Fabricated Metal Manufacturing) are also discussed here. 82 Calculations use data on value added from the U.S. Census Bureau’s Annual Survey of Manufactures 

and data on GDP from the U.S. Department of Commerce’s Bureau of Economic Analysis. 83 Census, Annual Survey of Manufactures (accessed December 30, 2013). 84 Based on data from Census, SUSB (accessed November 18, 2013). 85 Census export data for this NAICS code do not take into account peripheral businesses such as legal, 

financial, logistics, and business service providers that were also involved in the manufacture and export of 

those products.

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Trade Barriers Related to Miscellaneous Manufactured Products 

Miscellaneous manufacturing SMEs cited problems with standards, obtaining the CE 

mark, REACH, constantly changing regulations, and regulations that do not account for 

advances in technology as disproportionately affecting exports from SMEs to the EU 

compared to those of large firms. Non-standards barriers stated by SMEs in this industry 

included audits, market access issues, duties on globally sourced goods, and issues 

bringing trade show and replacement products into the EU.

Fire Equipment Barriers 

The fire equipment industry produces fire safety and firefighting products. 

Representatives of SMEs in this industry cited the CE mark, REACH, design standards, 

and obstacles to accessing original equipment manufacturer (OEM) markets as barriers 

disproportionately impeding exporting from SMEs to the EU. 

Standards and technical regulations barriers 

Fire equipment representatives stated that for SMEs, compliance with the CE mark and 

REACH rulings can be incredibly costly, particularly when attempting to export cuttingedge technologies that require large costs in initial testing and submission. SMEs from 

the industry also reported concerns with voluntary EU standards that differ from U.S. 

standards, because EU consumers were significantly more inclined to adopt the EUcompliant model over the U.S.-compliant model. 86

CE mark 

For extremely small companies in this industry, obtaining approval for the CE mark can 

be a major barrier because it requires documentation and testing that can be confusing 

and costly.87

REACH

For fire equipment SMEs exporting to the EU, complying with REACH can be very 

time- and cost-intensive. Companies that are on the cutting edge of technology may 

easily spend almost $200,000 on initial testing and submission for new products. The

many exemptions and preregistration capabilities in place do allow numerous preexisting 

products to access the EU market, but one SME argued that this discourages innovation. 

It can reportedly take an extra year or more to bring a new product to market just because 

of REACH restrictions.88

Standards 

An SME industry representative producing a wearable firefighting product stated that for 

their product, all firms in the United States follow the standards set by their industry 

association, so all U.S. products look similar. However, producers in the EU follow a 

86 Industry representative, roundtable discussion, Santa Ana, CA, September 24, 2013. 87 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013. 88 Industry representative, roundtable discussion, Milwaukee, WI, September 12, 2013.

4-18

 
French standard, which means that U.S. producers cannot export to the EU market 

without substantially modifying the design of their product. Middle Eastern and African 

countries have also started adopting the EU standard in their markets as well. As design, 

production, and testing to meet the separate set of standards would be prohibitively 

expensive for SMEs, this firm does not produce for EU-standard markets.89

Medical Devices and Supplies Barriers 

This industry includes manufacturers of non-pharmaceutical medical products, including 

instruments, tests, appliances, dressings and supplies, and other goods that treat, 

diagnose, or otherwise address medical concerns.

Standards and technical regulations barriers 

Although many SMEs in the industry stated that the EU’s regulatory processes in this 

industry are more consistent and easier to use than those in the United States, SMEs 

stated that they still find regulatory and standards barriers to be obstacles that 

disproportionately affect SMEs exporting in this industry. Their primary concerns were

the difficulty of obtaining the CE mark for medical products and the high cost of audits, 

as well as opaque, inconsistent, confusing, and frequently changing regulations.

CE mark 

To be approved for sale throughout the EU, all medical devices must have a CE mark. 

Two sources stated that the process of obtaining a CE mark lacks transparency and is 

extremely time consuming.90 One stated that the process is so confusing that it requires a 

U.S. commercial service contact to navigate it.

91 Another source reported that even 

accessories to a medical device exported to the EU require a CE mark. For instance, in 

order to export surgical kits to the EU, firms need a CE mark for the surgical sutures, the 

needle, and the thread. This can be very time consuming and burdensome to SMEs.

92 In 

addition to time, the cost of obtaining a CE mark can be significant for SMEs. One source 

indicated that the cost of obtaining a CE mark was $76,000 per device from one

certifying body approved by the EU.93

Before receiving the CE mark for one of its products, a medical device firm’s 

manufacturing facilities must be audited. This process entails paying for an EU inspector 

to visit the manufacturer’s domestic facility. Three sources commented on the cost of 

these audits. One source reported that this costs $8,000 the first year and then $5,000 

each year thereafter.94 Another source reported that the EU can send auditors whenever 

they deem appropriate, and according to one estimate, these officers can visit up to five

89 Industry representative, roundtable discussion, Santa Ana, CA, September 24, 2013. 90 Industry representatives, roundtable discussions, Minneapolis, MN, September 11, 2013 and Raleigh, 

NC, September 16, 2013. 91 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013. 92 Industry representative, roundtable discussion, Miami, FL, September 19, 2013. 93 These costs also reflected auditing expenses. Industry representative, roundtable discussion, 

Philadelphia, PA, September 23, 2013. 94 Industry representatives, roundtable discussions, Salt Lake City, UT, September 20, 2013, and Santa 

Ana, California, September 24, 2013.

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times per year to inspect a manufacturing facility and test products.95 Another source 

described how the failure of the EU to “grandfather” in devices that were approved for 

sale in Europe before the EU’s formation has imposed significant burdens on the firm.96

In particular, the firm described the sales and revenue lost during the time when the 

devices needed to be retested to obtain a CE mark under the new regulatory regime; the 

devices could not be sold while they were undergoing review, and the SME was forced to 

lay off employees.97

Frequently changing and inconsistent regulations 

One roundtable participant stated that constantly changing regulations and standards are

significant trade barriers for SMEs exporting to the EU. 98 A device that has been 

approved under one set of standards may not necessarily meet the requirements set by a 

new series of regulations. For instance, before September 2011, Italian customs did not 

require medical devices to have a “health clearance.” Since September 2011, however, 

the EU has required Italy to meet this standard (Medical Device Legislation Directive 

93/42/EC) and has required Italy to install a new electronic system that checks all 

medical devices that are imported to Italy. The importer is now required to provide a list 

of documents, including a health and safety clearance, before Italian customs will release 

the product.99 This change in policy enforcement was not conveyed to the exporter, and

in one particular instance, Italian customs retained the device.100

In another example, a medical device start-up company asserted that a European 

Commission (EC) directive will replace the three existing medical device directives and

may impose a more stringent testing and control process. 101 While the directive

(2012/0267 COD) was updated in September 2012, it has not yet been officially approved 

by the EC. This source suggested that the directive may delay the CE mark approval 

process while the rules are devised and implemented into law.102

Another SME representative listed problems with country-specific regulations, which 

require manufacturers to register their products, in addition to displaying the CE mark, in 

order to export to several EU economies.

103 A device that is approved for sale in 

Germany, France, and Italy might not meet the requirements of the UK, for example.104

95 Industry representatives, roundtable discussions, Salt Lake City, UT, September 20, 2013, and 

Bethpage, NY, September 25, 2013. In the U.S., a central regulatory body—the Food and Drug 

Administration—considers medical devices for clearance or approval through a few different routes, ranging 

from less-stringent 510(k)s to clinical trial-backed premarket approvals. By contrast, Europe’s system gives 

that responsibility to private companies known as notified bodies, which are paid by medical device 

manufacturers to carry out their reviews. 96 Industry representative, email message to USITC staff, October 17, 2013. 97 Industry representative, email message to USITC staff, October 17, 2013. This firm found success by 

contacting the Mid Atlantic Trade Act Assistance Center to explain their situation and were able to obtain a 

grant that covered the costs of obtaining a CE mark. 98 Industry representative, roundtable discussion, Philadelphia, PA, September 23, 2013. 99 Industry representative, email message to USITC staff, September 24, 2013. This policy was 

imposed in 1993 and applies to the entire EU, but Italy did not enforce it until recently. 100 Highland Metals Inc., written submission to the USITC, September 24, 2013. 101 This proposal can be accessed at European Commission, “Revision of the Medical Device 

Directives,” December 12, 2013. 102 Industry representative, SBA roundtable discussion, July 26, 2013. 103 The countries for which specific registration requirements are imposed are Bulgaria, Estonia, 

Finland, France, Italy, Latvia, Lithuania, Poland, Portugal, Slovakia, and Spain. Highland Metals Inc., written

submission to the USITC, September 24, 2013. 104 Industry representative, roundtable discussion, Salt Lake City, UT, September 20, 2013.

4-20

 
In some cases, these hurdles have made exporters more selective in choosing the EU 

countries to which they will export. One source mentioned that due to such countryspecific regulations and the associated cost of gaining approval to sell to every EU 

country, they only export to France, Italy, and Spain.105

The occasional incompatibility of regulations in the United States with those in the EU

was also cited as regulatory burden by U.S. SMEs. For instance, the EU requires a 

puncture test to be conducted on pacifiers for premature infants. These pacifiers are sold 

as medical devices because they can reportedly calm premature infants and lessen the 

need for drugs. The test, which is not required for this product in the United States, is 

required in the EU despite the fact that (1) premature infants do not have teeth and cannot 

puncture the device, and (2) a somewhat thin material is needed due to the smallness of 

premature infants’ mouths. Further, the EU requires the nipple size of a pacifier to be 

larger than what is permitted for sale in the United States. Such inconsistencies require 

additional certification costs and occasionally mean that a firm must produce separate 

products to serve both markets.106

Sporting Goods Barriers 

Members of the sporting goods industry produce products that are used for athletics and 

sports, including skates, skis, balls, and exercise equipment. In the sporting goods 

industry, SMEs listed a variety of barriers to exporting, including barriers involving

technical regulations, market access, and customs and duties.

Standards and technical regulations barriers 

Industry representatives experienced standards issues in three areas: cost of obtaining a 

copy of regulations, difficulty in finding testing facilities that work with their products, 

and EU regulations that are stricter than their U.S. counterparts.

CE certification 

An SME representative indicated that companies are required to pay for a copy of each 

CE standard that they request. This representative also indicated that the SME has

experienced difficulties in finding a facility to provide CE certification for its product 

because facilities that test and certify tend to be clustered in the United Kingdom and 

Germany. The representative added that for his firm’s equipment, CE certification is 

mandatory, whereas the United States only has voluntary industry standards to follow. 

Overall, this firm’s biggest challenge in exporting product to the EU is accessing 

important information about the CE process, which would be less of a burden for large 

firms that could afford to dedicate personnel to information gathering.

107

105 Highland Metals Inc., written submission to the USITC, September 24, 2013. 106 Industry representative, roundtable discussion, Santa Ana, CA, September 24, 2013. 107 Industry representative, telephone interview by USITC staff, September 17, 2013.

4-21

 
Other barriers to trade 

Other barriers in exporting to the EU cited by representatives from the U.S. sporting 

goods industry included difficulties showing products and researching new markets in the 

EU, high duties, and customs barriers.

One firm stated that its biggest barrier is the need to conduct market research before 

determining if a market in the EU is right for its product. It manufactures a large piece of 

equipment that does not ship easily and is subject to a variety of certifications and 

regulatory requirements, and the firm has no way to provide consumers with test models 

or determine if a market is a good fit before it ships products. The firm said that because 

the regulatory environment is different, they have a much easier time shipping product to 

Japan and testing the market there.108

A representative of a recently acquired SME stated that one of its products falls under 

U.S. Hazardous Materials (HAZMAT) regulations. The representative said that although 

the product does not face any specific barriers in being tested, certified, and shipped to a 

central processing location in Germany, distributors do not want to move the product 

outside of Germany for fear of violating stricter regulations in other EU countries. The 

representative did not state whether this refers to stricter country-level regulations or to 

an inconsistent application of EU-wide regulations.109

Toy and Children’s Products Barriers 

The toy and children’s product industry produces toys such as dolls, games, puzzles, and 

other children’s products, such as play mats and children’s hairbrushes. SMEs in this 

industry cited diverging international standards and high-cost testing as barriers to trade.

Standards and technical regulations barriers 

This industry’s SMEs face exporting barriers due to safety standards and testing issues. 

SMEs found that a lack of harmonization between the United States and EU creates highcost obstacles, but that they also have concerns with country-specific safety regulations 

and the regionalization of testing rules.

Safety standards 

EU and U.S. rules for toys differ from each other and from the International Organization 

for Standardization (ISO)-8124, the international toy safety standard. This means that all 

products that U.S. firms want to export to the EU must fit all certification criteria and be 

tested for each region. A representative stated that for one firm, testing to meet the EU 

safety rules for toys can make up almost half of the cost of a toy.110

Individual countries also add requirements for toy certification. For example, one SME

cited a stricter rule on the formamide content of play mats in France than in the rest of the 

108 Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. 109 Industry representative, telephone interview by USITC staff, September 17, 2013. 110 Industry representative, roundtable discussion, New York, NY, September 24, 2013.

4-22

 
EU. They also said that Germany is currently attempting to tighten rules on the content of

several substances, including barium, in toys and children’s products.111

Until last year, both U.S. and EU toy regulations were consistent with respect to limits on 

heavy metals. In July 2013, however, the EU toy safety directive 2009/48/EC was 

amended to cover additional chemicals and metals. Electrical toys are another point of 

divergence. The FCC in the United States excludes low-powered products like toys from 

its broader regulations, but the EU requires an extra layer of testing and certification 

under EN-62115, the electrical toy standard.112

SMEs also stated that toy standards in the United States and Canada are jointly developed 

through an open process with industry and government, but that is not the case in the 

EU.113

Testing barriers 

Testing rules vary by EU country. Although a company can self-test and self-certify to 

obtain the CE mark and confirm REACH compliance, customs agents in the EU also 

irregularly require further testing to prove that products do not contain any chemicals 

listed as Substances of Very High Concern (SVHC).

114 This adds to the firm’s expenses,

because it has to pay storage duties and the cost of testing again at the border. Tests in 

addition to the standard ones also exist for any products coming from China, even when 

they are produced by U.S. firms.

115

Regionalization of testing can also cause difficulties, because different EU member 

countries verify and enforce certifications at different levels. In Germany, for example, 

enforcement happens at the state level rather than at the federal level, so different states 

may interpret rules differently.116

Suggested Ways to Enhance SME Participation in Trade

Manufacturing SMEs participating in roundtables and industry associations making 

written submissions shared numerous suggestions about ways to bolster manufacturing 

trade between the United States and the EU. Many suggestions focused on policy changes 

that could improve transatlantic trade, such as better harmonization or mutual recognition 

of standards and technical regulations. Other suggestions concerned alternative

approaches that SMEs themselves could consider to boost their exports.

Suggested Policy Adjustments to Enhance Trade 

An SME in the machinery industry suggested that if the EU were to accept or recognize

U.S. standards and technical regulations in areas covered by the CE certification, the 

111 Industry representative, roundtable discussion, New York, NY, September 24, 2013. 112 Ibid. 113 Ibid. 114 Chemicals on the SVHC list can be found at European Chemicals Agency (ECHA), Candidate List 

of Substances of Very High Concern for Authorisation, n.d. (accessed November 12, 2013). 115 Industry representative, roundtable discussion, New York, NY, September 24, 2013. 116 Ibid.

4-23

 
Pressure Equipment Directive, and HEPA classification, it would improve the

competitiveness of U.S. SME exports to the EU.117 Similarly, SMEs in the toy industry 

stated that mutual recognition of certification and safety regimes would reduce the trade

costs of exporting to the EU for SMEs in that industry.118

An SME in the automotive industry indicated that harmonization of technical regulations 

between the EU and United States for motor vehicle parts would lower export barriers. 

The SME stated that the EU and the United States have the same goals for many 

regulations but a different method of achieving them, which often requires automotive 

parts to be tested in both the EU and the United States. For example, the U.S. vehicle 

emissions regulation Environmental Protection Agency (EPA) 2010 certification is 

functionally equivalent to the EU’s Euro VI vehicle certification, but these regulations 

require different tests to be performed.

119

The National Association of Manufacturers (NAM) suggested several policy changes to 

strengthen SME exports. They suggested that future agreements should be free from

product- and industry-specific exemptions from intellectual property protection and that

rules protecting trade secrets, such as the WTO Trade-Related Aspects of Intellectual 

Property Rights (TRIPS) agreement, be strengthened. NAM suggests that further 

addressing burdens faced by U.S. SMEs in transferring data across borders while 

ensuring that IP rights are adequately protected would benefit U.S. SME manufacturers. 

NAM also supports reforming the EU’s General Data Privacy Regulation to improve data 

flows and to reduce compliance concerns for SMEs while still protecting data rights.120

NAM suggested that the immediate removal of tariffs between the United States and the

EU and the end of regulations that require local content or technology transfer would 

benefit U.S. SMEs. They suggest harmonization of standards and regulations where 

possible, and mutual recognition otherwise, to reduce costs and resource burdens for

exporting SMEs in both the EU and the United States. NAM also suggested that the 

United States and the EU mutually recognize each other’s conformity assessment 

organizations, because being able to meet EU regulations through domestic testing would 

remove one obstacle to exporting for U.S. SMEs. NAM stated that the creation of 

regulations and technical standards should be more transparent and better founded on 

science. NAM added that customs procedures should be improved; the U.S. and EU 

should work together to expand trade facilitation; and the de minimis threshold for 

imposing regular tariff rates should be increased to $800 or more (and increase with the 

consumer price index) to allow U.S. SMEs to send low-value shipments to the EU with a

lower customs burden. 

SMEs also suggested some actions the U.S. government might take to enhance their 

exports to the EU. An SME in the electronics industry stated that when companies in the 

sector are seeking to fulfill compliance requirements in new export markets, it would be 

helpful to receive more U.S. government support in the form of public certification and 

testing laboratories and/or help meeting certification requirements. They stated that added

assistance in testing would help them to be more competitive.

121 An SME in the satellite 

industry suggested that the U.S. government continue its ongoing reform of export 

controls. Specifically, it suggested that moving regulation of trade in satellite parts and 

117 Industry representative, email message to USITC staff, September 25, 2013. 118 Industry representative, roundtable discussion, New York, NY, September 24, 2013. 119 Industry representative, roundtable discussion, Chicago, IL, September 13, 2013. 120 NAM, written submission to the USITC, October 23, 2013. 121 Industry representative, roundtable discussion, Minneapolis, MN, September 11, 2013.

4-24

 
components from the State Department’s International Traffic in Arms Regulations to the 

Department of Commerce’s Export Administration Regulations would offer exporters 

more access to the world market.

122

Suggested Alternative Approaches to Enhance SME Exports to the 

EU

SMEs experienced in exporting to the EU suggested that trying different approaches 

could increase other SMEs’ exports. A machinery-sector SME currently exporting to the 

EU suggested that it was best to select the largest EU market for an SME’s particular 

product, to establish personal contacts with people who speak the language, to learn the 

rules and regulations for that market, and to conform to the way of doing business in that 

market before expanding to other EU markets. He advocated starting in Germany, the 

largest market for many products. This same SME suggested working with several local 

regional distributors (e.g., 5–6 in Germany alone) rather than a central importer.123

A consultant who works with U.S. SME machinery exporters to the EU made multiple

suggestions for SMEs seeking to export to the EU. First, SMEs should ensure that their 

required technical, customs, and certification documents are coherent and accurate, 

because if the documents are accessed at a future date, the European staff person that

originally read and accepted them may no longer be with that organization. Second, the 

decisions of third-party certifiers for the CE mark may take an extraordinary amount of 

time to reverse, even when an appeal is successful. Third-party certifications may contain 

mistakes, so it is important to verify that third-party materials are correct. Third, in 

designing a product for the EU market, it may be desirable to incorporate components 

that already have the CE mark, so that the U.S. exporter will not have to certify the 

components. However, the U.S. exporter should also keep up with the latest components 

so that their product certification will not be tripped up by the use of out-of-date 

components. Finally, SMEs may want to test their products for compliance in large EU 

country markets first, rather than in smaller markets. The product might be accepted in a 

particular small market, but fail compliance in a much larger market. Finding out as early 

as possible which features need to be changed to become compliant minimizes the 

amount of redesign work to be done by the U.S. exporter.124

Several SMEs suggested that one way to deal with the irregularities of regulation 

enforcement against U.S.-manufactured products compared with EU-manufactured 

products is to open a manufacturing facility in the EU. For example, an SME machinery 

manufacturer familiar with the EU and other global markets suggested opening a facility 

in a large market (e.g., Germany) to establish local credentials and participating in that 

market and possibly expanding into other EU markets later.

125

122 Industry representatives, roundtable discussions, Cleveland, OH, September 10, 2013, and Salt Lake 

City, UT, September 20, 2013. 123 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013. 124 Industry representative, roundtable discussion, Atlanta, GA, September 18, 2013. 125 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013.

4-25

 
Another SME suggested using a free-zone warehouse in the EU to avoid tying up 

resources (personnel costs and funds) and paying the VAT and customs duties at the

border. 126 The SME explained that the free-zone warehouse will provide product storage, 

customer billing, and logistics services; will transmit the VAT and customs duties to the 

respective government authorities that in turn bill the SME’s customer; and will take the 

SME product out of inventory and ship it to the customer. This SME stated that it ships 

its products to the warehouse under bond. Thus, the SME is able to reduce its shipping 

costs, increase the volume of product shipped and stored in the EU, and avoid having to

pay the VAT and customs duties directly. By using this strategy, the SME lowered its upfront capital costs of exporting to the EU.127

Not all SME representatives focused on barriers to exporting to the EU. For example, an 

automotive industry SME exporter reported an overall positive experience. The exporter 

stated that two factors contribute strongly to this: first, in his industry, the buyer bears all 

the regulatory cost and risk. Second, the exporter sells a specialized product that has 

value because it is uniquely American and cannot be purchased without importing from 

the United States, so any exporting issues he experiences also apply to all competitors, 

and his customers consider the product worth the cost.128 Another industry representative 

echoed the first one’s sentiments on moving the logistics risk to the customer, stating that 

doing so not only ensures that the process runs more smoothly but also means that the 

SME exporter need not worry about complications like duties. 129 Finally, a

semiconductor industry representative expressed the view that exporting to the EU is 

more advantageous than exporting to China, because intellectual property protections are 

stronger in the EU.

130

126 Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. Free zones 

in the European Community are “special areas within the customs territory of the Community. . . . On 

importation, free zones are mainly for storage of non-Community goods until they are released for free 

circulation. No import declaration has to be lodged as long as the goods are stored in the free zone. Import 

and export declarations have only to be lodged when the goods leave the free zone. In addition, there may be 

special reliefs available in free zones from other taxes, excises or local duties. . . .The free zones are mainly a 

service for traders to facilitate trading procedures by allowing fewer customs formalities.” European 

Commission, “Free Zones” (accessed January 13, 2014). 127 Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. 128 Industry representative, roundtable discussion, Miami, FL, September 19, 2013. 129 Industry representative, roundtable discussion, Raleigh, NC, September 16, 2013. 130 Ibid.

4-26

 
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5-1 

CHAPTER 5 

Agriculture 

Overview 

Although a significant share of U.S. farm output is exported,1

 small and medium-sized 

enterprises (SMEs) supply only a minor portion of all direct U.S. agricultural exports. 

Generally, U.S. agricultural exports are non- or minimally processed products shipped in 

bulk by large multinational enterprises. However, SMEs are involved in U.S. agricultural 

exports in two distinct ways. 

First, SMEs often supply products that are incorporated into the exports of large firms. 

For example, while most U.S. farms qualify as SMEs, their products are typically 

consolidated by wholesalers and brokers, cooperatives, or large corporations to be 

exported. Such products are sometimes called indirect exports. In addition, products 

grown on SME farms may be further processed in manufacturing items for export, such 

as fruit going into distilled spirits or grains being used in baked goods that are then sold 

abroad. 

Second, SMEs directly export certain specialized and processed agricultural products, 

including products that are segregated from normal supply chains due to unique 

characteristics. Examples include food products using certified organic ingredients, or 

non-genetically modified crops. Only in this second case do barriers to trade have the 

potential to affect the exports of SMEs disproportionately, because the large exporters in 

the first case will be tasked with addressing European Union (EU) trade barriers. Most 

agricultural SMEs participating in the roundtables appeared to be direct exporters, and 

many were exporters of processed foods.2

 

U.S. exports of processed food to the EU are small, given the size of the EU market and 

the size of total U.S. exports to the EU. The EU accounts for almost a fifth of the total 

known value of all U.S. exports, but only about 9 percent of the known value of U.S. 

processed food exports. SMEs’ share of U.S. food exports to the EU ranged from 13 to 

15 percent during 2010–11 (table 5.1).3

 Similarly, SMEs’ share of total U.S. exports of 

processed food by known value is small; it ranged from 14 to 15 percent for all 

destinations and was 23 percent for EU exports for this period. The number of SMEs 

 1

 Based on volume, about 20 percent of U.S. farm output is exported. USDA, PSD Online (accessed 

November 4, 2013). 2

 Nevertheless, some agricultural SMEs and growers’ associations whose products are mainly exported 

by large firms provided information through roundtables or written submissions. Because the views of 

indirect agricultural exporters were presented to the USITC, and their views are somewhat entwined with 

those of direct exporters, the viewpoints of indirect exporters are also presented, but with the disclaimer that 

they are not disproportionately affected by EU trade barriers. 3

 As noted above, wholesalers and brokers, many of which are large firms, export a substantial amount 

of agricultural products in bulk or in a minimally processed form, but those data are not disaggregated in a 

way that permits reporting SME shipments to the EU. 
5-2 

TABLE 5.1 The known value of U.S. exports and the number of exports for food manufacturing (NAICS 311), by all 

U.S. exports and U.S. SME exports, and by all destinations and the EU4

All destinations EU EU shares (%)

 2010 

All U.S. exports, known value (million $) 49,194 4,542 9.2

U.S. SME exports, known value (million $) 6,991 1,030 14.7

 SME share (%) 14.2 22.7 –

Number of known exporters 2,808 925 32.9

Number of known SME exporters 2,497 756 30.3

 SME share (%) 88.9 81.7 –

 2011 

All U.S. exports, known value (million $) 56,975 4,858 8.5

U.S. SME exports, known value (million $) 8,374 1,114 13.3

 SME share (%) 14.7 22.9 –

Number of known exporters 2,912 929 31.9

Number of known SME exporters 2,598 757 29.1

 SME share (%) 89.2 81.5 –

Source: Special Census tabulation; Census, Profile of U.S. Importing and Exporting Companies, Exhibit 7; Census, Foreign Trade 

Division; and USITC staff calculations. 

Note: Almost all agricultural products fall under the North American Industry Classification System (NAICS) category 311. Raw 

products, which have had no processing at all, generally fall under NAICS 111 or 112, but are not tabulated here because they are 

exported in such small amounts. 

exporting processed food to the EU was also fairly small, totaling less than 800 in both 

2010 and 2011.5

Previous studies have found that in the EU, the U.S. agricultural sector faces some of the 

most significant trade barriers—both tariffs and nontariff measures (NTMs)—of any U.S. 

sector. For example, as reported in chapter 1, Francois et al. found that processed foods 

faced the highest tariffs of any major U.S. sector in the EU and that the estimated price 

effects of EU NTMs on the food and beverages sector were the highest of any sector.6

 

Similarly, in analyses conducted for a previous study, the Commission found that tariffs 

are high in many agricultural subsectors where SMEs supply a majority of exports. The 

Commission examined average applied tariff rates on all U.S. exports to all destinations, 

as well as the shares of exports accounted for by SMEs in different manufacturing and 

processed food sectors.7

 It found that SMEs accounted for a high share of exports, and 

faced applied tariffs above the average, for manufactured food exports in the following 

agricultural industries: meat and meat packaging, grain and oilseed milling, sugar and 

confectionery, dairy, foods not elsewhere classified, fruit and vegetable preserves, 

prepared seafood, and animal foods. 

During the roundtables, SMEs identified several barriers in different agricultural 

segments that they view as disproportionately affecting their exports to the EU. High 

tariffs and complex, extensive EU regulations were the most common concerns cited by 

many roundtable participants. For example, SME representatives stated that the ever-

 4

 The known value is the portion of U.S. exports that Census was able to link to a specific company. 

Thus, it is a subset of total U.S. exports. 5

 For more information on the role of SMEs in U.S. agriculture, see USITC, Small and Medium-Sized 

Enterprises: Characteristics, November 2010. 6

 Francois et al., Reducing Transatlantic Barriers to Trade and Investment, 2013, 14–20. 7

 USITC, Small and Medium-Sized Enterprises: Characteristics, 2010, 6-15. The export data to all 

destinations were reported at the 4-digit NAICS level. Also, survey results found that SMEs were more likely 

than large firms to identify tariffs as a significant impediment to exporting. 
5-3 

changing list of EU regulations and SMEs’ inability to find up-to-date information on 

allowable inputs disproportionately imposed a barrier to their exports, compared to large 

firms that have the resources to dedicate to personnel solely to navigating the latest 

regulations.8

The remaining sections of this report examine specific impediments to trade cited by 

participants in the roundtables and written submissions. The first part looks at broad 

barriers, and the second part breaks barriers down by product.

Overall EU Measures Affecting U.S. Agricultural Exports to 

the EU 

Several broad EU barriers specific to agriculture surfaced in roundtable discussions and 

industry submissions. According to several participants, the EU lacks a focus on sciencebased decision making in creating sanitary and phytosanitary measures, specifically 

regarding approval of genetically modified (GM) traits (box 5.1). 9 Industry 

representatives also stated that regulations and testing requirements are burdensome and 

often inconsistent among EU countries. For example, maximum residue levels (MRLs), 

which limit the amount of pesticide that may remain in a product presented for import, 

vary between EU countries. 10 Additionally, the aquaculture industry noted that EU 

requirements for testing heavy metals are more difficult to meet than those of other 

countries and impose a barrier on U.S. aquaculture firms seeking to export to the EU.11

Other participants view the process of obtaining standards and certifications, especially in 

the area of food safety, as expensive and poorly consolidated. 12 The certification 

requirements for the Global Food Safety Initiative (GFSI) 13 or for non-GM and 

sustainable inputs were viewed as extensive and requiring substantial investment, which 

especially disadvantages SMEs. Issues with packaging and inconsistent labeling 

requirements were also raised by a number of roundtable participants.14

 

 8

 Industry representatives, roundtable discussions, Salt Lake City, UT, September 20, 2013; 

Philadelphia, PA, September 23, 2013; and Sacramento, CA, September 25, 2013. As an example, the nut 

industry explained that the allowable level of bromide in walnuts is 200 parts per million in most countries, 

but the EU limits bromide levels to 50 parts per million. Many SME walnut producers run into problems 

because they are not aware of this restriction, even though they would easily be able to comply. Industry 

representative, roundtable discussion, Sacramento, CA, September 25, 2013. 9

 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the USITC, 

September 25, 2013, 3; National Corn Growers Association, written submission to the USITC, August 23, 

2013, 1. 10 Industry representatives, roundtable discussions, Lathrup Village, MI, September 9, 2013, and 

Fresno, CA, September 27, 2013. 11 The EU has more stringent regulations than the United States for heavy metals in food destined for 

human consumption, and has banned codfish due to traces of heavy metals in EU imports from the United 

States. Industry representative, SBA roundtable discussion, July 26, 2013. 12 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 13 The GFSI is discussed in more detail later in this chapter. 

14 Industry representatives, roundtable discussions, Sacramento, CA, September 25, 2013, and Fresno, 

CA, September 27, 2013. 
5-4 

Other concerns raised by industry representatives, which are not covered in further detail 

in the remainder of the chapter, included (1) EU production subsidies;15 (2) a lack of U.S. 

government export financing and export assistance;16 (3) high duties on imports from the 

United States, including tariff-rate quotas (TRQs) for certain goods;17 (4) more favorable 

EU tariffs on imports by third-country competitors, such as Chile and Canada, that make 

U.S. exports to the EU less competitive relative to those countries;18 (5) customs delays;19

 15 California Citrus Mutual, written submission to the USITC, September 20, 2013. 16 California Citrus Mutual, written submission to the USITC, September 20, 2013; industry 

representatives, roundtable discussions, Lathrup Village, MI, September 9, 2013, and Sacramento, CA, 

September 25, 2013. 17 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the 

USITC, September 25, 2013, 1; industry representative, roundtable discussion, Sacramento, CA, September 

25, 2013. 18 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 19 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 

BOX 5.1 Sanitary and phytosanitary measures 

The following definition of sanitary and phytosanitary measures is from the World Trade Organization (WTO) 

Agreement on the Application of Sanitary and Phytosanitary Measures. A sanitary or phytosanitary measure is 

one that is intended: 

 “to protect animal or plant life or health within the territory of the Member from risks arising from the entry, 

establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms; 

 to protect human or animal life or health within the territory of the Member from risks arising from additives, 

contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs; 

 to protect human life or health within the territory of the Member from risks arising from diseases carried by 

animals, plants or products thereof, or from the entry, establishment or spread of pests; or 

 to prevent or limit other damage within the territory of the Member from the entry, establishment or spread of 

pests.”a

The definition notes that such measures 

 include all relevant laws, decrees, regulations, requirements and 

procedures including, inter alia, end product criteria; processes and 

production methods; testing, inspection, certification and approval 

procedures; quarantine treatments including relevant requirements 

associated with the transport of animals or plants, or with the materials 

necessary for their survival during transport; provisions on relevant 

statistical methods, sampling procedures and methods of risk 

assessment; and packaging and labelling requirements directly related to 

food safety.b

_____________ 

a

 WTO, WTO Agreement on the Application of Sanitary and Phytosanitary Measures, Annex A, 

http://www.wto.org/english/tratop_e/sps_e/spsagr_e.htm. b

 WTO, WTO Agreement on the Application of Sanitary and Phytosanitary Measures, Annex A, 

http://www.wto.org/english/tratop_e/sps_e/spsagr_e.htm.
5-5 

and (6) inability to obtain U.S. government certifications needed to sell in the EU, such as 

for dioxin.20

Product-specific Barriers Affecting Agricultural Exports to 

the EU 

Corn 

The United States is by far the world’s largest corn producer, supplying about one-third 

of global corn production every year.21 The most widely produced feed grain in the 

United States, corn is used as an input for further processed products (animal feed, corn 

syrup) or used as a feedstock in the production of ethanol. Corn is mostly grown in the 

north central United States, and over 80 million acres are planted each year.22 

Historically, the United States has also been the world’s largest corn exporter, due to its 

modern production methods, expansive acreage, and efficient transportation. Though the 

2012 Midwestern drought curbed exports substantially, 23 about 20 percent of U.S. 

produced corn is exported, representing the largest net contribution to the U.S. 

agricultural trade balance.24 In 2012, U.S. exports of corn were valued at just under 

$10 billion.25 Asian countries, including Japan, China, and the Republic of Korea, are 

generally the largest markets for U.S. corn, while exports to the EU market are 

negligible.26 Corn tends to be exported mainly by large firms, and the trade barriers 

identified in this subsection are not considered to disproportionately affect exports of 

SMEs compared to those of large firms. 

Trade Barriers Related to Corn 

The corn industry expressed serious concern over the EU’s treatment of genetically 

modified organisms (GMOs). Representatives reported that EU labeling requirements, 

and what they consider to be unreasonable expectations about low-level presence 

(LLP),27 are limiting their exports of corn to the EU.28 GMOs are seeds or organisms that 

have been genetically manipulated to achieve certain desirable characteristics, including 

resistance to herbicides or increased nutritional value. New GM developments are known 

as traits, and need to be approved in the country of production and importation before 

they can be sold or imported. Several GM crops, including corn, wheat, and soybeans, 

 20 The U.S. government does not offer certifications for certain substances, such as dioxin, because they 

are not seen as a science-based threat to food safety. Therefore, the U.S. government does not test for or 

regulate dioxin, nor does it issue a certificate to prove testing. Industry representatives, roundtable 

discussions, Atlanta, GA, September 18, 2013, and Philadelphia, PA, September 23, 2013. 21 USDA, PSD Online (accessed November 12, 2013). 

22 USDA, ERS, “Corn Briefing Room” (accessed November 12, 2013). 

23 McConnell, Fry, and Lynch, “King Corn versus the Safrinha,” March 2013, 3. 24 USDA, ERS, “Corn Briefing Room” (accessed November 12, 2013). 25 GTIS, Global Trade Atlas database (accessed November 12, 2013). 26 Ibid. 

27 European Union, “Questions and Answers,” June 24, 2011. Low-level presence is a term that refers 

to traces of non-approved genetic traits in import shipments. 28 National Corn Growers Association, written submission to the USITC, August 23, 2013, 2. 
5-6 

have been adopted all over the world: the corn grown in Brazil and the United States, 

both large global producers, is over 50 percent and 90 percent GMO respectively.29 

However, the EU, because of concerns about the health impact of GMOs in both food 

and animal feed, passed legislation regulating GMOs in those products. EU regulations 

1829/2003 and 1830/2003 set out mandatory labeling requirements for GM crops and 

testing procedures for imports, and allow only very small trace amounts of unapproved 

traits.30 According to the Biotechnology Industry Organization, the EU actively restricts 

imports of GM products by backlogging the approval of newly developed traits. 31

Although EU scientific panels may approve the trait, government bodies were reported to 

hold the applications without giving final approval, leading to the presence of “not yet 

approved” traits in shipments and subsequent delays at EU ports.32 In addition, the EU 

does not automatically allow stacked traits,33 which is the combination of two previously 

approved single traits into one product. This lengthens the approval process in the EU 

and, along with the mandatory labeling of all GM products, acts as a barrier for new U.S. 

corn products.34 

Dried Fruit 

Dried fruit production takes place throughout the United States; depending on the year, 

between 10 and 15 percent of total U.S. fruit production is dried. Approximately 

2.2 million metric tons (mt) of fresh fruit were dried in the United States in 2012.35 The 

dried fruit industry consists of growers and processors, most of which are SMEs. 

Typically, fruits are dried either by mechanical dehydration or, more commonly, by 

laying them out in sun. Raisins account for more than half of all dried fruit production 

and consumption in the United States, but plums (prunes), figs, apricots, peaches, apples, 

pears, cranberries, blueberries, cherries, and strawberries are also commonly dried.36 At 

the retail level, dried fruit is packaged and marketed either as a single dried fruit variety 

or as mixtures of different dried fruits and nuts. 

While the U.S exports a variety of dried fruits, in 2012, raisins and prunes accounted for 

almost 80 percent of the total U.S. exports of dried fruit, including dried fruit in mixtures 

of fruits and nuts.37 In 2012, the United States exported $384 million worth of raisins and 

was the second-largest exporter in the world, behind Turkey. The United States is the 

world’s largest exporter of prunes and exported $178 million worth in 2012. The EU is an 

important market for U.S. raisin and prune exporters, accounting for approximately 

30 percent of total exports in both products each year.38 

 29 USITC, Brazil: Competitive Factors, May 2012. 30 Europa, Summaries of EU Legislation, Regulation (EC) No. 1830/2003, “Traceability and Labelling 

of GMOs,” April 19, 2011, 

http://europa.eu/legislation_summaries/consumers/product_labelling_and_packaging/l21170_en.htm; Europa, 

Summaries of EU Legislation, Regulation (EC) No. 1829/2003, “Food and Feed (GMO),” January 19, 2011, 

http://europa.eu/legislation_summaries/agriculture/food/l21154_en.htm. 31 BIO, written submission to USTR, [May 2013], 14. 

32 Ibid., 15. 

33 Ibid., 15. 

34 National Corn Growers Association, written submission to the USITC, August 23, 2013, 2. 35 USDA, NASS, Noncitrus Fruit and Nuts: 2012 Preliminary Summary, January 2013. 36 Huntrods et al., “Raisin Profile,” February 2013. 

37 USITC DataWeb/USDOC (accessed November 7, 2013). 

38 GTIS, Global Trade Atlas (accessed November 8, 2013). 
5-7 

Trade Barriers Related to Dried Fruit 

According to industry representatives, the fruit industry faces several barriers on exports 

to the EU, mostly pertaining to pesticide limits and testing requirements for chemicals 

and heavy metals.39 First, MRLs, or the limits on pesticide residues remaining on a crop, 

differ in various EU countries, making it difficult for producers to be consistent with their 

pesticide applications.40 Representatives reported that, as an example, allowable cadmium 

levels are set at 0.4 parts per million (ppm) in some countries and 0.2 ppm in others,41

which producers say often leads them to segregate production based on the destination.42

The combination of wind patterns and proximate farms also leads to pesticides being 

swept across fields—including pesticides from other products, such as walnuts, that are 

not allowed into the EU—so growers are not always aware of the type or levels of 

pesticides present on their products.43 In addition, new fruit-damaging pests, such as 

spotted wing drosophila, need new pesticides to treat them, and those pesticides may not 

be approved in the EU.44 

Second, SMEs reported that a general safety certification by the GFSI used to be 

accepted by most EU countries, but now an EU country may restrict entry of products 

that do not have a particular type of GFSI certification.45 The GFSI is an association 

composed of leading international food companies and is globally recognized as the top 

food-safety benchmarking organization. GFSI recognizes several different certification 

schemes as meeting its criteria for food safety;46 the fact that some may be preferred over 

others is said to be a significant problem for some U.S. exporters. For example, an EU 

company or country might prefer or mandate that any U.S. firm it imports from be 

certified under the Safe Quality Foods Program (SQF) (one of GFSI’s certification 

schemes), but the U.S. company that wants to export to them is certified under another 

GFSI certification scheme, such as the British Retail Consortium (BRC) certification.47

Thus, in order to export to that market, the SME must also obtain the SQF certification. 

SME representatives report that both of these are certified GFSI schemes and achieve the 

goal of ensuring food safety but require different tests, which are time-consuming and 

expensive and can be a particular burden for SMEs with tight resources.48 

Third, there is concern among the dried fruit industry about the changeable nature of and 

lack of transparency in EU chemical regulations, as well as the fact that they are often not 

based on scientific evidence, in the view of SME representatives. For instance, the 

industry reported that there has been an increase in testing for dioxins, perchlorates, and 

other chemicals not traditionally subject to scrutiny, and the allowable limits are not clear 

or consistent among EU member states. Staying abreast of the latest information can be 

especially difficult for SMEs, which often lack the resources to dedicate full-time 

 39 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 40 Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. 41 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013; Oosterhuis, 

Brouwer, and Wijnants, A Possible EU Wide Charge, April 2000. This cadmium issue was also raised by the 

wheat industry. Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 42 Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. 43 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 44 Industry representative, roundtable discussion, Lathrup Village, MI, September 9, 2013. 45 Industry representatives, roundtable discussion, Sacramento, CA, September 25, 2013. 46 GFSI, “Certification against a GFSI-Recognised Scheme” (accessed December 4, 2013). 47 GFSI, “GFSI Recognised Schemes” (accessed December 4, 2013); CERT ID Services, “GFSI Food 

Safety Certification” (accessed December 4, 2013). 48 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 
5-8 

personnel to master the nuances of regulations, as well as track their changes. 

Additionally, representatives noted that the lists of prohibited pesticides and pesticide 

residue ceilings are occasionally not published until U.S. producers have already applied 

pesticides for the season. Growers reported instances of being required to find new export 

markets for their products because a given pesticide was allowed in the EU at the time of 

application, but was added to the list of banned pesticides later in the year. The EU also 

reportedly requires growers to list chemicals that were used near their fruit plants, such as 

chemical gopher bait, even if those chemicals are never absorbed into the trees or fruit 

and could not be detected.49 

Lastly, the industry shared concerns over other regulatory issues. These included 

packaging, which is subject to extensive EU testing; packaging must also be labeled with 

the percentage of recyclable content, and meeting these requirements require time and 

financial resources. In addition, one representative said that Scandinavian countries have 

outlawed palm oil as an input for dried fruits.50 

Animal Feed 

Animal feed is a large business in the United States and globally; U.S. shipments are 

valued at over $30 billion annually.51 The industry encompasses both inputs and end 

uses: several different types of grains, oilseeds, and additives such as vitamins and 

minerals are used to feed a variety of animals, including poultry, swine, cattle (dairy and 

beef), and fish. The United States is one of the world’s leading producers of feed, and the 

industry generally concentrates on production of feed for poultry and other livestock.52

Approximately one-third of annual U.S. corn and soybean production is used in animal 

feed.53 Exports of animal feed can be composed of individual feed ingredients, such as 

soymeal or specific vitamins, or complete feeds. The United States exports approximately 

1,000 to 1,500 mt of complete feeds per year.54 

The animal feed industry is relatively concentrated among a few major companies that 

are generally involved in both domestic and export markets, unless the product is very 

specialized and fills a niche market.55 Farmers typically sell their product to large feed 

companies that blend ingredients to their specifications for sale to customers, including 

customers overseas.56 While the United States is a relatively large producer of animal 

feed, the domestic poultry and livestock industries absorb much of the U.S. output, 

substantially limiting exports. 

 49 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 50 Ibid. Palm oil is rarely used as an input for dried fruit in the United States. 51 IbisWorld, “Farm Animal Feed Production in the US,” December 2012. 52 Johns Hopkins Center for a Livable Future, Feed for Food-Producing Animals, 2007. China and 

Brazil are also large producers of animal feed. 53 USDA, PSD Online (accessed November 12, 2013); American Soybean Association, Soy Stats 2013 

(accessed November 12, 2013). 54 HighQuest Partners and Soyatech, Opportunities and Challenges, n.d. (accessed January 23, 2014). 55 Amanor-Boadu and Ross, “Industry Trend Report: Animal Feed Manufacturing,” NAICS Report 

2011–05.1, May 2011. 56 Thus, the barriers reported below by SMEs directly exporting animal feed do not typically 

disproportionately affect SME exports. 
5-9 

Trade Barriers Related to Animal Feed 

According to representatives of animal feed SMEs, the barriers faced by the industry 

center around two issues: the lack of harmonization between the United States and EU, 

and the EU’s strict regulations on traceability. The EU requires U.S. certification on the 

safety of certain inputs before the animal feed products are allowed to be imported into 

the EU. However, the United States does not have programs in place to certify these 

particular inputs.57 One set of EU requirements involves allowable levels of dioxin, a 

naturally occurring substance that the industry described as similar to lead.58 According 

to the industry, because dioxin is naturally occurring, the U.S. Department of Agriculture 

(USDA) does not have an associated certification process, leaving the exporter with 

nothing to provide the EU to satisfy this requirement. 59 Additionally, the EU has 

requirements for certifying the safety of animal feed additives, used for aquaculture, that 

originate from marine products, such as fish and krill oils or meals, but there is no U.S. 

classification for these products as inputs into aquaculture feed.60 Therefore, no U.S. 

agency can certify animal feeds containing these products under the EU’s Chapter 1 

health certificates. 61 Industry representatives report that this lack of harmonization 

between the United States and EU has led to both entities trying to place classification 

responsibilities on the other, leaving the exporters in a gray area and unable to ship their 

product to the EU.62 

An industry representative also expressed concern over the growing importance of 

traceability from both the United States and the EU. The representative said that the 

United States, through the Animal and Plant Health Inspection Services (APHIS), and the 

EU are placing more emphasis on paperwork showing the supply chain of a given 

product,63 even though each entity in the supply chain has been previously certified by 

the EU.64

Several representatives of animal feed sector SMEs stated that the EU restricts imports 

using measures that are not based in science. One representative said that animal feed 

exports are being held up by extensive testing requirements for chemicals and heavy 

metals,65 which result in lost time and extra expenses. The industry noted that this is 

especially pertinent for businesses shipping animal feed containing GM products, as the 

multitude of regulatory layers and the cost of testing are reported to erase much of the 

competitive advantages of U.S. animal feed companies.66 

Though barriers in specific EU countries were not brought up by the animal feed 

industry, SMEs expressed concern that countries that are currently looking to join the 

EU, such as Turkey, are implementing testing and regulations that attempt to mirror those 

 57 Industry representatives, roundtable discussions, Atlanta, GA, September 18, 2013, and Philadelphia, 

PA, September 23, 2013. 58 Industry representative, roundtable discussion, Atlanta, GA, September 18, 2013. 59 Industry reported that no U.S. agency has a dioxin certification program, including USDA, the Food 

and Drug Administration (FDA), and the U.S. State Department. 60 Industry representative, roundtable discussion, Philadelphia, PA, September 23, 2013. 61 Ibid. 

62 Ibid. 

63 For example, the supply chain could include the supplier, the buyer, the warehouse/shipper, and the 

final importer or processor. 64 Industry representative, roundtable discussion, Philadelphia, PA, September 23, 2013. 

65 Industry representative, roundtable discussion, Atlanta, GA, September 18, 2013. 66 In addition to testing, the EU also has a low limit on the presence of “carriers” (extra residues, such 

as rice hulls) in shipments. Industry representative, roundtable discussion, Atlanta, GA, September 18, 2013. 
5-10 

of the EU. Some of these regulations act as barriers to U.S. products; as a result, industry 

representatives report problems in continuing to export some products to Turkey.67

Cheese 

The cheese industry is an important component of the U.S. dairy industry, with roughly 

one-third of U.S. milk supplies annually going to the production of cheese.68 The value of 

cheese shipments in 2012 is estimated at about $36 billion, almost 30 percent higher than 

the $28 billion in shipments in 2009. 69 Cheese manufacturing supports between 

40,000 and 50,000 employees, 70 with Wisconsin and California by far the leading 

producing states, followed by Idaho, New York, and New Mexico. Excluding changes in 

stocks, 71 U.S. cheese consumption grew 8 percent annually between 2009 and 2012 

(26 percent over the period), with mozzarella and cheddar the most popular cheese 

types.72 

U.S. international trade (imports and exports) in cheese is very small relative to total 

domestic production. U.S. cheese exports did see rapid growth over this time period, 

increasing from $437 million in 2009 to $1.1 billion in 2012, representing annual growth 

of over 36 percent. In 2012, the United States for the first time became a net exporter of 

cheese. But U.S. exports of cheese to the EU countries were negligible, totaling 

$6 million in 2012, primarily to Germany, the Netherlands, and the United Kingdom.73

Shipments to the EU consisted of cheddar and colby cheese, processed cheese, and grated 

or powdered cheeses.74 

SME cheese producers in the United States often produce specialty and premium cheeses 

rather than bulk cheddar and mozzarella; these cheesemakers increasingly compete with 

imports from the EU in the U.S. market.75 

Trade Barriers Related to Cheese 

The major barrier expressed by the cheese industry was the EU’s use of protected 

designations of origin (PDOs). PDOs are used to identify a good as originating in a 

specific geographic location and with a particular level of quality. 76 One industry 

representative said that the EU uses PDOs to signify that the product is unique, but the 

United States contends that many PDOs have become common generic terms and should 

no longer be protected. For example, Parmiggiano Reggiano is a protected term in the 

 67 Industry representative, roundtable discussion, Atlanta, GA, September 18, 2013. 68 About one-third of the milk is processed into fluid milk and cream products, one-third into cheese, 

and the remaining one-third into all other manufactured dairy products, such as butter, ice cream, and yogurt. 69 USDOC, Census, Annual Survey of Manufactures 2010 (accessed May 16, 2013). 70 Ibid. 

71 Stocks refer to end-of-period inventory. 

72 International Dairy Foods Association, “Cheese Sales & Trends,” December 2012. 73 USITC DataWeb/USDOC (accessed November 7, 2013). 

74 GTIS, Global Trade Atlas (accessed November 8, 2013). 75 Dobson, “The Future Role of the U.S.,” 2008, 6. 

76 PDOs are defined as being produced or processed in a specific area. They are similar to protected 

geographic indicators (PGIs), though besides being produced or processed in a specific area, PGIs must use a 

method or stage of production unique to that area. 
5-11 

EU, while the United States sees parmesan as a generic type of cheese.77 The SME 

representative added that “these PDO’s effectively close the entire [EU] market to us.”78 

Wheat 

Wheat is the most prevalent cereal grain grown in the United States and is found 

primarily in the Plains states, from Texas to North Dakota. The USDA classifies wheat 

into five major classes, though the spring wheat and winter wheat varieties make up 

about 70 to 80 percent of U.S. production.79 Generally, exporters of wheat and other 

grains are large international companies that buy grain from SME growers.80 The United 

States is the world’s fifth-largest wheat producer, and generally exports about half its 

production. 81 In marketing year (MY) 2011/2012, the United States produced over 

54 million mt of wheat, of which over 1.2 million mt ($362 million) were exported to the 

EU.82 Traditionally, Italy is the largest European export market for U.S. wheat, followed 

by Spain.83 

Trade Barriers Related to Wheat 

Feedback by U.S. wheat industry representatives on trade barriers faced by the industry 

echo the concerns voiced by other agricultural industries, focusing on the EU’s nonscience-based risk assessments and the lack of harmonization between U.S. and EU 

certifications. Specifically, the EU does not accept the certified mycotoxin tests for 

deoxynivalenol (DON) and ochratoxin that are conducted by the U.S. Federal Grain 

Inspection Service, 84 nor does it accept USDA Karnal bunt (KB) certification, even 

though virtually all other countries accept it.85 KB is a fungal disease found in wheat, and 

according to EU reports, USDA certification does not meet the level of protection 

mandated by the EU.86 The EU requires testing even when the USDA certifies that the 

exported wheat originated from an area that is free of KB.87 

The wheat industry also commented on the disparity in allowable cadmium levels that 

has already been discussed in the dried fruit section as impeding trade,88 and brought up 

 77 Sartori, written submission to the USITC, September 3, 2013, 1. 78 Ibid. 

79 USDA, ERS, “Wheat Briefing Room” (accessed November 12, 2013). The five wheat varieties 

include hard red winter, hard red spring, soft red winter, white, and durum. 80 Thus, the barriers discussed in this section are not viewed as disproportionately affecting SMEs 

compared to large firms. 81 USDA, PSD Online (accessed November 4, 2013). The largest producers include the EU, China, 

India, and Russia. 82 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the 

USITC, September 25, 2013, 1. 83 Ibid., 1. 

84 Ibid., 3. 

85 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013; U.S. Wheat 

Associates and National Association of Wheat Growers, written submission to the USITC, September 25, 

2013. 86 EFSA, PLH, “Scientific Opinion on a Quantitative Pathway Analysis,” 2010. 87 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 88 Allowable cadmium levels range from 0.4 ppm to 0.2 ppm in different countries. Industry 

representative, roundtable discussion, Sacramento, CA, September 25, 2013. 
5-12 

GM issues similar to those raised by the corn industry.89 These include the slow traitapproval process, which the industry states is not based on science, and the LLP 

requirement for food, which, according to the industry, is arbitrary and exceedingly 

difficult to meet.90 Lastly, industry representatives noted the increasing global focus on 

sustainability, which is leading a growing number of EU companies to harbor a negative 

view of U.S. wheat because it is irrigated.91 Although the irrigation water comes from 

natural sources, such as a river, the representatives said that it is seen as less acceptable 

and less sustainable than alternative sources like direct rainfall.92

While these issues act as trade barriers in the entire EU, certain EU countries are more 

restrictive regarding KB shipments and specific testing procedures than others. Industry 

representatives especially noted that the United Kingdom (UK) and Greece require 

testing on wheat shipments even though KB has not been found in tests in the United 

States before shipping. The representatives stated that false positives and port delays have 

occurred as a result. The representatives also reported that Italy has encouraged precertification for mycotoxins, even though the U.S. Federal Grain Inspection Service 

“follows a rigorous sampling and testing procedure to provide independent third-party 

assurance to buyers of their contract specifications”93 

Nuts 

The U.S. almond industry is centered in California, the only U.S. state with commercial 

production. According to the 2007 USDA Agricultural Census, there are around 

6,500 California almond farms. Of those, most are SMEs: 72 percent are family owned 

and 51 percent are less than 50 acres.94 In 2011, there were approximately 104 almond 

packers (“handlers”) in California. 95 The world’s largest almond handler is the Blue 

Diamond Growers Cooperative, which is located in Sacramento, California. Blue 

Diamond is owned by over two-thirds of California growers and markets one-third of 

California’s crop.96 Almonds are the largest agricultural export from California, and rank 

in the top three consumer foods exported from the United States. 

In 2012, U.S. almond production reached 920,800 mt, valued at $4.3 billion, and was 

produced on 780,000 bearing acres.97 This volume accounted for 84 percent of global 

production that year.98 Australia and Spain were the next-largest global producers, at 

70,000 mt and 40,000 mt, respectively, in 2012.99 

 89 Industry representatives, roundtable discussions, Salt Lake City, UT, September 20, 2013, and 

Smithfield, RI, September 27, 2013. 90 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the 

USITC, September 25, 2013, 3. 91 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 92 Ibid. 

93 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the 

USITC, September 25, 2013, 3. Mycotoxins are a form of mold. 94 Almond Board of California, Almond Almanac, 2012. 95 Ibid. 

96 Huntrods, “Almond Profile,” July 2013. 

97 USDA, NASS, Noncitrus Fruits and Nuts: Preliminary Summary, January 2013. 98 USDA, FAS, “Tree Nuts: World Market and Trade,” October 2012. 

99 International Nut and Dried Fruit Council, “Global Statistical Review: Almond,” March 2013, 50. 
5-13 

The U.S. almond industry exported over 70 percent of its total production and accounted 

for about 80 percent of global exports in 2012.100 The U.S. almond industry exports to 

markets around the world, but its top five export markets in 2012, by volume, were the 

EU, China/Hong Kong, India, the United Arab Emirates, and Japan.101 About 70 percent 

of U.S. almonds are exported as shelled almonds, with the remainder being either 

unshelled (in-shell) or manufactured. 

U.S. almond production has grown significantly in the last decade. Improvements in 

efficiency and technology as well as new tree varieties, improved planting patterns, 

mechanization, and better orchard agronomy have increased almond yields 

significantly.102 Demand for almonds continues to grow in the United States and abroad 

owing to wider awareness of almonds’ health attributes. In addition to being a good 

source of protein, almonds have also been marketed as a good source of vitamin E, 

dietary fiber, and monounsaturated fat—the latter of which has been associated with 

decreased risk of heart disease.103

Trade Barriers Related to Nuts 

Trade barriers reported by the nut industry closely follow the themes expressed by other 

agricultural industries: extensive testing done by the EU, frequent changes in allowable 

residue levels, and a focus on GM and other “food safety” issues. First, the EU testing 

requirements for aflatoxin, a naturally occurring substance, were reportedly altered with 

no notice from a minimum sample of 38 pounds to 44 pounds.104 SMEs say they have 

noticed that products that had already passed internal tests for aflatoxin have failed the 

testing in the EU, but when a re-test was requested the sample then passed.105 Second, as 

other industries reported, the EU sets allowable residue levels relatively low and changes 

them frequently, rejecting even residue levels that are accepted in the United States; 

sometimes the levels change in mid-shipment.106 Third, almond producers state that they 

are required to provide statements that their product is non-GMO to EU buyers even 

though GM almonds do not yet exist.107 Lastly, an SME reported that there have been 

changes in tariff harmonization codes, making trade more difficult, and duty rates appear 

to vary depending on the wording in entry documents and on the country of entry.108

Meat 

The U.S. livestock and meat industry includes the production of poultry (chicken and 

turkey), lamb and mutton,109 and other meats, primarily beef and pork. The supply chain 

is similar for all meats. Once an animal has reached market weight, it is taken to a 

 100 GTIS, Global Trade Atlas database (accessed November 8, 2013). 101 Ibid. 102 Huntrods, “Almond Profile,” July 2013. 103 Almond Board of California, Almond Almanac, 2012. 104 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. It should be noted 

that per EC Regulation Number 165/2010, the maximum amount of aflatoxin allowed on certain nuts, 

including almonds and pistachios, was raised in the EU in 2010 to be in line with Codex Alimentarius 

standards. USDA, FAS, “New EU Aflatoxin Levels and Sampling Plan,” March 9, 2010. 105 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 106 Ibid. 107 Ibid. 108 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013; Almond Board of 

California, “Summary: Applied Tariffs on U.S. Almonds,” August 2009. 109 Mutton is the meat of sheep. 
5-14 

processing plant where it is slaughtered and turned into uncooked meat, which can be 

sold as an end product or as an input to a further processor.110 Further processing covers 

a variety of activities, including cooking, dehydrating, and marinating, that create 

products for end use (such as microwave meals or pre-marinated products for home 

cooking) or as inputs into yet other products (such as cooked meat chunks or broths for 

soups). 

While the supply chain is similar for all meats, the sectors vary dramatically in size. The 

chicken sector is the largest segment of the U.S. livestock and meat industry (41 percent 

of production in 2012); the turkey sector is far smaller (6 percent).111 Globally, the 

United States is the largest producer of poultry and the second-largest poultry exporter.112

A handful of large firms accounts for most production of chicken and turkey meat, but 

many SMEs have processing and further processing plants. 113 The U.S. poultry 

processing industry employs about 225,000 people in 2012.114 The lamb and mutton 

sector is the smallest segment of the U.S. meat industry, making up less than 1 percent of 

production in 2012; globally, the United States accounted for only about 1 percent of 

lamb and mutton exports during 2007–11.115 

Trade Barriers Related to Meat116 

According to poultry industry representatives, there is significant potential in the EU 

market for U.S. product, but restrictions effectively ban any U.S. poultry from being 

exported to the EU.117 The representatives state that the EU sometimes imposes new 

restrictions on slaughter and processing techniques that have been approved by the U.S. 

Food Safety and Inspection Service (FSIS), and changes old restrictions as well.118 The 

techniques targeted by the EU involve the use of certain pathogen reduction treatments 

(PRTs) in chicken processing, including chlorine water for the chilling of poultry 

carcasses.119 EC regulation number 853/2004 prohibits importing poultry treated with a 

substance that is not water or that has not been approved by the EU.120 As a result, U.S. 

poultry processed with chemical PRTs, which are meant to reduce the amount of 

 110 Processing plants, especially at larger firms, may also incorporate further processing facilities. 111 Based on 2012 data for federally inspected slaughter, in pounds. USDA, ERS, Livestock and Meat 

Domestic Data: Meat Statistics; All Meat Statistics (accessed November 6, 2013). 112 U.S. poultry production accounted for about one-quarter of global poultry production during 2006–

12. In 2012, U.S. exports accounted for about 34 percent of global broiler and turkey meat exports by volume. 

Brazil is the world’s largest exporter of poultry. USDA, PSD database (accessed August 20, 2013). See also 

Weaver, Poultry, January 2014, 37, 39. 113 Based on a survey of top broiler and turkey producers, the top five firms account for approximately 

60 percent of production in 2012 for the chicken and turkey sectors, respectively. Thornton, “US Chicken 

Companies Enter 2013,” March 2013, 13; Thornton, “Turkey Companies Plot Production Growth for 2013,” 

March 2013, 44. 114 AMI, Meat and Poultry Facts 2012, April 2012, 26. 115 Based on 2012 data for federally inspected slaughter, in pounds. USDA, ERS, Livestock and Meat 

Domestic Data: Meat Statistics; All Meat Statistics (accessed November 7, 2013). Australia and New 

Zealand dominate exports of lamb and mutton, making up about 86 percent of exports during 2007–11. Data 

for 2012 are incomplete due to the lack of trade data from some countries. 116 The discussion in this section is limited to poultry and lamb barriers since representatives of those 

industries communicated their views to the Commission. 117 Henningsen Foods, written submission to the USITC, September 18 2013, 1. 118 Ibid. 119 Johnson, U.S.-EU Poultry Dispute, November 19, 2012. 120 Johnson, U.S.-EU Poultry Dispute, November 19, 2012. 
5-15 

microbes on the bird, has been banned from entering the EU since 1997, a restriction that 

keeps out virtually all U.S. poultry.121 

A representative of an SME producing lamb stated that U.S. lamb is currently on the EU 

non-allowable import list. The representatives noted that lamb is often administratively 

grouped with beef because the lamb industry is relatively small.122 In order to separate 

lamb and make it subject to different regulations, U.S. lamb exporters would need to 

obtain food safety certifications through the U.S. Agricultural Marketing Service (AMS), 

which is very costly.123 

The lamb industry therefore faces the same EU restrictions as the U.S. beef industry, 

even though the issues are different. For example, U.S. beef has faced problems with E. 

coli and the use of growth hormones, neither of which apply to the lamb industry.124 In 

addition to the regulations and restrictions concerning beef, representatives noted that the 

FDA has approved a steroid for use on lamb, giving rise to a negative perception overseas 

of the U.S. lamb industry though the steroid is not used.125

Suggested Ways to Enhance SME Participation in Trade 

SMEs suggested several ways to enhance agricultural trade between the United States 

and the EU, focusing mainly on the reduction or elimination of tariffs to ensure that 

competitors from other countries do not have an unfair advantage.126 For example, the 

representative of an SME that exports prunes stated that the EU duty on U.S. prunes is 

about 9.6 percent, while Chile’s free trade agreement with the EU allows its prunes to 

enter the EU duty free.127 He further stated that acreage in prunes in California has 

declined over 40 percent since the Chile-EU agreement entered into force and that he 

believes prunes to be an excellent candidate product for which the United States and the 

EU could mutually eliminate duties. U.S. wheat producers stated that Canada and the EU 

are nearing completion of a free trade agreement that will eliminate EU duties on 

Canadian wheat, arguing that a similar U.S.-EU agreement is needed to prevent U.S. 

producers from facing a competitive disadvantage. 128 Similarly, an SME in a 2010 

USITC study was quoted as saying that the large differential in EU duties between U.S. 

and Canadian shrimp was harming the U.S. West Coast shrimp industry.129

Additionally, industry representatives suggested that the U.S. government could provide 

more export support. This support could be in the form of either an ombudsman to hear 

 121 “In 2002, the United States asked the EC to approve the use of four PRTs in the production. In June 

2008, the EC Standing Committee on Food Chain and Animal Health rejected a proposal to allow the import 

of poultry treated with these four PRTs, and in December 2008, the EC Agricultural and Fisheries Council 

also rejected the proposal.” Weaver, Poultry, January 2014, 42. 122 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. The meat 

industry met several years ago to discuss trade barriers and discuss new ideas, which is part of how lamb 

became grouped with beef. The lamb industry feels it is too small to influence the larger meat industry. 123 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 124 Ibid. 125 Ibid. 126 Ibid. 127 Industry representatives, roundtable discussions, Lathrup Village, MI, September 9, 2013, and 

Philadelphia, PA, September 23, 2013. 128 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the 

USITC, September 25, 2013, 2. 129 USITC, Small and Medium-Sized Enterprises: U.S. and EU Export Activities, 2010, 6-24. 
5-16 

complaints on current EU trade barriers or a government-funded source of export 

information and assistance. 

Several SMEs shared positive experiences about exporting to the EU that other SMEs 

could perhaps emulate. For example, being an SME has allowed some producers to 

customize their product for a specific country or customer. Large companies that mostly 

export bulk products would likely have difficulty segregating products throughout the 

supply chain, but small companies can target niche markets.130 The fruit industry was the 

main reporter of this advantage. 

The fruit industry also stated that harmonization between the USDA National Organic 

Program and EU organic authorities has made trade in organic products more seamless. 

This harmonization recognizes products that have been deemed organic by either the 

United States or EU—if the EU exports a certified organic product to the United States, 

the United States accepts it as such, and vice versa.131 Additionally, an SME stated that 

involvement with both government agencies and private industry organizations had 

helped to smooth trade and resolve disputes. On the government side, the Export-Import 

Bank was cited as helping producers to export their product and to obtain credit 

insurance.132 On the private side, the California Almond Board, the U.S. Meat Export 

Federation, and the Western United States Agricultural Trade Association, which brings 

pre-qualified buyers to U.S. firms’ operations, were identified by SMEs as providing 

valuable assistance.133 Lastly, SMEs stated that different shipping or logistics options, 

such as shipping through alternate routes or setting up a satellite office in Europe, have 

allowed their companies to avoid some EU barriers.134

 130 Industry representatives, roundtable discussions, Lathrup Village, MI, September 9, 2013, and 

Philadelphia, PA, September 23, 2013. 131 Industry representative, roundtable discussion, Fresno, CA, September 27, 2013. 132 Industry representatives, roundtable discussions, Lathrup Village, MI, September 9, 2013; Atlanta, 

GA, September 18, 2013; and Sacramento, CA, September 25, 2013. 133 Industry representatives, roundtable discussions, Sacramento, CA, September 25, 2013, and Fresno, 

CA, September 27, 2013. 134 Industry representative, roundtable discussion, Sacramento, CA, September 25, 2013. 
5-17 

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Trade Commission, January 2014. 
CHAPTER 6

Services 

Overview

Services cover a broad range of industries and account for roughly 80 percent of U.S. 

gross domestic product (GDP) and employment.1 The United States is the world’s largest 

services market and also the leading exporter and importer of services. However, U.S. 

exporters of services to most markets, including the European Union (EU), face an array 

of market access, investment, and national treatment barriers. These barriers affect both 

large firms and small and medium-sized enterprises (SMEs); some disproportionately 

affect SMEs. To address these barriers, the Business Coalition for Transatlantic Trade 

(BCTT) has identified a number of services sector objectives for the U.S.-EU 

Transatlantic Trade and Investment Partnership (TTIP) negotiations. These include

cooperating on regulations, permitting cross-border data flows, prohibiting localization 

and performance requirements, and removing business operations restrictions, as well as 

addressing anticompetitive practices (e.g., state-supported or -owned enterprises), lack of 

transparency, and licensing issues.2

Fewer services firms than goods-producing firms participated in the USITC roundtables.

A variety of factors could account for the disparity. One potential reason is described in

the third USITC report on SMEs, which reported that services firms encountered fewer 

impediments to exporting than manufacturing firms.3 Moreover, the impediments most 

often encountered by SME services firms were “foreign sales not sufficiently profitable,” 

“difficulty locating sales prospects,” and “transportation and shipping costs,” which are 

not directly related to trade policy. Furthermore, according to one recent study, nontariff 

measures (NTMs) affecting transatlantic services trade may be less stringent than those 

on goods.4

Nevertheless, SMEs participating in USITC roundtables and responding to related

USITC outreach efforts listed several major EU barriers that could have a 

disproportionate effect on U.S. SMEs’ exports of services to the EU. Barriers were 

reported in certain professional services and in information services. These barriers relate

to licensing, transparency of regulations, reciprocity of professional credentials, 

broadcasting and film quotas, language dubbing requirements, and government subsidies.

1 In 2012 services represented 78 percent of U.S. GDP and 82 percent of U.S. employment, expressed 

in full-time equivalents (FTEs). USDOC, BEA, Full-Time Equivalent Employees by Industry (accessed 

November 12, 2013). Examples of services industries include distribution services, electronic services, 

financial services, and travel and passenger services. For a detailed description of U.S. services, see USITC, 

Recent Trends in U.S. Services: 2013, July 2013. 2 U.S. Chamber of Commerce for the Business Coalition for Transatlantic Trade, Regulatory Working 

Group, written submission to the USITC, December 2, 2013; U.S. Chamber of Commerce for the Business 

Coalition for Transatlantic Trade, Services Working Group, written submission to the USITC, December 2, 

2013.

3 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 6-2. 4 Based on an index of NTM severity created from a survey of businesses. Francois et al., Reducing 

Transatlantic Barriers to Trade and Investment, 2013, 17.

6-1

 
Professional Services 

Professional, scientific, and technical services (henceforth called simply “professional 

services”) encompass a variety of activities.

5 Providers of professional services are 

among the most highly skilled, trained, and educated workers in the global economy. The 

value added by most professional services is based primarily on expertise and knowledge. 

Consequently, most professional services providers are subject to stringent registration, 

certification, and licensing requirements to ensure that only qualified personnel offer such 

services. These requirements, however, may also inhibit trade by foreign providers. 

Professional services contributed $2.2 trillion to the U.S. GDP in 2011, and jobs in 

professional services accounted for one-quarter of total U.S. private-sector employment, 

or 27 million employees, in 2012.6 Professional services are primarily provided by SMEs, 

which made up over 99 percent of all professional services firms in 2010 (latest available 

data).7

 SMEs also accounted for half of professional services export revenue in 2007 

(latest available data).8 SMEs that export professional services realized 21 percent of 

their revenues from exports in 2007, a higher percentage than the export revenues 

realized by large firms that year.

9

Participants in USITC roundtables included representatives of SMEs in healthcare 

services, engineering services, and testing services. The following section describes the

barriers and related issues that they reported as disproportionately affecting their exports 

to the EU.

Trade Barriers Related to Healthcare Services

A significant barrier affecting U.S. healthcare SMEs is the lack of recognition of U.S. 

medical credentials in the EU, which could impose a disproportionate effect on SMEs.

10

An industry representative stated that it is difficult for U.S. doctors to practice medicine 

in the EU on a temporary basis because U.S. medical licenses are not recognized in 

5 For a complete listing and description of professional services, see Census, “North American Industry 

Classification System, (NAICS)” n.d. (accessed November 4, 2013). For example, legal, accounting, 

architectural, engineering, computing, consulting, and testing services are defined in NAICS code 541, and 

healthcare services is defined in NAICS code 62. 6 Latest available data; employment expressed in FTEs. USDOC, BEA, Full-Time Equivalent 

Employees by Industry, August 7, 2013; USDOC, BEA, “Real Value Added by Industry,” November 13, 

2012. 7 Census, “Number of Firms, Number of Establishments,” October 2012. 

8 For cross-border trade, USITC, Small and Medium-Sized Enterprises: Characteristics, 2010, 3-12. 

The data are tabulated according to firm size categories, but refer to the establishments of firms. 9 USITC, Small and Medium-Sized Enterprises: Characteristics, 2010, D-10. 10 Any individual from outside the EU, whether a solo practitioner or an employee of a major clinic 

with an EU branch, must obtain the medical credentials to practice in the EU. The costs associated with 

obtaining foreign medical credentials, such as the time and effort required for passing the various tests, are a 

fixed cost that must be borne in order to practice in the EU. As previously stated, large firms that have more 

export revenue are better able to bear these costs than SMEs, and these barriers thus impose a 

disproportionate burden on SMEs. Also, a previous USITC study reported that large firms are much more 

likely than SMEs to serve foreign customers by setting up foreign affiliates, which may enable large firms to 

more easily navigate local regulatory environments. An estimated 85 percent of foreign sales by large firms 

were conducted through foreign affiliates of U.S. firms as opposed to direct exports. USITC, Small and 

Medium-Sized Enterprises: Characteristics, 2010, 4-1 to 4-12.

6-2

 
Europe; likewise, European doctors cannot practice in the United States unless they hold 

U.S. credentials.

11 In the EU, national and local authorities regulate medical licenses. 

Medical practitioners from outside the EU who want to practice in the EU are subject to 

additional requirements that may originate at either level. Licensing requirements for

foreign practitioners were reported to vary substantially by EU country and often by local 

government authority as well. Requirements may include tests of theoretical and/or 

clinical knowledge, evidence of licenses and credentials from one’s home country, 

language competency, and evidence of work visa/permit.12

Moreover, when non-EU medical practitioners become licensed in a particular EU 

country, their credentials are not necessarily recognized by other EU countries; 

reportedly, they are subject to the credentialing requirements of each EU country. In 

contrast, EU nationals benefit from regulations providing for mutual recognition of 

medical credentials among EU nationals. 13 A roundtable participant stated that 

standardization of medical licensing could facilitate trade in healthcare services, but that 

the separate licensing and credentialing regimes among national and subnational entities 

in the United States and the EU will be difficult to harmonize in a trade agreement.

14

Trade Barriers Related to Engineering Services

As reported in roundtable discussions, issues affecting U.S.-EU engineering trade include

unequal licensing requirements and enforcement safeguards between the EU and the 

United States. One roundtable participant, whose firm primarily provides transportation 

engineering services (involving bridges and other large infrastructure projects), reported 

that a high proportion of the work on many U.S. transportation projects is carried out by

non-U.S.-licensed engineers. The participant said that consequently, much of the design 

work on these projects is now performed in the EU or other countries.15 According to this 

person, the EU has more stringent licensing enforcement safeguards than the United 

States.

16 Another industry representative made the same observation about the nonreciprocity of engineering licenses and commented that U.S. engineers face greater 

scrutiny of their credentials in the EU than EU engineers working in the United States.17

Similarly, a study by the Organisation for Economic Co-operation and Development 

(OECD) reported that the United States ranks near the OECD average on restricting trade 

in engineering services, while restrictions in EU countries vary substantially.

18 

11 Industry representative, roundtable discussion, Philadelphia, PA, September 23, 2013. 12 WHO Europe, “Regulation and Licensing of Physicians,” 2005, 18.

13 Europa, Summaries of EU Legislation, Directive 2005/36/EC, “Medicine: Mutual Recognition of 

Qualifications,” October 2007, http://europa.eu/legislation_summaries/other/l23021_en.htm; academic 

researcher, interview by USITC staff, November 14, 2013. 14 Industry representative, roundtable discussion, Philadelphia, PA, September 23, 2013, 15–16. The 

participant suggested that harmonizing standards and definitions would be especially difficult given that the 

United States has 50 different licensing regimes. 15 Industry representative, telephone interview by USITC staff, December 2, 2013. 16 Industry representative, roundtable discussion, New York, NY, September 24, 2013. 17 Industry representative, telephone interview by USITC staff, November 26, 2013. 18 OECD, “Services Trade Restrictiveness Index (STRI),” May 14, 2012, 26. 

6-3

 
Trade Barriers Related to Testing Services

At the roundtables, SMEs described several barriers affecting certain testing services,

including opaque EU regulations and different testing standards in the United States and

the EU. These barriers were reported to raise the costs substantially for U.S. SMEs that 

provide such services and to affect U.S. SME exports of these services

disproportionately. A U.S. testing firm accredited by the International Standards 

Organization reported having difficulty gaining accreditation in the EU to provide tirerolling resistance data for fuel efficiency ratings. 19 The firm reported a lack of 

transparency as well as difficulty interpreting recent EU rules, particularly regarding new 

standards contained in regulation ECR 117.20

Another industry participant reported that it is difficult to correlate test results with EU 

counterparts and that the process was inordinately expensive, in part, because U.S. firms 

were not included in setting up the new standard. The industry representative stated that 

in the United States, the process for setting standards used by the National Highway 

Traffic Safety Administration is transparent and allows low-cost lab correlation estimated 

at $5,000; correlating with EU standards, by contrast, costs the firm $95,000, which is 

prohibitively expensive for an SME. The firm’s representative also stated that 

information about the regulations is extremely difficult to find and that it is not apparent

which EU agency is the competent authority to respond to their queries. The firm 

reported that SMEs do not have the staff or financial resources to research and navigate

opaque regulations and standards, so that these barriers have a disproportionate impact on 

SMEs.

21

In a submission to the Commission, the National Association of Manufacturers (NAM) 

described several barriers to U.S. testing services. A major impediment is that the EU 

does not recognize or accredit U.S. conformity assessment bodies, such as U.S. 

laboratories that provide tire testing services; thus, U.S. manufacturers are required to 

perform additional testing procedures that are costly and redundant.

22 Moreover, NAM 

stated that the lack of national treatment for U.S. testing firms and varying accreditation 

standards in different EU countries are burdensome and an “unnecessary barrier” to trade 

and economic growth.

Information Services

Information services encompass a wide range of firms engaged in (1) producing and 

distributing information; (2) providing the means to transmit or distribute this 

information, including data or communications; and (3) processing data.23 The majority 

19 Industry representative, roundtable discussion, Cleveland, OH, September 10, 2013. 20 Official Journal of the EU, European Commission Regulation 117, “Uniform Provisions concerning 

the Approval of Tyres with Regard to Rolling Sound Emissions and to Adhesion on Wet Surfaces and/or to 

Rolling Resistance,” November 23, 2011, http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:307:0003:0063:EN:PDF. 21 Industry representative, roundtable discussion, Cleveland, OH. September 10, 2013. 22 NAM, written submission to the USITC, October 23, 2013. 23 NAICS code 51 encompasses all information services firms. Specific services include publishing, 

both traditional (e.g., newspapers, periodicals, books, directories) and via the Internet (NAICS 511 and 519, 

respectively); motion picture and sound recording (512); telecommunications (517); and data processing, 

hosting, and related services (518), among others. 

6-4

 
6-5 

of information services providers are engaged in producing and distributing content 

protected by copyright laws. Only those holding the rights to these works are authorized 

to reproduce, alter, improve, and distribute them. 24 In the motion picture and sound 

recording subsector, for example, service providers can collect royalties, rental fees, 

license fees, and sales revenue in return for granting rights to display, broadcast, 

reproduce, or distribute audiovisual works. Moreover, government policies often play a 

significant role in the production and distribution of information services. Important 

policy issues include the promotion of cultural values, restrictions on illicit content, 

protection of intellectual property rights, the regulation of advertising practices, and the 

provision of investment and tax incentives.25 

Information services providers26 contributed $672.8 billion to U.S. GDP in 2011,27 and 

employment in the information services sector accounted for about 2.4 percent of total 

U.S. private-sector jobs in 2012, or 2.5 million employees.28 Information services are 

primarily provided by SMEs, which comprised close to 99 percent of all information 

services firms in 2010 (latest data available).29 Among information services SMEs, the 

share of revenue accounted for by exporting establishments reached about 27 percent in 

2007 (latest available data). 30 By comparison, for large information services firms 

(500 employees or more), the share of revenue accounted for by exporting establishments 

amounted to about 18 percent in 2007.31 Overall, the percentage of SMEs with exporting 

establishments was much higher for information services (11.2 percent) than for all other 

services sectors (which averaged 3.7 percent) in 2007.32 

The following discussion focuses on barriers and issues that affect trade in motion picture 

and video production and distribution services (henceforth “audiovisual services”) 33

reported by industry and U.S. government representatives. 

 24 For a complete listing and description of information services, see Census, “North American Industry 

Classification System,” n.d. (accessed November 4, 2013). 25 Industry representative, interview by USITC staff, Los Angeles, CA, September 24, 2013; WTO, 

“Audiovisual Services: Background Note,” January 12, 2010, 1. The following section reports trade barriers 

to exporting motion picture and video production and distribution services, the only segment of information 

services that responded to the Commission’s request for information. 26 The Bureau of Economic Analysis defines “Information” as publishing industries (including 

software); motion picture and sound recording industries; broadcasting and telecommunications; and 

information and data processing services. 27 Latest available data; real value added by industry calculated using 2005 chained dollars. USDOC, 

BEA, “Real Value Added by Industry,” April 25, 2013. 28 Latest available data; employment expressed in FTEs. USDOC, BEA, “Table 6.5D: Full-Time 

Equivalent Employees by Industry,” August 7, 2013. 29 Census, “Number of Firms, Number of Establishments,” October 2012. 30 Cross-border trade only. USITC, Small and Medium-Sized Enterprises: Characteristics, November 

2010, 3-12. 31 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, D-8. The data are 

tabulated according to firm size categories, but refer to the establishments of firms. 32 USITC, Small and Medium-Sized Enterprises: Characteristics, November 2010, 3-12 and D-8. 33 For the purpose of this discussion, “audiovisual services” refers to the production and distribution of 

motion pictures, comprising primarily feature films, television programs, and documentaries. These services 

are distributed to consumers through projection in theaters, commercial flights, and other public venues; 

rental or sale of prerecorded works; broadcast, cable, and satellite television, using such means as DVDs, 

Blu-ray discs, video on demand, and the Internet (including the streaming of content through mobile devices). 
Trade Barriers Related to Audiovisual Services

Industry representatives reported that a variety of barriers are problems for them in the 

EU and serve to protect the European market for audiovisual services. Examples include

broadcasting and film quotas (explained below), language dubbing requirements, 

government subsidies that support local content producers and distributors, and film 

piracy.

34

U.S. audiovisual services SMEs often face screen content quotas and local-language 

requirements when trying to enter most EU markets.35 For example, in France, cinemas 

have to set aside five weeks per quarter to show European feature films; thus about 30–

40 percent of the films shown in French cinemas must be European. 36 This requirement, 

as the Motion Picture Association of America (MPAA) notes, has not significantly 

affected its member companies (which are the six largest movie studios in Hollywood);37

on the other hand, these limits pose greater difficulties for smaller independent movie 

producers, which are almost entirely SMEs, looking to gain a theatrical foothold in larger 

EU markets. 38 Further, requirements for dubbing in local language, such as those in 

Spain, effectively reduce trade opportunities and disproportionately increase expenses for 

potential SME exporters. 39 To illustrate, in 2010–11, the Catalan government in the 

northeast region of Spain adopted new language restrictions on films released in 

Catalonia and established a network of movie theaters exhibiting only films dubbed in 

Catalan. Even the European Commission has found parts of the new legislation to be 

discriminatory towards other European countries and has requested that Spain amend the 

provision.40

Additionally, securing funding for film productions is of particular importance to SMEs 

because most function as independent entities without the safety net of a larger 

conglomerate.41 These filmmakers operate under strict budgets with exacting contractual 

34 Industry representative, interview by USITC staff, Los Angeles, CA, September 24, 2013. The 

barriers described in this section were identified in an interview with an industry association whose members 

are mainly SMEs. In order to provide background information or clarify the points mentioned by the industry 

association, this section also uses information from sources not directly related to SMEs. 35 These were initially adopted in 1989, under what is referred to as the Television Without Frontiers 

(TVWF) Directive, which established European content quotas for broadcast television programming. All EU 

countries have implemented this directive, which applies to all foreign program suppliers. Some EU member 

states such as France, Italy, and Spain have taken measures which are far more restrictive than required by 

the basic provisions of the TVWF Directive. These measures include the imposition of primetime 

programming requirements, feature film quotas, and domestic language quotas. MPAA, Trade Barriers to 

Exports, October 2012, 42–43. 36 MPAA, Trade Barriers to Exports, October 2012, 50–51; industry representative, interview by 

USITC staff, Los Angeles, CA, September 24, 2013. 37 These companies are Warner Brothers (subsidiary of Time Warner Inc.), Paramount Pictures 

(Viacom Inc.), 20th Century Fox (News Corp. Ltd.), Walt Disney Pictures (Walt Disney Co./Buena Vista), 

Sony Pictures (Sony Corp.), and Universal Pictures (Comcast Corp.). Amobi, “Movies and Entertainment,” 

June 2013, 20. 38 The global motion picture industry remains dominated by a handful of large U.S.-based movie 

studios, which consistently account for over 80 percent of annual U.S. box office receipts and over 60 percent 

of annual global box office receipts. EAO, Focus 2013: World Film Market Trends, May 2013, 12–14; 

MPAA, Trade Barriers to Exports, October 2012, 50–51; industry representative, interview by USITC staff, 

Los Angeles, CA, September 24, 2013. 39 Industry representative, interview by USITC staff, Los Angeles, CA, September 24, 2013. 40 MPAA, Trade Barriers to Exports, October 2012, 64. 41 StudioSystemNews.com, “Beyond the Big 6: Mini Majors,” March 20, 2013.

6-6

 
requirements from financiers, who are often third-party distributors.42 Hence, because

most EU national governments provide some level of financial support to local film 

producers,43 through either direct grants, tax breaks, and/or co-production treaties with 

other EU countries, U.S. SMEs are placed at a competitive disadvantage.

44 In midNovember 2013, the European Commission announced new directives allowing EU 

countries to provide even more support to their domestic audiovisual services industries. 

Under the new rules, governments will be allowed to cover 50 percent of the costs of a 

film, from production and scriptwriting to distribution and promotional costs. EU 

national governments will also be able to require that 50–80 percent of subsidized films’

budgets must be spent within the country.45

Lastly, overarching issues related to growing intellectual property piracy have 

particularly hampered smaller industry players in terms of both international trade and 

domestic development. Although EU intellectual property directives provide a 

satisfactory level of protection for rights holders in general, increasing rates of broadband 

penetration in certain countries make the illicit sharing of large quantities of motion 

pictures on peer-to-peer networks and streaming websites a growing concern.46 Industry 

representatives note that in countries such as Greece, Italy, and Spain, piracy is 

particularly detrimental to U.S. exporters of independent films. Film piracy not only 

limits overall revenue for all legitimate stakeholders, but also destabilizes the financing 

structure of independent filmmaking itself, because, as mentioned previously, most of 

these third-party distributors also provide funding for the production of independent

movies.47 Moreover, with the recent economic crisis in the eurozone affecting all EU 

markets to some extent, smaller distributors in the hardest-hit countries, such as Greece 

and Spain, have become less reliable partners.

48

42 Production companies can be classified into three major categories: the majors, the mini-majors, and 

the independents or “indies.” The majors include large conglomerates such as Disney, Sony, and Viacom. In 

such companies, a single corporate structure often controls both the production and distribution of films. 

Slightly smaller companies, often called mini-majors (e.g., Lionsgate, Weinstein Company), may have 

weaker distribution power and may specialize in a specific segment of the film market, such as art films or 

action films. Small independent filmmakers (e.g., Alcon Entertainment, Legendary Pictures) often have no 

distribution capability at all and must depend entirely on outside distribution companies. 

HighBeamBusiness.com, “Industry Report: Movie Picture and Video Tape Production,” n.d. (accessed 

November 4, 2013); StudioSystemNews.com, “Beyond the Big 6: Mini Majors,” March 20, 2013; industry 

representative, interview by USITC staff, Los Angeles, CA, September 24, 2013. 43 Wisch, “Media: Europe,” June 2013, 11–12; MPAA, Trade Barriers to Exports, October 2012, 50. 44 Government in the United States does not give similar financial help to U.S. filmmakers at the 

federal level. Industry representative, interview by USITC staff, Los Angeles, CA, September 24, 2013. 45 EUobserver.com, “EU Pleases France, Widens Film Subsidy Rules,” November 15, 2013. 46 Industry representative, interview by USITC staff, Los Angeles, CA, September 24, 2013; MPAA, 

Trade Barriers to Exports, October 2012, 43–47. 47 Industry representative, interview by USITC staff, Los Angeles, CA, September 24, 2013. 48 Also, many EU countries’ video-on-demand distribution outlets (Netflix and Amazon.com-type 

businesses) are still in their infancy. As a result, independent films, which rely heavily on this 

revenue/distribution stream in the United States, have yet to realize gains from new media platforms in the 

EU. Ideally, SME content producers would like to export in a way that allows distributors to sell films on 

more platforms, since traditional outlets (e.g., DVDs) are becoming saturated with pirated material. Industry 

representative, interview by USITC staff, Los Angeles, CA, September 24, 2013; U.S. government official, 

telephone interview by USITC staff, November 20, 2013. 

6-7

 
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6-8
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6-9

APPENDIX A 

Request Letter 

 

EXECUTIVE OFFICE OF THE PRESIDENT

THE UNITED STATES TRADE REPRESENTATIVE

WASHI c - , . “.., --­

NUMBER

TI'1€Honorable Irving A. Williamson JUN 3 “"3

Chairman

U.S. International Trade Commission I l ;,_

500 E Street, S.W. _____________________________________ l

Washington, DC 20436 p ' Officeofthe

/’[}(t/“I8 Secretary

Dear Chairm illiamson: 1"" "adefiommlssion

In the past three years since the Office of the U.S. Trade Representative (USTR) launched its

Small Business initiative, we have intensified efforts to ensure the specific export challenges and

priorities of small- and medium-sized enterprises (SMEs) and their workers are addressed in our

trade policy and enforcement activities, and have enhanced cooperation with trading partners on

small business trade initiatives. As previous studies by the U.S. International Trade Commission

(USITC) have shown, small businesses benefit from trade agreements that expand their export

opportunities. As indicated in those reports, trade agreements can particularly help SMEs boost

exports by tackling tariff barriers, burdensome customs procedures, discriminatory or arbitrary

standards, and a lack of transparency relating to relevant regulations in foreign markets. These

agreements also enhance trade facilitation work, help strengthen and enforce intellectual property

rights, and target services barriers that present difficult challenges for SMEs, such as

requirements to staff a foreign office. i

...-i

In the Transatlantic Trade and Investment Partnership (TTIP) negotiations, we will seek to

strengthen U.S.-European Union (EU) cooperation to enhance the participation of SMEs in

transatlantic trade, and to address trade barriers that may disproportionately impact small

businesses. We are seeking broad input on these matters through our domestic consultation

process. Building on previous USITC reports that investigated the role of U.S. SMEs in trade

and generally identified trade barriers that may disproportionately impact U.S. SME export

perfonnance, I believe that the USITC can also be helpful to us in identifying such barriers in the

EU.

Therefore, pursuant to authority delegated by the President to the United States Trade

Representative (USTR) under section 332(g) of the Tariff Act of I930 (I9 U.S.C. l332(g)), I

request that the Commission conduct an investigation and prepare a report that catalogues traderelated bamers that SMEs perceive as disproportionately affecting U.S. SMEs exporting to the

EU, compared to larger U.S. exporters to the EU.

In identifying these barriers to exporting, the Commission may consider infomration and

definitions contained in the three Commission reports on SMEs released in 2010 (including the

definitions of “SME,” “disproportionate,” and “barrier”), any relevant literature, and information

gathered from SMEs and others throughout the investigation. The report should cover barriers

faced by U.S. SMEs exporting both goods and services, focusing primarily on barriers identified

by U.S. SMEs that have experience in exporting to the EU. To the degree practicable, the

investigation should identify barriers by economic sector or by special issue and should focus on

sectors with high concentrations of SMEs.

Q

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A-3
The report should be based on available information including information furnished by SMEs

and interested parties following the Commission’s notice of investigation. Where information is

available, the investigation should also address specific trade barriers in individual EU member

states. To the extent applicable, the Commission should provide qualitative distinctions among

the identified trade-related barriers. Additionally, the report may also include suggestions

gathered from SMEs or the relevant literature to strengthen U.S.-EU cooperation to enhance the

participation of SMEs in transatlantic trade.

I request that the report be delivered by January 31, 2014. As we intend to make the

Commission's repoit available to the public, the report should not include confidential business

or national security classified information.

I appreciate the Commission’s assistance and cooperation in this matter.

Sincerely,

kw ‘ AmbassadorMiriamE.Sapiro

M ActingUnitedStatesTradeRepresentative

A-4
APPENDIX B

Federal Register Notices

66950 Federal Register / Vol. 78, No. 216 / Thursday, November 7, 2013 / Notices 

(DHS), Science and Technology 

Directorate, 1120 Vermont Avenue NW., 

(Room 5–212), Washington DC. 

All visitors must pre-register and 

present a government-issued ID in order 

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please contact the person listed under 

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For information on facilities or 

services for individuals with disabilities 

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meeting, contact the person listed under 

FOR FURTHER INFORMATION CONTACT, 

below. 

Materials that are provided to 

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meeting or on the public Web site 

mentioned below, or both. Check this 

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public participation, we invite public 

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by the committee as listed in the 

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Comments may be submitted orally, in 

writing, or both. If submitting in 

writing, please include the docket 

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Include the docket number in the 

subject line of the message. 

• Fax: 202–254–6176. 

• Mail: Mary Hanson, HSSTAC 

Executive Director, Science and 

Technology Directorate, Department of 

Homeland Security, 245 Murray Lane, 

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Instructions: All submissions received 

must include the words ‘‘Department of 

Homeland Security’’ and the docket 

number. Comments received will be 

posted without alteration at http://

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Docket: For access to the docket to 

read background documents or 

comments received by the HSSTAC, go 

to http://www.regulations.gov and type 

‘‘HSSTAC’’ into the search function of 

the Web site. 

A period is allotted for oral public 

comment on December 4 and 5, 2013, 

before any recommendations are 

formulated. Speakers are asked to preregister and limit their comments to 

three minutes or less. Please note that 

the public comment period may end 

before the time indicated, following the 

last call for comments. To register as a 

speaker, contact the person listed below. 

FOR FURTHER INFORMATION CONTACT: 

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Director, Science and Technology 

Directorate, Department of Homeland 

Security, 245 Murray Lane, Bldg. 410, 

Washington, DC 20528, 202–254–5866 

(O), 202–254–5823 (F), mary.hanson@

hq.dhs.gov. 

SUPPLEMENTARY INFORMATION: Notice of 

this meeting is given under the Federal 

Advisory Committee Act (FACA), 5 

U.S.C. Appendix (Pub. L. 92–463). The 

HSSTAC was established and operates 

in accordance with the provisions of the 

FACA. The committee addresses areas 

of interest and importance to the Under 

Secretary for Science and Technology, 

such as new developments in systems 

engineering, cyber-security, knowledge 

management and how best to leverage 

related technologies funded by other 

federal agencies and by the private 

sector. It also advises the Under 

Secretary on policies, management 

processes, and organizational constructs 

as needed. 

Agenda: Members will meet with the 

Acting Under Secretary and other 

executives of the DHS Science and 

Technology Directorate (DHS S&T) to 

hear updates, discuss areas of concern, 

and receive taskings. Agenda items on 

December 4 include an update on the 

status of the DHS Science and 

Technology Directorate (DHS S&T), a 

brief about the DHS S&T Resilient 

Systems Division, a discussion about 

industry engagement with DHS S&T, 

and a status report from the HSSTAC 

Task Force on Third Party PreScreening, followed by a public 

comment period, committee 

deliberations, and DHS taskings to the 

committee. The agenda on December 5 

focuses solely on the interaction 

between DHS S&T and Customs and 

Border Protection (CBP). An official 

from CBP will first give a CBP overview, 

followed by a discussion among officials 

from CBP and DHS S&T about CBP’s 

technology needs, how DHS S&T 

supports those needs, and how that 

support can be improved. A public 

comment period will follow the 

discussion. The committee will then 

deliberate, receive its tasking from DHS, 

and begin to develop written 

recommendations regarding how DHS 

S&T can better support CBP. 

Dated: October 29, 2013. 

Mary Hanson, 

Executive Director, Homeland Security 

Science and Technology Advisory Committee. 

[FR Doc. 2013–26605 Filed 11–6–13; 8:45 am] 

BILLING CODE 9110–9F–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 332–541] 

Trade Barriers That U.S. Small and 

Medium-Sized Enterprises Perceive as 

Affecting Exports to the European 

Union; Rescheduling of Washington, 

DC Public Hearing and Change in 

Dates for Filing Requests To Appear, 

Pre- and Post-Hearing Briefs, All Other 

Written Submissions, and for 

Transmittal of Final Report 

AGENCY: United States International 

Trade Commission. 

ACTION: Rescheduling of Washington 

public hearing and change in dates for 

filing requests to appear, pre- and posthearing briefs, all other written 

submissions, and transmittal of the final 

report. 

SUMMARY: Due to the lapse in 

appropriations and resulting furlough, 

the Commission has rescheduled the 

Washington, DC, public hearing in this 

investigation to 9:30 a.m. on November 

20, 2013. The Commission has also 

changed the dates for filing requests to 

appear, pre-hearing briefs and posthearing briefs relating to the 

Washington hearing; for filing all other 

written submissions, and for 

transmitting the final report to USTR. 

The Washington, DC, hearing was 

previously scheduled for October 8, 

2013, with post-hearing briefs and all 

written submission due by October 15, 

2013, and a transmittal date of January 

31, 2014. 

Revised Dates: 

November 12, 2013: Deadline for filing 

requests to appear at Washington 

hearing. 

November 13, 2013: Deadline for filing 

pre-hearing briefs and statements. 

November 20, 2013: Public hearing. 

December 2, 2013: Deadline for filing 

post-hearing briefs. 

December 2, 2013: Deadline for filing all 

other written submissions. 

February 28, 2014: Transmittal of 

Commission report to the USTR. 

ADDRESSES: All written submissions 

should be addressed to the Secretary, 

United States International Trade 

Commission, 500 E Street SW., 

Washington, DC 20436. The public 

record for this investigation may be 

viewed on the Commission’s electronic 

docket (EDIS) at https://edis.usitc.gov/ 

edis3-internal/app. 

FOR FURTHER INFORMATION CONTACT: 

Project Leader William Deese (202–205– 

2626 or william.deese@usitc.gov) or 

Deputy Project Leader Tamar 

Khachaturian (202–205–3299 or 


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Federal Register / Vol. 78, No. 216 / Thursday, November 7, 2013 / Notices 66951 

tamar.khachaturian@usitc.gov) for 

information specific to this 

investigation. For information on the 

legal aspects of these investigations, 

contact William Gearhart of the 

Commission’s Office of the General 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: The hearing relates to a 

report that the Commission is preparing 

at the request of the United States Trade 

Representative (USTR) under section 

332(g) of the Tariff Act of 1930 (19 

U.S.C. 1332(g)). The USTR requested 

that the Commission prepare a report 

that catalogs trade barriers that U.S. 

small and medium-sized enterprises 

(SMEs) perceive as disproportionately 

affecting their exports to the EU, 

compared to those of larger U.S. 

exporters to the EU. In the request letter, 

the USTR stated that the United States, 

in the Transatlantic Trade and 

Investment Partnership (TTIP) 

negotiations with the European Union 

(EU), is seeking to strengthen the 

participation of SMEs in transatlantic 

trade and to address trade barriers that 

may disproportionately impact small 

businesses. The notice announcing the 

institution of this investigation and a 

hearing on October 8, 2013 was 

published in the Federal Register of 

July 30, 2013 (78 FR 45969); the notice 

is also posted on the Commission’s Web 

site at www.usitc.gov. Due to the lapse 

in appropriations and resulting 

furlough, the hearing scheduled for 

October 8, 2013, did not take place. 

Public Hearing: The rescheduled 

hearing will be held at the U.S. 

International Trade Commission 

Building, 500 E Street SW., Washington, 

DC, beginning at 9:30 a.m. on November 

20, 2013. Requests to appear at the 

public hearing should be filed with the 

Secretary, no later than 5:15 p.m., 

November 12, 2013, in accordance with 

the requirements in the ‘‘Request to 

Appear’’ section below. All pre-hearing 

briefs and statements should be filed no 

later than 5:15 p.m., November 13, 2013; 

and all post-hearing briefs and 

statements should be filed not later than 

5:15 p.m., December 2, 2013. In the 

event that, as of the close of business on 

November 12, 2013, no witnesses are 

scheduled to appear at the hearing, the 

hearing will be canceled. Any person 

interested in attending the hearing as an 

observer or nonparticipant should 

contact the Office of the Secretary at 

202–205–2000 after November 12, 2013, 

for information concerning whether the 

hearing will be held. All hourly times in 

this notice are eastern time. 

Requests to Appear: Requests to 

appear at the hearing may be in the form 

of a letter, which should be on company 

or other appropriate stationery. Requests 

should identify the name, title, and 

company or other organizational 

affiliation (if any), address, telephone 

number, email address, and industry or 

main line of business of the company, 

if any, of the person signing the request 

letter and of the persons who plan to 

appear at the hearing. Requests to 

appear must be made by mail or 

delivered in person to the Commission’s 

Office of the Secretary (see ADDRESSES), 

or in the alternative may be filed by 

email sent to SMEHearing@usitc.gov. 

The Commission does not accept 

requests filed by fax. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning this 

investigation. Such submissions should 

be received no later than 5:15 p.m., 

December 2, 2013. All written 

submissions must conform to the 

provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

and the Commission’s Handbook on 

Filing Procedures require that interested 

parties file documents electronically on 

or before the filing deadline and submit 

eight (8) true paper copies by 12:00 p.m. 

on the next business day. In the event 

that confidential treatment of a 

document is requested, interested 

parties must file, at the same time as the 

eight paper copies, at least four (4) 

additional true paper copies in which 

the confidential information must be 

deleted (see the following paragraph for 

further information regarding 

confidential business information). 

Persons with questions regarding 

electronic filing should contact the 

Secretary (202–205–2000). 

Any submissions that contain 

confidential business information (CBI) 

must also conform to the requirements 

of section 201.6 of the Commission’s 

Rules of Practice and Procedure (19 CFR 

201.6). Section 201.6 of the rules 

requires that the cover of the document 

and the individual pages be clearly 

marked as to whether they are the 

‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information is clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In the request letter, the USTR stated 

that the Office of the USTR intends to 

make the Commission’s report available 

to the public in its entirety, and asked 

that the Commission not include any 

confidential business information or 

national security classified information 

in the report that the Commission sends 

to the USTR. Any confidential business 

information received by the 

Commission in this investigation and 

used in preparing this report will not be 

published in a manner that would 

reveal the operations of the firm 

supplying the information. 

Issued: November 1, 2013. 

By order of the Commission. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2013–26619 Filed 11–6–13; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 337–TA–845] 

Certain Products Containing 

Interactive Program Guide and 

Parental Control Technology; Notice of 

the Commission’s Final Determination 

Finding No Violation of Section 337; 

Termination of the Investigation 

AGENCY: U.S. International Trade 

Commission. 

ACTION: Notice. 

SUMMARY: Notice is hereby given that 

the U.S. International Trade 

Commission has found no violation of 

section 337 of the Tariff Act of 1930, 19 

U.S.C. 1337, in this investigation. The 

investigation is terminated. 

FOR FURTHER INFORMATION CONTACT: 

Robert Needham, Office of the General 

Counsel, U.S. International Trade 

Commission, 500 E Street SW., 

Washington, DC 20436, telephone (202) 

708–5468. Copies of non-confidential 

documents filed in connection with this 

investigation are or will be available for 

inspection during official business 

hours (8:45 a.m. to 5:15 p.m.) in the 

Office of the Secretary, U.S. 

International Trade Commission, 500 E 

Street SW., Washington, DC 20436, 

telephone (202) 205–2000. General 

information concerning the Commission 

may also be obtained by accessing its 


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51746 Federal Register / Vol. 78, No. 162 / Wednesday, August 21, 2013 / Notices 

confidential business information, will 

be made available for inspection by 

interested parties. 

In its request letter, the Committee 

stated that it intends to make the 

Commission’s reports available to the 

public in their entirety, and asked that 

the Commission not include any 

confidential business information or 

national security classified information 

in the reports that the Commission 

sends to the Committee. Any 

confidential business information 

received by the Commission in this 

investigation and used in preparing this 

report will not be published in a manner 

that would reveal the operations of the 

firm supplying the information. 

By order of the Commission. 

Issued: August 15, 2013 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2013–20387 Filed 8–20–13; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 332–541] 

Trade Barriers That U.S. Small and 

Medium-sized Enterprises Perceive as 

Affecting Exports to the European 

Union; Scheduling of an Additional 

Public Hearing With Simplified Filing 

Procedures 

AGENCY: United States International 

Trade Commission. 

ACTION: Scheduling of additional public 

hearing in Moffett Field, CA. 

SUMMARY: The Commission has 

scheduled an additional public hearing 

in Inv. No. 332–541, Trade Barriers that 

U.S. Small and Medium-sized 

Enterprises Perceive as Affecting 

Exports to the European Union, to be 

held beginning at 9:30 a.m., September 

26, 2013, at the NASA Ames Research 

Center at Moffett Field, CA. This 

hearing is in addition to a previously 

announced public hearing in this 

investigation to be held at the U.S. 

International Trade Commission 

Building, 500 E Street SW., Washington, 

DC, beginning at 9:30 a.m. on October 

8, 2013. Procedures for filing requests to 

appear have been changed for both 

hearings to encourage the appearance of 

small businesses. 

This field hearing is being scheduled 

in conjunction with a field hearing to be 

held on September 25, 2013, also at the 

NASA Center in Moffett Field, CA in a 

second Commission investigation, No. 

332–540, Digital Trade in the U.S. and 

Global Economies, Part 2, requested by 

the Senate Committee on Finance. 

Interested persons who wish to present 

consolidated statements and testimony 

relevant to both investigations are 

invited to do so on Wednesday 

September 25, 2013. 

DATES: September 12, 2013: Deadline for 

filing requests to appear at the Moffett 

Field, CA hearing. 

September 18, 2013: Deadline for 

filing pre-hearing briefs and statements. 

September 26, 2013: Public hearing in 

Moffett Field, CA. 

October 3, 2013: Deadline for filing 

post-hearing briefs. 

October 15, 2013: Deadline for filing 

all other written submissions. 

January 31, 2014: Transmittal of 

Commission report to the USTR. 

ADDRESSES: All written submissions 

should be addressed to the Secretary, 

United States International Trade 

Commission, 500 E Street SW., 

Washington, DC 20436. The public 

record for this investigation may be 

viewed on the Commission’s electronic 

docket (EDIS) at https://edis.usitc.gov/

edis3-internal/app. 

FOR FURTHER INFORMATION CONTACT: 

Project Leader William Deese (202–205– 

2626 or william.deese@usitc.gov) or 

Deputy Project Leader Tamar 

Khachaturian (202–205–3299 or 

tamar.khachaturian@usitc.gov) for 

information specific to this 

investigation. For information on the 

legal aspects of these investigations, 

contact William Gearhart of the 

Commission’s Office of the General 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: The hearing relates to a 

report that the Commission is preparing 

at the request of the United States Trade 

Representative (USTR) under section 

332(g) of the Tariff Act of 1930 (19 

U.S.C. 1332(g)). The USTR requested 

that the Commission prepare a report 

that catalogs trade barriers that U.S. 

small and medium-sized enterprises 

(SMEs) perceive as disproportionately 

affecting their exports to the EU, 

compared to those of larger U.S. 

exporters to the EU. In the request letter, 

the USTR stated that the United States, 

in the Transatlantic Trade and 

Investment Partnership (TTIP) 

negotiations with the European Union 

(EU), is seeking to strengthen the 

participation of SMEs in transatlantic 

trade and to address trade barriers that 

may disproportionately impact small 

businesses. The notice announcing the 

institution of this investigation and the 

Washington, DC, hearing on October 8, 

2013, was published in the Federal 

Register of July 30, 2013 (78 FR 45969); 

the notice is also posted on the 

Commission’s Web site at 

www.usitc.gov. 

The Commission is particularly 

interested in receiving information and 

views from SMEs and related 

organizations about trade-related 

barriers faced by U.S. SMEs in exporting 

goods or services to the EU and about 

EU trade barriers by economic sector or 

by special issue. (For purposes of this 

report, an SME is defined as a firm with 

fewer than 500 U.S.-based employees.) 

The Commission is also interested in 

receiving information and views about 

specific trade barriers in individual EU 

countries; the relative effect on exports 

of different EU trade barriers; and ways 

in which SME participation in 

transatlantic trade might be 

strengthened. 

Public Hearing: The additional 

hearing will be held at the NASA Ames 

Conference Center/NASA Research 

Park, Building 152, Room 171, 200 

Dailey Road, Moffett Field, CA, 

beginning at 9:30 a.m. on September 26, 

2013. Requests to appear at the public 

hearing should be filed with the 

Secretary, no later than 5:15 p.m. 

(eastern daylight time), September 18, 

2013, in accordance with the 

requirements in the ‘‘Requests to 

Appear’’ section below. All pre-hearing 

briefs and statements should be filed no 

later than 5:15 p.m. (eastern daylight 

time), September 18, 2013; and all posthearing briefs and statements should be 

filed not later than 5:15 p.m., October 3, 

2013. In the event that, as of the close 

of business on September 12, 2013, no 

witnesses are scheduled to appear at the 

hearing, the hearing will be canceled. 

Any person interested in attending the 

hearing as an observer or nonparticipant 

should contact the Office of the 

Secretary at 202–205–2000 after 

September 12, 2013, for information 

concerning whether the hearing will be 

held. 

Requests To Appear: Requests to 

appear at the Moffett Field, CA, and 

Washington, DC, hearings may be in the 

form of a letter, which should be on 

company or other appropriate 

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Federal Register / Vol. 78, No. 162 / Wednesday, August 21, 2013 / Notices 51747 

stationery. Requests should identify the 

name, title, and company or other 

organizational affiliation (if any), 

address, telephone number, email 

address, and industry or main line of 

business of the company, if any, of the 

person signing the request letter and of 

the persons who plan to appear at one 

or both hearings. Requests to appear 

may be made by mail or delivered in 

person to the Commission’s Office of the 

Secretary (see ADDRESSES), or may be 

filed by email sent to SMEHearing@

usitc.gov. The Commission does not 

accept requests filed by fax. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning this 

investigation. Such submissions should 

be addressed to the secretary, and 

should be received no later than 5:15 

p.m., October 15, 2013. All written 

submissions must conform to the 

provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

and the Commission’s Handbook on 

Filing Procedures require that interested 

parties file documents electronically on 

or before the filing deadline and submit 

eight (8) true paper copies by 12:00 p.m. 

eastern time on the next business day. 

In the event that confidential treatment 

of a document is requested, interested 

parties must file, at the same time as the 

eight paper copies, at least four (4) 

additional true paper copies in which 

the confidential information must be 

deleted (see the following paragraph for 

further information regarding 

confidential business information). 

Persons with questions regarding 

electronic filing should contact the 

Secretary (202–205–2000). 

Any submissions that contain 

confidential business information (CBI) 

must also conform to the requirements 

of section 201.6 of the Commission’s 

Rules of Practice and Procedure (19 CFR 

201.6). Section 201.6 of the rules 

requires that the cover of the document 

and the individual pages be clearly 

marked as to whether they are the 

‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information is clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In the request letter, the USTR stated 

that the Office of the USTR intends to 

make the Commission’s report available 

to the public in their entirety, and asked 

that the Commission not include any 

confidential business information or 

national security classified information 

in the report that the Commission sends 

to the USTR. Any confidential business 

information received by the 

Commission in this investigation and 

used in preparing this report will not be 

published in a manner that would 

reveal the operations of the firm 

supplying the information. 

By order of the Commission. 

Issued: August 16, 2013 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2013–20388 Filed 8–20–13; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

Importer of Controlled Substances; 

Notice of Application; NORAMCO, Inc. 

Pursuant to Title 21 Code of Federal 

Regulations 1301.34 (a), this is notice 

that on June 27, 2013, Noramco, Inc., 

1440 Olympic Drive, Athens, Georgia 

30601, made application by renewal to 

the Drug Enforcement Administration 

(DEA) for registration as an importer of 

the basic classes of controlled 

substances: 

Drug Schedule 

Phenylacetone (8501) .................. II 

Thebaine (9333) ........................... II 

Poppy Straw Concentrate (9670) II 

Tapentadol (9780) ........................ II 

The company plans to import 

Thebaine (9333) analytical standards for 

distribution to its customers. The 

company plans to import an 

intermediate form of Tapentadol (9780) 

to bulk manufacture Tapentadol for 

distribution to its customers. The 

company plans to import the 

Phenylacetone (8501) in bulk for the 

manufacture of a controlled substance. 

Comments and requests for hearings 

on applications to import narcotic raw 

material are not appropriate. 72 FR 3417 

(2007). 

In reference to the non-narcotic raw 

material, any bulk manufacturer who is 

presently, or is applying to be, 

registered with DEA to manufacture 

such basic classes of controlled 

substances listed in schedules I or II, 

which fall under the authority of section 

1002(a)(2)(B) of the Act (21 U.S.C. 

952(a)(2)(B)) may, in the circumstances 

set forth in 21 U.S.C. 958(i), file 

comments or objections to the issuance 

of the proposed registration and may, at 

the same time, file a written request for 

a hearing on such application pursuant 

to 21 CFR 1301.43, and in such form as 

prescribed by 21 CFR 1316.47. 

Any such written comments or 

objections should be addressed, in 

quintuplicate, to the Drug Enforcement 

Administration, Office of Diversion 

Control, Federal Register Representative 

(ODL), 8701 Morrissette Drive, 

Springfield, Virginia 22152; and must be 

filed no later than September 20, 2013. 

This procedure is to be conducted 

simultaneously with, and independent 

of, the procedures described in 21 CFR 

1301.34(b), (c), (d), (e), and (f). As noted 

in a previous notice published in the 

Federal Register on September 23, 1975, 

40 FR 43745–46, all applicants for 

registration to import a basic class of 

any controlled substances in schedule I 

or II are, and will continue to be, 

required to demonstrate to the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration, that the requirements 

for such registration pursuant to 21 

U.S.C. 958(a); 21 U.S.C. 823(a); and 21 

CFR 1301.34(b), (c), (d), (e), and (f) are 

satisfied. 

Dated: August 14, 2013. 

Joseph T. Rannazzisi, 

Deputy Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration. 

[FR Doc. 2013–20285 Filed 8–20–13; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

Office of Justice Programs 

[OJP (BJA) Docket No. 1629] 

Meeting of the Department of Justice’s 

(DOJ’s) National Motor Vehicle Title 

Information System (NMVTIS) Federal 

Advisory Committee 

AGENCY: Office of Justice Programs 

(OJP), Justice. 

ACTION: Notice of meeting. 

SUMMARY: This is an announcement of a 

meeting of DOJ’s National Motor 

Vehicle Title Information System 

(NMVTIS) Federal Advisory Committee 

to discuss various issues relating to the 

operation and implementation of 

NMVTIS. 

DATES: The meeting will take place on 

Tuesday October 8, 2013, from 10:00 

a.m. to 4:00 p.m. ET. 

ADDRESSES: The meeting will take place 

at the Office of Justice Programs (OJP), 

810 7th Street NW., Washington, DC 

20531. 

FOR FURTHER INFORMATION CONTACT: 

Todd Brighton, Designated Federal 

Employee (DFE), Bureau of Justice 

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Federal Register / Vol. 78, No. 146 / Tuesday, July 30, 2013 / Notices 45969 

Commission’s rules; the deadline for 

filing is October 29, 2013. Parties may 

also file written testimony in connection 

with their presentation at the hearing, as 

provided in section 207.24 of the 

Commission’s rules, and posthearing 

briefs, which must conform with the 

provisions of section 207.25 of the 

Commission’s rules. The deadline for 

filing posthearing briefs is November 14, 

2013. In addition, any person who has 

not entered an appearance as a party to 

the investigation may submit a written 

statement of information pertinent to 

the subject of the investigation, 

including statements of support or 

opposition to the petition, on or before 

November 14, 2013. On November 27, 

2013, the Commission will make 

available to parties all information on 

which they have not had an opportunity 

to comment. Parties may submit final 

comments on this information on or 

before December 2, 2013, but such final 

comments must not contain new factual 

information and must otherwise comply 

with section 207.30 of the Commission’s 

rules. All written submissions must 

conform with the provisions of section 

201.8 of the Commission’s rules; any 

submissions that contain BPI must also 

conform with the requirements of 

sections 201.6, 207.3, and 207.7 of the 

Commission’s rules. Please be aware 

that the Commission’s rules with 

respect to electronic filing have been 

amended. The amendments took effect 

on November 7, 2011. See 76 FR 61937 

(Oct. 6, 2011) and the newly revised 

Commission’s Handbook on E-Filing, 

available on the Commission’s Web site 

at http://edis.usitc.gov. 

Additional written submissions to the 

Commission, including requests 

pursuant to section 201.12 of the 

Commission’s rules, shall not be 

accepted unless good cause is shown for 

accepting such submissions, or unless 

the submission is pursuant to a specific 

request by a Commissioner or 

Commission staff. 

In accordance with sections 201.16(c) 

and 207.3 of the Commission’s rules, 

each document filed by a party to the 

investigation must be served on all other 

parties to the investigation (as identified 

by either the public or BPI service list), 

and a certificate of service must be 

timely filed. The Secretary will not 

accept a document for filing without a 

certificate of service. 

Authority: This investigation is being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.21 of the 

Commission’s rules. 

By order of the Commission. 

Issued: July 25, 2013. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2013–18230 Filed 7–29–13; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 332–541] 

Trade Barriers That U.S. Small and 

Medium-Sized Enterprises Perceive as 

Affecting Exports to the European 

Union; Institution of Investigation and 

Scheduling of Hearing 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of investigation and 

scheduling of public hearing. 

SUMMARY: Following receipt of a letter 

from the United States Trade 

Representative (USTR) dated June 13, 

2013 (received on June 18, 2013), under 

section 332(g) of the Tariff Act of 1930 

(19 U.S.C. 1332(g)), the U.S. 

International Trade Commission 

(Commission) instituted investigation 

No. 332–541, Trade Barriers that U.S. 

Small and Medium-sized Enterprises 

Perceive as Affecting Exports to the 

European Union. 

DATES: 

September 13, 2013: Deadline for filing 

requests to appear at the public 

hearing. 

September 20, 2013: Deadline for filing 

pre-hearing briefs and statements. 

October 8, 2013: Public hearing. 

October 15, 2013: Deadline for filing 

post-hearing briefs. 

October 15, 2013: Deadline for filing all 

other written statements. 

January 31, 2014: Transmittal of 

Commission report to the USTR. 

ADDRESSES: All Commission offices, 

including the Commission’s hearing 

rooms, are located in the United States 

International Trade Commission 

Building, 500 E Street SW., Washington, 

DC. All written submissions should be 

addressed to the Secretary, United 

States International Trade Commission, 

500 E Street SW., Washington, DC 

20436. The public record for this 

investigation may be viewed on the 

Commission’s electronic docket (EDIS) 

at https://edis.usitc.gov/edis3-internal/ 

app. 

FOR FURTHER INFORMATION CONTACT: 

Project Leader William Deese (202–205– 

2626 or william.deese@usitc.gov) or 

Deputy Project Leader Tamar 

Khachaturian (202–205–3299 or 

tamar.khachaturian@usitc.gov) for 

information specific to this 

investigation. For information on the 

legal aspects of these investigations, 

contact William Gearhart of the 

Commission’s Office of the General 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: As requested by the 

USTR, the Commission will conduct an 

investigation and prepare a report that 

catalogues trade-related barriers that 

U.S. small and medium-sized 

enterprises (SMEs) perceive as 

disproportionately affecting their 

exports to the EU, compared to those of 

larger U.S. exporters to the EU. In 

identifying these barriers to exporting, 

the Commission will use, to the extent 

appropriate, information and definitions 

contained in the three Commission 

reports on SMEs released in 2010, 

including definitions of ‘‘SME,’’ 

‘‘disproportionate,’’ and ‘‘barrier,’’ any 

relevant literature, and information 

gathered from SMEs and others. As 

requested by the USTR, the 

Commission’s report will cover barriers 

faced by U.S. SMEs exporting both 

goods and services, and will focus 

primarily on barriers identified by U.S. 

SMEs that have experience in exporting 

to the EU. Also as requested, the report, 

to the degree practicable, will identify 

barriers by economic sector or by 

special issue and will focus on sectors 

with high concentrations of SMEs. 

The letter indicated that the United 

States, in the Transatlantic Trade and 

Investment Partnership (TTIP) 

negotiations, will seek to strengthen 

U.S.-European Union (EU) cooperation 

to enhance the participation of SMEs in 

transatlantic trade, and to address trade 

barriers that may disproportionately 

impact small businesses. 

As requested by the USTR, the 

Commission (1) will base its report on 

available information, including 

information furnished by SMEs and 

interested parties following the 

Commission’s notice of investigation; 

(2) will address, where information is 

available, specific trade barriers in 

individual EU member states; (3) will 

provide, to the extent applicable, 


pmangrum on DSK3VPTVN1PROD with NOTICES

B-7
45970 Federal Register / Vol. 78, No. 146 / Tuesday, July 30, 2013 / Notices 

qualitative distinctions among the 

identified trade-related barriers; and (4) 

will include suggestions gathered from 

SMEs or the relevant literature to 

strengthen U.S.-EU cooperation to 

enhance the participation of SMEs in 

transatlantic trade. As requested by the 

USTR, the Commission expects to 

transmit its report to the USTR by 

January 31, 2014. 

Public Hearing: A public hearing in 

connection with this investigation will 

be held at the U.S. International Trade 

Commission Building, 500 E Street SW., 

Washington, DC, beginning at 9:30 a.m. 

on October 8, 2013. Requests to appear 

at the public hearing should be filed 

with the Secretary, no later than 5:15 

p.m., September 13, 2013, in accordance 

with the requirements in the 

‘‘Submissions’’ section below. All prehearing briefs and statements should be 

filed no later than 5:15 p.m., September 

20, 2013; and all post-hearing briefs and 

statements should be filed not later than 

5:15 p.m., October 15, 2013. In the event 

that, as of the close of business on 

September 13, 2013, no witnesses are 

scheduled to appear at the hearing, the 

hearing will be canceled. Any person 

interested in attending the hearing as an 

observer or nonparticipant should 

contact the Office of the Secretary at 

202–205–2000 after September 13, 2013, 

for information concerning whether the 

hearing will be held. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning this 

investigation. All written submissions 

should be addressed to the Secretary, 

and should be received no later than 

5:15 p.m., October 15, 2013. All written 

submissions must conform to the 

provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

and the Commission’s Handbook on 

Filing Procedures require that interested 

parties file documents electronically on 

or before the filing deadline and submit 

eight (8) true paper copies by 12:00 p.m. 

eastern time on the next business day. 

In the event that confidential treatment 

of a document is requested, interested 

parties must file, at the same time as the 

eight paper copies, at least four (4) 

additional true paper copies in which 

the confidential information must be 

deleted (see the following paragraph for 

further information regarding 

confidential business information). 

Persons with questions regarding 

electronic filing should contact the 

Secretary (202–205–2000). 

Any submissions that contain 

confidential business information (CBI) 

must also conform to the requirements 

of section 201.6 of the Commission’s 

Rules of Practice and Procedure (19 CFR 

201.6). Section 201.6 of the rules 

requires that the cover of the document 

and the individual pages be clearly 

marked as to whether they are the 

‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information is clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In the request letter, the USTR stated 

that the Office of the USTR intends to 

make the Commission’s reports 

available to the public in their entirety, 

and asked that the Commission not 

include any confidential business 

information or national security 

classified information in the report that 

the Commission sends to the USTR. 

Any confidential business information 

received by the Commission in this 

investigation and used in preparing this 

report will not be published in a manner 

that would reveal the operations of the 

firm supplying the information. 

Issued: July 25, 2013. 

By order of the Commission. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2013–18272 Filed 7–29–13; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Notice of Lodging of Proposed 

Consent Decree Under the 

Comprehensive Environmental 

Response, Compensation, and Liability 

Act and the Clean Water Act 

On July 19, 2013, the Department of 

Justice lodged a proposed consent 

decree with the United States District 

Court for the Southern District of 

Alabama in the lawsuit entitled United 

States of America, Alabama Department 

of Conservation and Natural Resources, 

and the Geological Survey of Alabama 

v. BASF Corporation, Civil Action No. 

13–00372–KD–M. 

The plaintiffs alleged that BASF 

Corporation, as successor in interest to 

BASF Performance Products LLC (f/k/a 

Ciba Corporation, f/k/a Ciba Specialty 

Chemicals Corporation), is liable under 

CERCLA and the Clean Water Act for 

damages for injury to, loss of, or 

destruction of natural resources under 

the trusteeship of the National Oceanic 

and Atmospheric Administration 

(NOAA), the U.S. Department of the 

Interior (DOI), Alabama Department of 

Conservation and Natural Resources, 

and the Geological Survey of Alabama. 

The claims arise from releases and 

threatened releases of hazardous 

substances, including the pesticide DDT 

and its degradation products, from a 

chemical production facility at the CibaGeigy Corporation (McIntosh Plant) 

Superfund Site near McIntosh, 

Washington County, Alabama. The 

consent decree requires BASF 

Corporation to pay $3.2 million into the 

Mobile Bay Watershed/Ciba-Geigy Site 

(AL) Restoration Account; $500,000 to 

the Alabama Department of 

Conservation and Natural Resources, 

Game and Fish Fund; and $1.3 million 

to DOI and NOAA as reimbursement for 

damage assessment costs. Under the 

consent decree, the plaintiffs covenant 

not to sue or take civil judicial or 

administrative action against BASF 

Corporation under CERCLA or the Clean 

Water Act to recover natural resource 

damages related to the Site. 

The publication of this notice opens 

a period for public comment on the 

consent decree. Comments should be 

addressed to the Assistant Attorney 

General, Environment and Natural 

Resources Division, and should refer to 

United States of America, Alabama 

Department of Conservation and 

Natural Resources, and the Geological 

Survey of Alabama v. BASF 

Corporation, D.J. Ref. No. 90–11–2–781/ 

1. All comments must be submitted no 

later than thirty (30) days after the 

publication date of this notice. 

Comments may be submitted either by 

email or by mail: 

To submit 

comments: Send them to: 

By e-mail ...... pubcommentees.enrd@usdoj.gov. 

By mail ......... Assistant Attorney General, 

U.S. DOJ—ENRD, P.O. 

Box 7611, Washington, DC 

20044–7611. 

During the public comment period, 

the consent decree may be examined 

and downloaded at this Justice 

Department Web site: http:// 

www.usdoj.gov/enrd/ 

Consent_Decrees.html. We will provide 

a paper copy of the consent decree upon 

written request and payment of 

reproduction costs. Please mail your 

request and payment to: Consent Decree 

Library, U.S. DOJ—ENRD, P.O. Box 

7611, Washington, DC 20044–7611. 

Please enclose a check or money order 

for $8.25 (25 cents per page 


pmangrum on DSK3VPTVN1PROD with NOTICES

B-8
APPENDIX C 

Calendar of Public Hearing 

C-3

APPENDIX D 

Positions of Interested Parties 
 
D-3 

Introduction 

The following summaries of the positions of interested parties are based on information 

provided at a public hearing held on November 20, 2013, in Washington, DC, and 

material submitted to the Commission in conjunction with this investigation. The 

summaries express the views of the submitting parties and not those of the Commission, 

which did not attempt to confirm the accuracy of or make corrections to the information 

provided. The full text of the hearing transcript and written submissions associated with 

this investigation can be found by searching the Commission’s Electronic Docket 

Information System.1

American National Standards Institute (ANSI) 

ANSI stated that it serves as the coordinator of the United States’ private sector-led and 

public sector-supported system for setting standards based on voluntary consensus and 

for assessing conformity with them. ANSI said it is the official U.S. representative to the 

International Organization for Standardization (ISO) and, via the U.S. National 

Committee, to the International Electrotechnical Commission (IEC), and is a U.S. 

representative to the International Accreditation Forum (IAF). 

ANSI stated that while standards are a key component of U.S.-EU trade relations, the 

United States and EU have significantly different views on the use of international 

standards for regulatory purposes, and this can complicate opportunities for greater 

convergence. ANSI indicated that the U.S. standards strategy promotes a flexible, 

multiple-path approach. According to ANSI, U.S. law and policy call for federal agencies 

to base technical regulations on voluntary consensus standards developed by the private 

sector and, in particular, relevant international standards wherever possible. ANSI stated 

that U.S. regulators are given the flexibility to select the standards that suit their 

regulatory objectives. ANSI asserted that in each case the United States uses the national 

or international standard developed according to the principles of the World Trade 

Organization’s (WTO) agreement on Technical Barriers to Trade (TBT)—which include 

transparency, openness, due process, and balance—that best meets marketplace needs. 

On the other hand, according to ANSI, the EU’s New Approach Directives define the 

“essential requirements” for products accepted in the EU market and extend the 

presumption of compliance with these requirements to select standards developed or 

adopted by the three European standards organizations the European Committee for 

Standardization (CEN), the European Committee for Electrotechnical Standardization 

(CENELEC), and the European Telecommunications Standards Institute (ETSI). ANSI 

stated that the EU does not recognize U.S.-domiciled standards bodies in the same way 

that the United States recognizes such European bodies, asserting that the EC’s New 

Approach could cause a trade barrier by directing that only European Norms (ENs) be 

incorporated by reference into EC regulations. 

ANSI stated that any regulatory convergence mechanisms developed by the United States 

and EU must ensure that regulators, companies, and consumers on both sides of the 

 1

 Available online at http://edis.usitc.gov. 
D-4 

Atlantic can choose international standards from multiple sources. ANSI recommended 

that the EU empower its regulators to grant the presumption of compliance to 

international standards as defined in the WTO TBT principles. According to ANSI, 

giving EU regulators this flexibility would both enable them to select the standards that 

best meet their objectives and provide an important mechanism for greater regulatory 

alignment between the United States and EU. 

ANSI indicated that it also supports provisions that enable stakeholders to provide 

comments in the development of technical regulations, in adherence to the WTO TBT 

principles. ANSI said it believes that there must also be accountability to ensure 

European regulators consider such comments when finalizing a measure. Further, ANSI 

stated that allowing conformity assessment providers to provide services on a nationaltreatment basis will be an important tool to facilitate trade for manufacturers and will 

increase competitiveness and economic growth in the United States and the EU. 

ANSI maintained that while the United States and EU should seek to minimize 

differences wherever possible, the negotiations for the Transatlantic Trade and 

Investment Partnership (TTIP) should not hold the United States and the EU to regulatory 

coherence objectives that are not viable. ANSI stated that where U.S. and EU regulators 

choose to cooperate, the impact assessment should consider the full cost to society and 

not just the immediate cost. According to ANSI, TTIP should also embrace the WTO 

TBT assertion that public safety is paramount, and both the U.S. and EU regulators 

should keep their authority to take measures to ensure the quality of exports, the 

protection of life, the health of the environment, and the prevention of deceptive 

practices. 

ANSI stated that it supports the TTIP as a means to overcome barriers to trade in goods 

and services. According to ANSI, TTIP provides an opportunity to build on one of the 

world’s strongest trade alliances and further strengthen the U.S.-EU trading relationship. 

ANSI indicated that standards and compliance requirements that follow the principles in 

WTO agreements can further the goals of the TTIP. 

ASTM International (ASTM) 

ASTM indicated that it is a leading member of the global standards community and that 

more than half of the experts participating in ASTM standards development are from 

SMEs. SMEs, according to ASTM, make important contributions to the development of 

these standards and benefit from engaging in the standards development process. 

ASTM stated that it supports the objectives of the TTIP, but that changes to the EU 

standards policy would facilitate standards convergence and EU market access for U.S. 

SMEs. ASTM indicated that one of the primary reasons that U.S. SMEs encounter 

nontariff barriers when seeking access to the EU market is structural differences in the 

two markets’ standards and regulatory systems. According to ASTM, the EU system does 

not connect well with the U.S. system. 

ASTM indicated that these differences involve issues such as participation models, the 

use of international standards, and the indirect referencing of European standards. 

Participation in the European standards development process, according to ASTM, is 

limited primarily to European experts working through their national standards bodies, 
D-5 

while in the United States most standards are developed through an open, transparent, 

and balanced process that allows direct participation by individual experts in order to 

reach a global consensus. ANSI explained that individuals from EU-based SMEs 

participate in or lead standards development activities in standards bodies like ASTM, 

but that it is difficult for U.S.-based SMEs to participate in the development of the 

European standards. 

ASTM also stated that the United States promotes the view that there are multiple paths 

to the development of international standards, and that U.S. regulators reference 

standards from ASTM and many other global standards bodies. However, the EU 

officially designates the International Organization for Standardization (ISO), the 

International Electrotechnical Commission (IEC), and the International 

Telecommunication Union (ITU) as international standards bodies. According to ASTM, 

this difference in approaches complicates opportunities for EU-U.S. cooperation on 

standards. 

ASTM also indicated that efforts to achieve regulatory convergence are complicated by 

indirect referencing under the EU’s New Approach. There are 4,000 European standards 

that are referenced as part of 30 New Approach directives covering products and 

materials used in construction, packaging, toys, medical devices, equipment, and 

machinery. The indirect referencing of these European standards means that—while their 

use is voluntary—a product that meets these standards also meets the essential technical 

requirements of a directive, and its manufacturer gains certainty in the form of a 

presumption of conformity with those requirements. Further, the standards that are 

indirectly referenced are limited to European standards and those European standards 

harmonized through ISO and IEC. No legal mechanism exists to permit global standards 

from U.S.-domiciled standards organizations to receive the same benefit or to be treated 

on an equal footing. 

ASTM stated that two changes to EU standards policy would facilitate greater standards 

convergence and help U.S. SMEs access the European market. First, according to ASTM, 

the New Approach directives need to allow the indirect referencing of certain global 

standards developed by U.S.-domiciled standards organizations that can demonstrate 

technical equivalence and global relevance; second, there needs to be greater inclusion of 

international standards. 

California Citrus Mutual (CCM)2

CCM stated that it is a nonprofit citrus grower trade association that represents 

2,200 grower members in California, approximately 75 percent of the California citrus 

industry. CCM said that it monitors all state and federal regulatory issues concerning the 

California citrus industry. The organization contended that U.S. government export 

financing assistance is directed at field crops and not specialty crops such as fruit and 

vegetables. CCM asserted that although the U.S. Department of Agriculture (USDA) 

intended to institute a specialty crop variation of the Supplier Credit Guarantee Program 

(SCG or SCGP), the program was discovered to be subject to fraud and was dismantled 

before any fruit and vegetable assistance was given. CCM added that other current U.S. 

programs, such as those run by the Export-Import Bank, do not work for perishable 

 2

 California Citrus Mutual, written submission to the USITC, September 20, 2013. 
D-6 

products such as fruit and vegetables. The effects of this lack of assistance, according to 

CCM, are made worse by the EU’s decoupled payments of €9.5 billion or $12.4 billion 

for fruits, vegetables, and tree nuts in marketing year (MY) 2006–7 through the EU’s 

Common Agricultural Policy (CAP). CCM claimed that this assistance imbalance is 

counteracting the weakened U.S. dollar, which makes U.S. products more desirable for 

export. CCM asserted that eradicating tariffs alone will not ameliorate the trade 

imbalance, but enacting U.S. government specialty crop assistance while negotiating on 

EU tariffs will make for a more level playing field. 

California Fashion Association3 

In a written submission to the Commission, Ms. Ilse Metchek, president of the California 

Fashion Association, wrote that the increase in EU tariffs on women’s premium denim 

jeans from 12 percent to 38 percent would likely limit EU market share for California 

producers. 

Ms. Metchek added 

A spokesman for the EU trade commissioner Karel De Gucht, noted that 

the penalties were designed to “redress the injury to European companies 

brought about by the infamous Byrd Amendment in the United States 

which has been found to break international trade rules. Given this legal 

context, the EU has no choice but to defend European companies against 

this illegal U.S. trade action.” 

Ms. Metchek noted in the submission (consisting of copies of letters from the association 

to Senator Feinstein, dated May 3, 2013, and Ambassador Froman, June 28, 2013) that 

Southern California supplies 75 percent of the premium denim market; the tariff increase 

will not only reduce exports but also employment in California as EU companies change 

their sourcing patterns. 

Government Relations, LLC4 

In a written submission and in hearing testimony, Dr. David Ellison, co-founder of 

LiveAssay and vice president of Government Relations, LLC, stated that Global 

Relations provides consulting services on importing and exporting, regulatory 

compliance, enterprise risk management, and corporate governance. LiveAssay, 

according to Dr. Ellison, produces ready-made cell biology tests used in scientific 

experiments. 

Dr. Ellison stated that SMEs support the conclusions of the final report of the U.S.-EU 

Summit held on November 28, 2011, that encouraged TTIP negotiations, which were 

announced on February 13, 2013. He stated that SMEs specifically support market 

liberalization efforts to (1) eliminate barriers to trade and investment; (2) enhance 

 3

 Ilse Metchek, president, California Fashion Association, written submission to the USITC. September 

11, 2013. 4

 USITC hearing transcript, November 20, 2013, 53–58; Ellison, written submission to the USITC, 

October 8, 2013. 
D-7 

regulatory coherence and cooperation; and (3) develop new rules in areas such as 

intellectual property, labor, environment, regulating data flow, and facilitating supply 

chains. He said that it is difficult to overestimate the importance of increasing EU-U.S. 

trade, since bilateral U.S.-EU trade represents 30 percent of global trade and shared 

investments total nearly $3.7 trillion. 

Dr. Ellison contended that market liberalization is a shared value in the U.S.-EU 

relationship, and he recommended that the TTIP be changed into a “living” agreement so 

that other trading partners with similar values can join easily. Dr. Ellison also stated that 

some SMEs are concerned about the White House’s shift in global policy toward Asia 

and away from Europe. He asserted that this shift was articulated in the President’s 

speech before the Australian Parliament in 2011, the National Security Advisor’s speech 

before the Asia Society in March 2013, and the President’s fiscal year (FY) 2014 budget. 

Dr. Ellison stated that this policy shift places tremendous pressure on TTIP negotiations 

to be aggressive and far reaching. If the TTIP falls short of this, by only eliminating 

already low tariffs and by not aggressively pressing for harmonization of regulations, Dr. 

Ellison contended that it will be seen as a failure and a sign that the Administration does 

not place enough political capital behind its European agenda. 

Dr. Ellison said that many U.S. businesses are not pleased with the EU’s restrictions on 

medical devices and with its Registration, Evaluation, Authorization, and Restriction of 

Chemicals (REACH) regulation of 2006 on chemicals related to nanomaterials and other 

advanced materials. According to Dr. Ellison, these place major constraints on U.S. 

SMEs’ exports to the EU. He stated that SMEs seek an ambitious plan to harmonize 

regulations with the EU since excessive regulation presents a key unfair disadvantage to 

U.S. SME trade. Dr. Ellison cited regulations for medical devices as an example where he 

would like to see four objectives met: (1) mutual recognition of ISO 13484, which is the 

standard for quality management in the design and manufacture of medical devices; (2) a 

single audit process; (3) a harmonized format for product registration and submission; 

and (4) a common way to trace products through a single unique device identification 

process with interoperable databases. 

The Hardwood Federation5 (HF) 

The HF stated that it represents companies in the hardwood industry—predominantly 

small family-owned businesses that collectively produce $200 billion in products 

annually and employ 900,000 workers. The HF said that in 2012, U.S. hardwood lumber 

exports, including those to the EU, totaled $1.6 billion. In its written submission, the HF 

stated that there are two areas of concern that it wanted to bring to the Commission’s 

attention: European regulations relating to imports of North American ash (Fraxinus 

Spp.) and the EU’s acceptance of the National Hardwood Lumber Association's Kiln 

Drying Certification. 

The HF explained that EU regulations regarding the importation of North American ash 

lumber require that all bark, wane, and the one-half inch of wood below the cambium 

layer be removed to eliminate the risk of transmitting the emerald ash borer. The HF 

asserted, however, that this requirement is unnecessary in preventing the spread of the 

pest and results in losses in yield, which in turn raise the cost of the product. Instead, the 

 5

 Hardwood Federation, written submission to the USITC, October 7, 2013. 
D-8 

HF stated that kiln drying for a minimum of 30 minutes at temperatures above 56 degrees 

C destroys the borer, larvae, and eggs without loss of material. The HF expressed the 

view that verification of kiln drying is a more reasonable import regulation for North 

American Ash than the current EU regulation. 

The HF also said that the National Hardwood Lumber Association's (NHLA) kiln drying 

(KD) certification is designed to monitor kiln facilities and verifies that requirements 

regarding moisture content and treatment, temperature, and duration are met before 

export. According to the HF, the program achieves the same goals as an Animal and 

Plant Health Inspection Service (APHIS) Phytosanitary Certificate but at less cost to both 

APHIS and the U.S. hardwood industry. The HF stated that the EU is considering, but 

does not currently accept, the NHLA KD Certificate for oak, maple, sycamore, poplar, 

ash, or chestnut. The HF recommended that the EU accept the NHLA KD Certificate as 

an efficient and cost-effective method of meeting requirements for exports to the EU. 

Henningson Foods6

In its submission, Henningson Foods stated that it manufactures dehydrated poultry meats 

that are inspected by the USDA’s Food Safety and Inspection Service (FSIS) and used as 

ingredients in many other consumer products. Henningson reported on what it described 

as essentially a ban by the EU on U.S. poultry products. Henningson stated that the EU 

requires different slaughter and processing procedures than FSIS, including a ban on the 

use of chlorine water for chilling poultry carcasses and additional residue testing. 

Henningson asserted that almost all U.S. poultry companies, with the exception of a 

single turkey plant, avoid selling to the EU market because of these trade barriers. 

According to Henningson, the removal of these barriers would result in their gross 

poultry sales increasing by at least 30 percent. 

Highland Metals (HMI) 

In a written submission to the Commission, Ms. Eveline Carr, quality manager of HMI, 

discussed the general barriers to market access that her company faces when exporting 

orthodontic wires to the greater EU region, explaining that these wires are classified as 

class IIa medical devices in the EU. Ms. Carr stated that the company has been exporting 

to the EU for years, but has only recently encountered these barriers, which include 

“country specific registration and customs requirements.” She said that under this 

arrangement, selected EU countries impose additional registration requirements—

including customs-specific import certifications—in addition to the standard CE marking 

certification that is required when exporting to the EU. Ms. Carr listed Turkey, Italy, and 

England as countries with more onerous customs-related issues. In particular, according 

to Ms. Carr, Turkey’s customs charges can be significant, often exceeding the invoice 

value of the good; in Italy, the importer of the HMI device must apply for a “sanitary 

permit” with customs for each HMI shipment that arrives in Italy, which often results in 

significant delays; and a recent HMI shipment to England was intercepted and 

repackaged after the product had been stripped of about $15,000 worth of material. 

 6

 Henningson Foods, written submission to the USITC, September 18, 2013. 
D-9 

Nation Ford Chemical 

In a written submission to the Commission, Mr. Jay Dickson, president of Nation Ford 

Chemical (NFC), wrote that the EU is a very important trading partner for the company 

and that a U.S.-EU free trade agreement would not only benefit the company but also its 

customers in the United States and the EU. Mr. Dickson stated that NFC was proactive in 

its response to REACH by educating themselves about the legislation; making REACH a 

priority focus for the company; and also by hiring a consultant. He said that NFC has 

only one product registered under REACH at this time but will register another one for 

the next REACH deadline in 2018. Mr. Dickson stated that REACH “is and has been 

very expensive and time consuming for NFC and all chemical companies doing business 

in the EU,” adding that compliance costs for the company for one non-hazardous product 

has been about $200,000 (said to be a one-time expense) and $35,000 per year to the 

company’s Only Representative. Mr. Dickson stated that the effect is disproportionate for 

SMEs versus their larger counterparts not only because of the magnitude of the costs but 

also because of the SME’s “inability to spread [them] over a diverse product line.” Mr. 

Dickson states that NFC’s payment of the costs associated with REACH “was at the 

expense of cash reserves that would normally be used for reinvestment in our plant.” 

National Association of Manufacturers (NAM) 

In a written submission to the Commission, Linda Dempsey, NAM’s vice president for 

international economic affairs, stated that NAM is the largest American manufacturing 

association and that its membership includes both small and large manufacturers across 

the country.7

 She described issues in intellectual property (IP) protection, tariffs, customs 

procedures, and regulatory requirements that, she said, represented export barriers for 

SMEs. She also provided policy recommendations for the TTIP negotiations that seek to 

eliminate the perceived barriers. 

Ms. Dempsey stated that SMEs rely on trade secrets rather than patents to protect their IP 

and that trade-secret misappropriation threatens these businesses. She recommended that 

TTIP incorporate robust trade-secrets protection and enforcement; fewer requirements to 

disclose trade secrets; and cooperation with third countries to combat trade-secret theft. 

Ms. Dempsey asserted that eliminating all EU tariffs would help U.S. SMEs. She 

recommended complementing this with elimination of border charges and other importrelated fees. She also stated that long customs clearance times, excessive paperwork 

requirements, and other customs practices increase costs and particularly affect SMEs 

that export small volumes. She also stated that improving trade facilitation would help 

manufacturers of all sizes, and to achieve this, she recommended harmonizing customs 

regulations, allowing preclearance of goods, and implementing several other policies. She 

also stated that raising the de minimis threshold to $800 would reduce export costs for 

SMEs. 

 7

 Dempsey, Linda. “Re: Concerning Trade Barriers that U.S. Small- and Medium-Sized Enterprises 

Perceive as Affecting Exports to the European Union (Investigation Number 332-541).” Letter to Lisa 

Barton, October 23, 2013. 
D-10 

Ms. Dempsey alleged that the EU’s use of the precautionary principle has created 

regulations that impose nontariff barriers on U.S. exports. She recommended greater 

regulatory cooperation on labeling, product safety requirements, and recognizing function 

equivalence where appropriate. She also asserted that EU conformity assessment 

procedures have created higher costs for U.S. businesses because they create delays in 

placing products on the market and exclude U.S.-based laboratories from performing 

certification tests. 

Ms. Dempsey stated that SME manufacturers need confidence in their ability to move 

data across borders. She noted that manufacturers have expressed concerns that the EU 

General Data Privacy Regulation creates burdensome compliance requirements for crossborder data flows. 

National Corn Growers Association (NCGA)8

NCGA stated that it has a membership of over 40,000 corn growers and represents the 

interests of more than 300,000 corn farmers. NCGA works with state-affiliated corn 

agencies to protect the interests of U.S. corn growers regarding foreign trade policies. 

The main concerns for U.S. corn growers, as reported by NCGA, are the EU’s reliance on 

non-science-based measures in biotechnology and its stringent labeling requirements. The 

EU approval process for biotechnology traits is cumbersome and restricts U.S. 

agricultural products from entering the EU, while not adhering to internationally 

recognized norms for sanitary and phytosanitary (SPS) measures. NCGA, according to its 

written submission, would encourage USTR to remain dedicated to fulfilling its prior 

commitments to ensure that the EU honors its WTO obligations regarding biotechnology. 

Owner’s Right Initiative (ORI), Association of Service and 

Computer Dealers International, North American 

Association of Telecommunications Dealers (AsciNatd), and 

Radwell International9

 

In hearing testimony, Mr. Joseph Marion, president of AsciNatd, stated that ORI is an 

informal organization of 20 companies and trade associations dedicated to preserving the 

right to sell, lend, and rent goods in the secondary market. ORI, according to Mr. Marion, 

represents resellers and OEMs operating in the secondary markets for new and used 

hardware related to information technology and telecommunications, software, 

maintenance services, leasing services, business solutions, technical support, and other 

value-added services. Mr. Marion stated that secondary markets are an important and 

growing segment of the U.S. and world economy, where sales for new and used computer 

and telecommunications equipment alone are estimated at $300 billion. 

Mr. Marion indicated that barriers to participation in the secondary markets can and do 

have a substantial negative effect on U.S. exports. He stated that the U.S. Supreme Court 

recently affirmed a 200-year-old first-sale doctrine under which rightsholders’ exclusive 

 8

 National Corn Growers Association, written submission to the USITC, August 23, 2013. 9

 USITC hearing transcript, November 20, 2013, 75–80. 
D-11 

right to sell branded product is exhausted once the rightsholder has made or authorized a 

first sale of the product. According to Mr. Marion, the rightsholder is protected against 

pirating, counterfeiting, and the introduction of materially different goods under the same 

brand mark. He also stated that goods placed in the market by the rightsholder may be 

freely traded, promoting competition and consumer choice. However, according to Mr. 

Marion, in the EU the right to control the resale of branded products is exhausted if and 

only if the branded product is first sold in the EU. He indicated that the principle of 

exhaustion is applied within the EU to avoid the acknowledged anticompetitive effect of 

granting rightsholders a perpetual monopoly on the resale of their products within the 

EU. 

Mr. Marion stated that the EU ensures that branded goods can be freely traded within the 

EU while insulating the EU market from outside competition, given that rightsholders 

retain a perpetual monopoly over the trade of all their products first sold in the EU. He 

also noted that EU manufacturers can subsequently use their monopoly power to block 

independent U.S. resellers from exporting genuine products into the EU. Mr. Marion 

asserted that the anticompetitive effect of the EU’s policy is explicitly illustrated by a 

case recently decided by the UK Supreme Court (Oracle v. M-Tech), where Oracle sued 

M-Tech for exporting 64 Oracle disk drives from the United States to the EU.10 

Mr. Marion stated that his organization estimates that members’ exports to the EU have 

declined by $7.8 billion since the Oracle decision, with individual companies reporting 

declines of 50 to 90 percent. He also indicated that EU manufactures were refusing to 

verify if the products were first marketed in the EU, thereby further stifling legitimate 

U.S. competition. Mr. Marion estimated that U.S. computer and telecommunications 

exports would increase by as much as 30 to 50 percent if the EU opened its secondary 

market to competition from the United States. Mr. Marion stated that the EU’s 

recognition of the principle of exhaustion is essential to promoting competition and free 

trade. He suggested that failure to apply this principle equally to trade with the United 

States is unquestionably at odds with the goal of increasing trade and mutual economic 

growth. 

In hearing testimony, Mr. Anthony Chwastyk, General Counsel for Radwell 

International, stated that his company purchases, repairs, and sells industrial electrical 

equipment including timers, counters, circuit breakers, pushbuttons, programmable-logic 

controllers, motors, photoelectric sensors, and other devices used to make machinery 

run.11 Mr. Chwastyk stated that to facilitate his company’s expansion into the EU market, 

it established a repair and distribution center in England. Mr. Chwastyk indicated that 

Radwell’s UK sales doubled to nearly $4 million, while its exports to the EU declined 

dramatically. Mr. Chwastyk contends that the decline can be attributed both to Radwell’s 

local UK presence and to the uncertainty caused by the EU’s restrictive trademark and 

copyright laws. 

In a post-hearing brief, Ms. Marguerite Trossevin, counsel for ORI stated her concerns 

about barriers to U.S. exports erected through the operation of the EU’s trademark 

 10 According to Mr. Marion, a lower court ruled in favor of Oracle, but a UK appeals court reversed the 

decision. He stated that the Appeals Court found that Oracle’s practices had more to do with restricting 

imports and preventing price competition than with the proper exercise of intellectual property rights. Mr. 

Marion stated that the UK Supreme Court reversed this decision, finding that Oracle had the absolute right to 

block the importation of their products. 11 USITC hearing transcript, November 20, 2013, 80–84. 
D-12 

regime. 12 Ms. Trossevin stated that the EU’s trademark regime operates to block a 

substantial volume of potential U.S. exports of new and used trademarked (or “branded”) 

electronic equipment from U.S. independent resellers, a restriction that disproportionately 

affects SMEs because resellers tend to be small. Ms. Trossevin stated that independent 

U.S. resellers do not sell a large portion of the new and used electronic equipment 

through the gray market, yet the EU continues to block U.S. resellers from exporting 

these products to the EU, as well as other genuine branded products. Mr. Trossevin 

suggested that the United States use the TTIP negotiations as an opportunity to open the 

EU market to exports of new and used branded products by U.S. independent resellers. 

Polyguard Products, Inc.13 

In a written submission to the Commission, Mr. Nathan Muncaster, director of global 

business development for Polyguard Products, Inc., wrote that his company is a 

100 percent employee-owned SME. The company, he wrote, manufactures pipeline 

coatings, construction waterproofing, and anticorrosion products. Mr. Muncaster said that 

in 2012 the company sold its products in 29 countries but had difficulty selling in the EU 

because of the EU regulatory system and its standards-setting process. He said that the 

existing process doesn’t always work smoothly (particularly for innovative products), is 

costly, and does not allow reciprocal access between EU member states. He added that 

whereas large companies can afford to pay the high costs of conducting multiple tests and 

meeting the requirements of individual member countries, SMEs without such resources 

will not be able to access the EU market. He cited problems that his company had 

certifying two innovative products, attributing the problems to “defined tests linked to 

European standards” and classification issues under the Harmonized Tariff System. In 

conclusion, he stated that his company’s inability to obtain the CE mark for innovative 

products limits its EU market access. He recommended the establishment of an EU 

ombudsman to help SMEs address such challenges. 

Sartori14

According to its written submission, Sartori is a Plymouth, Wisconsin-based producer of 

artisan cheese. Sartori reported that the main EU barrier affecting its exports of cheese 

are the Protected Designations of Origins (PDOs), which protect EU-produced cheese 

originally named for a particular geographic locale even when the United States considers 

their names to be common. Sartori alleges that these PDOs effectively block U.S. cheese 

companies from exporting to the EU. 

 12 Owners Rights Initiative, written submission to the USITC, December 2, 2013. 13 Nathan Muncaster, director of Global Business Development, Polyguard Products, Inc., written 

submission to the USITC, September 6, 2013. 14 Sartori, written submission to the USITC, September 3, 2013. 
D-13 

Society of Chemical Manufacturers and Affiliates 

(SOCMA)15 

In his written testimony to the Commission on behalf of SOCMA, Mr. Jim DeLisi, CEO 

of Fanwood Chemical, Inc., wrote that SOCMA represents the specialty chemical 

industry and that over 80 percent of the association’s active members are small 

businesses. Mr. DeLisi stated that SOCMA welcomes a free trade agreement between the 

two trading partners but understands the challenges involved, particularly “given the 

different regulatory schemes.” Mr. DeLisi said that REACH, the EU’s chemical 

regulatory system, was “founded on the precautionary principle rather than the U.S. riskbased approach to regulation.” He said it is a significant trade barrier, noting that its “no 

data, no market approach” has caused U.S. SMEs to either incur large costs for 

compliance or exit the EU market. He added that Bloomberg Government has estimated 

that REACH increases tariffs on chemicals by as much as 22.2 percent. 

Mr. DeLisi stated that “SOCMA members understand [REACH] is a regulatory reality 

and this legislation will not be repealed. However, there are ways to make this legislation 

more workable.” He added that “even the European Commission’s REACH review 

concluded that the impact on SMEs was disproportionate.” Mr. DeLisi then described in 

more detail the main issues that SOCMA members face with REACH: high costs; limited 

communications channels with the European Chemicals Agency (ECHA); transparency 

concerns; and updates and maintenance related to the registration process. He concluded 

by describing several recommendations from SOCMA that would be helpful for SMEs, 

including the establishment of an EU small business ombudsman, increased availability 

of ECHA staff, and increased transparency. Mr. DeLisi also summarized several 

European Commission recommendations regarding REACH and SMEs. 

Trade Moves16

Trade Moves is an advisory firm that provides U.S. companies with trade tools and 

resources to support their exports, and works with several processed food manufacturers. 

Trade Moves reports that high and complex EU tariffs act as a barrier to trade, 

specifically the combination of ad valorem tariffs and the specific agricultural tariffs. The 

latter is calculated based on food content (i.e., flour, sugar, or milk fat content) in a 

system known as the Meursing code system. Due to this complicated system, tariffs are 

not decided upon until specific ingredient make-ups are reported, according to Trade 

Moves, which leads to a lack of transparency. If a processed food product changes 

ingredients even slightly, their import tariff may be altered. Trade Moves calls for the 

removal of the industrial tariffs as well as the complicated and difficult to understand 

Meursing tariff component. 

 15 Mr. Jim DeLisi, CEO of Fanwood Chemical, on behalf of SOCMA, written testimony to the USITC, 

September 20, 2013. 16 Trade Moves, written submission to the USITC, December 2, 2013. 
D-14 

Troy Corporation17 

In a written submission to the Commission, Mr. Adrian Krygsman, Director of Product 

Registration for Troy Corporation, wrote that his company is an SME that produces 

commodity and industrial biocides, as well as additives used globally in products such as 

adhesives, cosmetics, paints and coatings, plastics, and metalworking fluid industries. He 

noted that the company’s products are regulated under EU regulations and also under 

REACH and, as such, his company expends “considerable monetary and personnel 

resources” in compliance. To optimize its use of internal resources, he said the company 

focuses on a “registered once, registered everywhere” methodology. 

Mr. Krygsman stated that differing regulatory approaches between the United States and 

the EU (i.e., the EU’s emphasis on hazard versus the U.S. focus on risk and the resulting 

differences in interpretation between the two systems) present a trade barrier to his 

company marketing its products in the EU. He also cites as barriers various EU 

regulations (e.g., the Biocidal Products Regulation (BPR)); overlapping requirements of 

regulations and directives; and individual member state regulatory requirements. After 

mentioning the resources needed to meet North American regulatory requirements 

(noting that the similarity between the North American countries’ approaches not only 

allows companies to more readily plan for compliance but also allows for “efficient and 

economical use of company resources”), he says: 

The data used for North American approval are typically 

insufficient to obtain EU approval since reliance on hazard alone 

provides an impractical safety hazard. Secondly if data for a 

particular endpoint are unavailable regulators will use the 

precautionary principle and, as the name implies additional caution 

for various endpoints are incorporated usually resulting in 

restriction or non-approval of a product. Non-approval means no 

market access and ability to recover costs. 

Mr. Krygsman provides examples of the additional costs and tests needed to comply with 

REACH. He also mentions the additional criteria used by the BPR that can result in 

exclusion and/or substitution of a product. Mr. Krygsman highlights the differing 

registration requirements of EU member states, mentioning that they lead to additional 

costs on a per product basis and require companies to expend “extensive” staff resources 

to understand and comply with the various programs. Mr. Krygsman also says that other 

countries are increasingly adopting the EU chemical regulation system. In conclusion, 

Mr. Krygsman recommends harmonization of the U.S. and EU regulatory approaches. 

 17 Adrian Krygsman, director, Product Registration, Troy Corp., written submission to the USITC, 

September 30, 2013. 
D-15 

U.S. Chamber of Commerce18 

In a written submission and in hearing testimony, Marjorie Chorlins, Senior Director for 

Europe for the U.S. Chamber of Commerce, stated that the Chamber is the world’s 

largest business federation, representing interests of more than 3 million businesses; 

96 percent of which employ fewer than 100 employees. Ms. Chorlins indicated that the 

Small Business Administration found that SMEs are the principal driver of U.S. job 

growth and generate about two-thirds of net new jobs. She noted that the U.S. and the EU 

account for nearly half of world’s GDP at $16 trillion and that U.S.-EU trade in goods, 

services, and foreign affiliates’ sales exceeded $6.5 billion in 2012. 

Ms. Chorlins stated that her organization supports a comprehensive and ambitious 

Transatlantic Trade and Investment Partnership (TTIP), which will eliminate tariffs, open 

up services, investment, and procurement; generate good jobs; fortify the global rulesbased trading system; and promote regulatory cooperation to ensure high level of health, 

safety, and environment protection, while cutting unnecessary costs. She noted that 

several studies have shown that TTIP could bring significant benefits to the United 

States. She cited a recent study by the London-based Centre for Economic Policy 

Research (ECIPE) that estimated that the TTIP would boost U.S. exports to the EU by 

$300 billion annually, add $125 billion to U.S. GDP each year, and increase the 

purchasing power of the typical American family by nearly $900. She cited a September 

2013 study commissioned by the Atlantic Council, Bertlesmann Foundation, and the 

British Embassy of Washington, DC that concluded that the TTIP would create more than 

740,000 U.S. jobs.19 She also stated that ECIPE suggested that transatlantic trade would 

increase by $120 billion within 5 years of tariff elimination and that the combined GDP 

of the United States and the EU would expand by $180 billion.20 Ms. Chorlins explained 

that because SMEs are more affected by tariffs they will enjoy a large proportion of the 

gains from a transatlantic accord that eliminates or reduces tariffs. 

Ms. Chorlins indicated that TTIP should enhance the U.S.-EU SME bilateral trading 

relationship, produce robust partner identification initiatives, and improved export 

promotion programs. She stated that one priority of TTIP should be to create a business 

environment conducive to the success of entrepreneurs and small businesses. She also 

stated that eliminating foreign barriers to U.S. exports should be the principal focus of the 

U.S. government’s efforts to harness trade for the creation of jobs. Ms. Chorlins also 

indicated that eliminating tariffs alone would have an immense economic impact since 

SMEs, by their very nature, are more affected by tariffs. She indicated that one key goal 

of negotiations should be to tackle the so called “behind the border” barriers to trade. Ms. 

Chorlins noted that companies trying to sell their products on both sides of the Atlantic 

incur high costs to comply with often divergent U.S. and European regulations, even 

when they achieve comparable outcomes. 

Ms. Chorlins stated TTIP can benefit SMEs by establishing clear intellectual property 

rules to protect innovation and creative content; opening government procurement 

 18 USITC hearing transcript, November 20, 2013, 6–53; Chorlins, written submission to the USITC, 

October 8, 2013. 19 TTIP and the Fifty States: Jobs and Growth from Coast to Coast, Bertelsmann Foundation, Atlantic 

Council, and the British Embassy in Washington, DC, September 2013. 20 ECIPE, “A Transatlantic Zero Agreement: Eliminating the Gains from Transatlantic Free Trade in 

Goods,” Fredrik Erixon and Matthias Bauer, Occasional Papers 4/2010, October 2010. 
D-16 

markets to ensure transparency in bidding, particularly for contract for roads, schools, 

and clinics; and by establishing clear, consistent, and predictable rules for digital trade 

between the United States and the EU. She noted that existing government and private 

sector programs can continue to assist U.S. SMEs to export. Large companies like 

FedEX, UPS, and DHL, according to Ms. Chorlins, have assisted in shipping and 

educating SMEs about the complexity of doing business abroad. She also noted that 

SME’s have also used websites like Amazon and eBay to export. 

To boost exports, according to Ms. Chorlins, USTR, the Department of Commerce, the 

Small Business Administration, in coordination with the European Commission’s Trade 

and Enterprise Directorate launched the U.S.-EU Small and Medium-sized Enterprises 

Workshop series in December 2010. Ms. Chorlins stated that the workshops were 

designed to bring together U.S. and EU government officials, small businesses, and 

stakeholders to discuss current barriers and potential solutions. At the December 

2012 workshop, according to Ms. Chorlins, the USTR and the EU Director General of 

Enterprise signed a Memorandum of Understanding (MOU) to encourage the growth in 

exports between the United States and the EU through trade promotion activities, events, 

networking, trade shows, and joint efforts to expand business opportunities and 

partnerships. Ms. Chorlins noted that within this framework, the Chamber recommends 

sharing of SME exporter contacts, which will enable small companies on each side of the 

Atlantic to find reliable trading partners and overseas distributors. 

U.S. Wheat Associates and National Association of Wheat 

Growers21

U.S. Wheat Associates (USW) and National Association of Wheat Growers (NAWG) 

both represent the U.S. wheat industry domestically and abroad, with years of experience 

and offices all over the world. Due to the fact that the U.S. exports over half its wheat 

production, USW and NAWG have a vested interest in the Transatlantic Trade and 

Investment Partnership (TTIP). In addition to several wheat-focused concerns, USW and 

NAWG expressed their desire for the TTIP to be a 21st century, comprehensive 

agreement between two of the largest global economies. Specifically regarding wheat, 

USW and NAWG called for the elimination of duties on low and medium quality (under 

14 percent protein) wheat. While in-quota tariffs are relatively on par with other 

countries, and were even zero until June 2013, out of quota tariffs are much higher, at 

95 Euros per metric ton (MT), than U.S. tariffs. In addition to low and medium quality 

wheat, the EU operates a Margin of Preference (MOP) for high quality wheat. While 

tariffs under this MOP are variable, the high wheat prices in recent years have resulted in 

no import duties on high quality wheat. USW and NAWG call for the removal of all 

wheat tariffs completely, especially because of the recent completion of the free trade 

agreement between the EU and Canada, the largest competitor to U.S. wheat. USW and 

NAWG also reported that the EU is too cautious in its approach to SPS measures, 

especially regarding Karnal Bunt (KB) disease and mycotoxin testing. Increased testing, 

even when original testing has been verified by the U.S. government, results in amplified 

costs and port delays for U.S. companies. In addition to KB and mycotoxin, the EU has a 

policy on biotechnology that not does allow any traces of non-approved traits in 

 21 U.S. Wheat Associates and National Association of Wheat Growers, written submission to the 

USITC, May 10, 2013.
D-17 

shipments, and USW and NAWG suggest a low level presence (LLP) policy that would 

be workable for countries exporting to the EU. 

Westar Trade Resources22 

In written submissions to the Commission, Ms. Cindy Thyfault, Founder and CEO, 

Westar Trade Resources, discussed export challenges and opportunities for liquid 

biofuels, pellets, and biobased chemicals. Ms. Thyfault addressed various topics, 

including changes to HTS classifications; recent antidumping and countervailing 

measures in the EU on bioethanol and biodiesel; the imposition in the EU of non-tariff 

barriers “such as sustainability criteria and caps on first-generation biofuels in an attempt 

to limit indirect land use change, . . .;” and the EU inclusion of aviation in January 2012 

to its Emissions Trading System in an effort to reduce greenhouse gas emissions related 

to aviation. She said that the likely outcomes of these measures would be higher tariffs on 

EU imports of these products from the United States and potential reductions in 

U.S. exports of such products to the EU. She also mentions possible U.S. and EU policy 

recommendations to support industry growth and U.S. exports. 

 

 22 Cindy Thyfault, founder and ceo, Westar Trade Resources, written submissions to the USITC, 

September 11, 2013, and December 1, 2013.