by

Introduction

EU Investments in Louisiana

Louisiana’s Trade With The EU

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  Exports to Europe

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  Imports from the EU

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  Port of New Orleans Export/Import Data

EU Tourism in Louisiana

The Advent of the Euro

US-EU Trade Frictions

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  The Banana Dispute

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  U.S. Beef and Other Potential Problem Areas

How Local Businesses View Louisiana – EU Prospects

Conclusions

 

Appendixes

A - List of EU Direct Investments in Louisiana

B - Louisiana Exports to the EU

C - Port of New Orleans Trade with the EU - COMING SOON

With many of the economies and financial markets of Asia and Latin America still facing hard times and uncertain futures, Europe has emerged as America’s most consistently stable economic partner. Also, the European region is showing signs of increased economic activity. Based on strong first-quarter 1999 retail trade sales figures, some observers believe much of Europe may be on the threshold of a long-awaited consumer-led recovery.

Since more than 90 percent of Louisiana’s trade and investment with Europe takes place with the 15 member states of the European Union, this report examines Louisiana’s current economic relations with these countries and the outlook for additional Louisiana – EU business in the future.¹ The report also recounts the views of a number of Louisiana officials and executives involved in business activities with Europe and reviews developments in overall U.S.–EU economic relations – the irritants as well as the advances.

This report also examines the January 1, 1999 launching of the "euro," the new currency of the European Union. The euro is being used initially in 11 of the 15 EU countries and will, by 2002, displace the national currencies in each of the eleven. Together, these 11 countries constitute an economic unit as large and rich as the U.S. economy, and hence the euro is likely to eventually become an important currency for international trade. Also, during the next two to five years, the remaining four EU member states (Greece, Denmark, Sweden, and the UK) may adopt the euro, which would further expand and deepen the market for the currency.

Louisiana’s economic ties with Europe go back 300 years. Louisiana’s early history – both as a possession and as a state – was intimately tied to the needs and exigencies of the major European economies, especially France, Spain, and England. In the following periods, nearly all of Europe would become a well-connected economic partner of Louisiana. Today, in terms of overall economic contact between Louisiana and the 15 member countries of the European Union, such ties have never been fuller or more complex.

The same is true, of course, for the broader U.S.-EU relationship, which runs much deeper than the purely economic. In fact, the long history of close trans-Atlantic collaboration has evolved into a network of unequivocal fraternal ties between both sides of the Atlantic. The U.S. and the EU share a high degree of economic and political stability, a range of common or kindred institutions, and strikingly coincident views on topics as disparate as human rights, disarmament, intellectual property rights, and government corruption. Largely as a result of these commonalties, the people and companies of the U.S. and EU liberally travel, trade, and invest in each other’s territory. Moreover, on the political side of the equation, joint initiatives – such as the recent NATO military action on behalf of the people of Kosovo – reinforce the U.S.-EU relationship.

Of course, such intimate and complex ties – however fraternal – can and do give rise to frictions between the two entities from time to time. If left untended, disputes arising from trade frictions can fester and eventually lead to sanctions that disrupt trade. Louisiana is a key maritime trading state for Europe, as well as a popular international vacation and convention destination and a state with a significant amount of EU direct investment. As such, Louisiana’s economic relationship with the EU is also highly sensitive to and affected by overall U.S.-EU relations.

Research appraising European-Louisiana business relations shows that Louisiana companies are currently very interested in Europe. For example, Dr. Joseph Ganitsky and Dr. Rajiv Mehta of Loyola University’s College of Business Administration found in their 1998 survey² of companies in the state that respondents’ interest in trade with Europe is growing faster than with Latin America. In another interesting finding, the study showed that smaller Louisiana companies are generally more interested in Europe than are their larger counterparts.

Louisiana-EU economic ties involve considerable investment, trade, and tourism. In fact, in two of these three areas (investment and tourism – perhaps the closest and least "arms-length" of international economic relations), Louisiana’s links with the EU rank first among the state’s three principal regional economic partners (the EU, Latin America, and Asia). Indeed, in both investment and tourism, the current importance of the European Union outweighs that of all other regions combined. It is only in trade where Asia and Latin America rival Europe in their impact on Louisiana.

EU INVESTMENTS IN LOUISIANA – MORE THAN THOSE OF OTHER REGIONS COMBINED

In assessing the depth of Louisiana’s links with Europe, an analysis of the data on Europe’s investments in the state is most revealing. The Louisiana Department of Economic Development (DED) has rough estimates of foreign investment flows by both the company receiving the investment and also by the nationality of the investor. Europe’s position in these tabulations³ is impressive.

Of an estimated total stock of $21 billion of foreign investment in Louisiana, roughly two-thirds, or an estimated $14 billion, originated in EU countries. Further, an estimated 20,000 jobs in Louisiana are believed to be dependant on European Union companies’ investments in Louisiana. The Shell group of companies (Dutch/UK) is the largest single foreign investor in the state. Although data on investments in Louisiana by all EU countries is not available, the DED numbers indicate these holdings:⁴

Country	Billions of $
Netherlands5	$ 6.0
UK	2.5
Germany	2.3
France	1.5
Switzerland (not an EU member)	0.9

 

During his May 17-18, 1999 visit to New Orleans, the British Ambassador to the U.S. Sir Christopher Meyer told an audience at the World Trade Center that he believes British companies may have as much as $3.5 billion invested in Louisiana and employ 8,000 people in the state.

Recent DED data indicates that the EU interest in investing in Louisiana has remained strong into the mid-to-late 90’s. From 1993 to 1997, for example, investors from EU counties contributed $2.1 billion of the total $3.4 billion – or 62 percent – of the foreign investment Louisiana is known to have received. During the 1993-97 period, total new investment of $2.1 billion entered Louisiana as follows:

Country	Millions of $
Germany	804
Netherlands	637
Belgium	326
France	202
UK	170

 

Louisiana ranks twelfth among all states as the destination for EU direct investment. Among the U.S. southeastern states, Louisiana ranks fourth, behind Florida, North Carolina, and Georgia. Given Louisiana’s heavy involvement in hydrocarbons, it comes as no surprise that the bulk of foreign investment in the state is in industries related to oil, gas, and petrochemicals. In more recent years, however, Europeans have also invested in manufacturing, steel forging, coffee roasting, and other lines of business.

The current director of the state’s International Marketing Division of DED, Frank Mulhern, told the WTC that Louisiana’s array of inward investment incentives, combined with its tax rates, has made Louisiana a very competitive destination for foreign investors. However, Mulhern notes that concerns about education and the quality of life often crop up in discussions with foreign executives. These executives want to ensure that the children of their employees can receive a quality education in the state and that these families will feel at home in Louisiana.

Mr. Mulhern’s predecessor – now the Deputy Director of the Port of South Louisiana – Don Hays, explains the overwhelming predominance of European direct investment in Louisiana by pointing out that this investment typically predates investments from other regions – such as Asia – which is of a much more recent vintage. Mr. Hays notes that European firms do invest in new plant and facilities, but just as often they invest via acquisition. He cites the Rhone Poulenc (France) purchase of Stouffer Chemical’s installation in Baton Rouge as an example.⁷ He further observes that EU firms tend to look for investments that produce new synergies with their own operations, or with those of their strategic corporate partners. As an illustration of the latter, Hays notes the recent Shell-Aramco-Texaco purchase of the Star refinery in Donaldsonville, which gave Aramco access to the American petroleum products market.

Though these investment numbers are impressive, critics say that more can and should be done for Louisiana to attract investment from Europe and the rest of the world. For example, Bank One’s chief of international banking in New Orleans, William Cummins, believes that while other southern states have been able to attract major new ("greenfield") investments – for example, the Daimler-Chrysler investment in Alabama, the BMW investment in South Carolina, and the Toyota investment in Tennessee – Louisiana has not been as successful. Cummins believes the State needs to spend more money and effort to recruit new foreign investments.

Exports to Europe are down…⁸

As is apparent from the following table, Louisiana’s exports (by value) to European Union countries have dropped sharply over the past two years. During this period, exports to Latin America grew modestly, while exports to Asia also declined.

Louisiana’s Exports By Region of the World⁹
(billions of dollars)

The data on the value of Louisiana’s exports to the EU indicate some decline since 1995. Between 1995 and 1996 there was a decline of 1.4 percent, of 5.1 percent between 1996-97, and of 24.3 percent between 1997 and 1998. Among declines in the largest categories of goods which Europe imports from the state, the largest occurred in Louisiana’s exports of agricultural crops, particularly grains, falling from $2.25 billion in 1995 to $2.08 billion in 1997, and to just $1.4 billion in 1998. In fact, $700 million of the $1.1 billion decline between 1997 and 1998 was due to falling receipts, and prices, for grain exports.

Two points should be made about the data on agricultural exports from Louisiana ports. First, shipments in this category are overwhelmingly comprised of grain originating in the northern Midwest of the U.S., whereas the remaining export shipments of other products represented by the data do basically originate in Louisiana. Second, the reader should note that grain exports to Europe, by volume, fell only by two to three percent from 1997 to 1998: the precipitous fall in export values was largely driven by the decline in soybean prices during the period.

Louisiana’s Top 5 Exports to the EU¹⁰
(billions of dollars)

… but Louisiana’s Imports from the EU are Buoyant

It is very difficult to obtain data on imports at the state level.¹¹ However, import data from individual ports in Louisiana – such as the Port of New Orleans -- show that imports from the EU remain robust. For example, Port of New Orleans Operations Manager Steve Jaeger says that of the 14.4 million tons shipped through the Port in 1998, some 2.2 million tons originated in, or were destined for, European ports. The Port of New Orleans handles relatively more containerized cargo in its trade with Europe than with other regions. The port’s principal exports to Europe, Jaeger says, are industrial synthetic resins and plastic pellets. As shown in tabular form below, steel products represent the largest category of imports from Europe.

The Port of New Orleans also handles a greater proportion of general, rather than bulk, cargo than do the other Mississippi River ports in Louisiana (which are more oriented toward bulk agricultural products). Data reveal that the Port of New Orleans handles, in terms of weight, more than twice as many import shipments than export shipments on a worldwide basis. This fact points to the importance of imports to both the port and to the employment of longshoremen at the port (since tonnages of general cargo are relatively more labor intensive than for bulk cargo). The data also indicate the relatively greater importance of imports compared to exports in New Orleans' trade with Europe, albeit to a lesser extent than the port’s trade with all countries.

Louisiana imports a wide variety of European goods and commodities. During 1997, the most important categories of general cargo imported into the Port of New Orleans were as follows:

Products Short Tons

Steel, coils and strip	78,000
Steel, misc., incl. ingots	28,800
Steel, plate and strip	21,000
Steel wire rods	17,700
Zinc, ingots and slab	17,100
Steel, iron and pipes	12,400
Copper anodes	9,613
Beer and Ale	4,900
Ceramic and mosaic tiles	4,200

Source: Port of New Orleans

Larry Collins, Director of International Trade at the Louisiana Department of Economic Development (DED), says "While the economic development community devotes most of its time to promoting exports, it should be noted that imports shipped into Louisiana’s ports create jobs and businesses which are vital to the community."

The director of the DED’s New Orleans office, Whitey Lagasse, leads a delegation of Louisiana firms each year to the "Business Connections" trade fair in Warrington, England. The Louisiana companies use their exposure in Warrington to launch products in the UK and as a springboard for entering the entire EU market.

EUROPEANS SUPPLY A LARGE SHARE OF LOUISIANA’S INTERNATIONAL TOURISTS

Europeans have a natural disposition to visit Louisiana. They generally regard New Orleans as the "most European" of American cities and rank the city along with New York and San Francisco as their preferred U.S. tourism destinations. With the observance of "Franco Fete" this year (the tri-centennial of French influence in Louisiana), the number of European tourists – especially French – is experiencing a significant fillip. In addition, large numbers of immigrants from France, Italy, Germany, Spain, England, Greece, and Portugal long ago settled in the state, the most famous, of course, the Acadians (or "Cajuns") in southwestern Louisiana. Using the most reliable data at our disposal (from the U.S. Department of Commerce Travel and Tourism Administration), we find that just three EU countries (Germany, the UK, and France) supplied an estimated 165,000 tourists to Louisiana in 1997, many more than the 105,000 tourists that came from Canada, and roughly one-half of all foreign tourists. The Commerce Department data on Latin American tourists is considered to be unreliable, but the number of such tourists is thought unlikely to approach the number of those arriving from Europe.

What economic impact does this generate? First, since they are foreigners’ payments for services, they enter national income accounts very much like exports, i.e., as sales, and as contributions to Louisiana’s and to the U.S. balance of trade. Let’s try to estimate this impact.

To estimate the economic impact of European tourism to the state, we can make three reasonable assumptions which are supported by the findings of a recent study¹³ on international tourism. First, assume that Europeans make up roughly one-half of all international tourists Louisiana receives, and second, that European tourists and conventioneers spend as much time in Louisiana as do tourists from other parts of the world (the cited study indicates they normally stay a bit longer). Third, assume that European tourists spend an average of $300 per day in the state. If these assumptions are valid, then European tourists and conventioneers spend upwards of $500 million in Louisiana each year. These flows result in the following yearly indirect payments from Europe to the state authorities:

$ 22 million in hotel-motel tax

$ 40 million in sales taxes at eating and drinking establishments

$ 21 million in sales taxes related to the Morial Convention Center

$ 89 million total

Data published by the Louisiana Tax Free Shopping Program¹⁴ likewise show the importance of European tourism to Louisiana. However, since these data do not include sales of services like lodging to tourists, the data understate the relative total economic impact of European tourism to the state.¹⁵

Interestingly, recent data¹⁶ indicates that Europeans are more likely to come to New Orleans on business or to attend conventions, and are more likely to rent cars here, than are visitors from other regions. Nonetheless, it would be a mistake to take for granted Europeans’ fondness for Louisiana. A good many Europeans polled in the survey said they would not return to Louisiana because it is "too expensive" or because of their perceptions and concerns about crime and personal safety.¹⁷

THE ADVENT OF THE EURO AND ITS IMPLICATIONS FOR LOUISIANA AND THE U.S.

On January 1, 1999, 11 of the 15 EU member countries launched a single EU currency called the "euro." They have agreed to phase out their individual national currencies, replacing them with the euro as their common currency. These 11 EU members adopting the euro are the following member states of the EMU (the European Monetary Union): Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. The four EU states that have not yet joined the EMU are Greece, Denmark, Sweden, and the UK. The euro will be used only as an accounting unit until January 1, 2002, when it will be available in bills and coins. Until that date, it is possible to transact in either the euro or national EMU currencies. However, after January 1, 2002, it will no longer be possible to use those national currencies.

Until the national EMU currencies disappear in 2002, their value vis-a-vis the euro will continue to be fixed. However, the value of the euro floats vis-a-vis other currencies. Consequently, American companies will need to monitor the course of the euro and take measures to avoid currency risk, very much as they do today when doing business in other foreign currencies.

The leaders of the European Union believe the euro will help accelerate the economies of their countries and the region as a whole by bringing disparate geographic EU markets closer together and by reducing the costs of transacting trade. Both of these factors, most economists believe, will lead to a reduction of costs and prices and an increase in commercial competition in the EU. Experts believe that the euro’s economic benefits will spill over to the U.S. and beyond by increasing the EU’s wealth – and thus the EU’s imports from the rest of the world – and by spurring competitiveness outside Europe.

The advent of the euro will offer some clear advantages over the current multiple-currency regime. To explore in detail these advantages and to examine other aspects of the euro, the Louisiana chapter of the French-American Chamber of Commerce invited the Trade Commissioner of the French Embassy in the United States, Mr. Pierre Lepetit, to discuss the implications of the euro at a luncheon gathering at the World Trade Center of New Orleans, on February 9, 1999.¹⁸ Mr. Lepetit described the new EMU currency’s benefits essentially as follows:

• First, the euro eliminates the need to exchange currencies among EMU member countries.

• Second, since all prices in EMU states are now expressed in the same currency, pricing in the various EMU national markets is becoming more transparent and convergent.

• Third, as a result of this convergence, the EU market will consolidate further and this will sharpen both efficiency and competition in Europe and give rise to new economies of scale and a faster rate of economic growth.

• Fourth, as a result of this new competitiveness and productivity in Europe and a consequent increase in incomes there, American companies – and exporters here in Louisiana – will be rewarded with new market opportunities.

Of course, it may take a few years before American companies realize the full benefit of the euro. Over the shorter term, U.S. companies may need to change some of their existing commercial practices. For example, companies may want to change their modes of pricing, financing, invoicing, packaging, and shipping of their goods to the EU market as a result of the euro.

The success of the euro is by no means automatically assured. The biggest danger to strength and stability of the euro would arise if individual EMU member states experienced significant sustained budget deficits. To avert this problem, EMU governments have adopted limits on member states’ maximum-allowed public debt and yearly government deficits. These rules stipulate that member-governments shall not possess a public debt greater than 60% of GDP, or an annual public deficit exceeding 3% of GDP. However, with their ability to run deficits constrained, and bereft of a national currency to manipulate (e.g., to devalue to spur exports and stem imports), countries lose two traditional tools to stimulate their economies out of recessions.

Nonetheless, most economists believe the euro will remain a fairly strong currency, notwithstanding the euro’s decline from its initial January 1, 1999 value of $1.17, to $1.02 in early July 1999. These economists discount the eventuality of profligate spending at the national level. Further, they are confident that the benefits of a common currency and monetary policy will more than offset the disadvantages of having to abandon national currencies and individual monetary policies. They argue that European countries have in the past repeatedly abused devaluation and deficit spending as methods to circumvent undertaking painful economic reforms. The current conventional wisdom predicts the euro is likely to benefit foreign economies; as the EU grows stronger with the euro, U.S. and Louisiana firms are also able to profit.

U.S. - EU TRADE FRICTIONS

The Banana Dispute

With so many points of contact between the U.S. and the EU, some chafing understandably does occur, particularly at junctures where competitive rivalries exist. Speaking at an April 29, 1999 luncheon program at the World Trade Center of New Orleans, the French Ambassador to the United States, Mr. François Bujon de l'Estang¹⁹, explained the contours of U.S.-EU trade disputes as follows: "Having different interests is legitimate, and sometimes even healthy and stimulating. Differences are part of life. Europe and the United States can be and in fact often are competitors. That’s fine. But competition shouldn’t be unfair. It should be organized. In the area of trade, the World Trade Organization is there to settle disputes. It sets the rules of the game and reaches decisions based on those rules."

One recent dispute – though apparently well on its way toward resolution – concerns the EU’s discriminatory treatment of imported bananas produced in Central America by U.S. companies. The roots of this dispute are deep and longstanding. Over the past century the U.S. and European banana industries developed distinctly different geographic supply and distribution areas. U.S. banana companies have supplied the U.S. market from Central America, while European companies have supplied their home market from former colonies in the Caribbean and Africa. The two industries rarely competed. To protect their home market, EU companies convinced the EU Commission to erect and maintain preferential import arrangements in favor of bananas produced in the Caribbean and Africa. Meanwhile, U.S. companies – keen on expanding their sales of Central American bananas to Europe – unsuccessfully petitioned the EU Commission repeatedly to drop its preferential banana import arrangements.

Taking up the cause of U.S. companies in 1993, the U.S. government, to no avail, beseeched the EU to end these preferences. In response to a U.S. complaint, the World Trade Organization (then the "GATT") ruled in both 1993 and 1994 that the EU’s preferential rules in banana rules were GATT-inconsistent. Then, in 1997 and 1998, a WTO dispute settlement panel, and then the WTO’s Appellate Body, also found the banana regime in violation of WTO rules. In April 1999, WTO arbitrators ruled that the EU’s treatment of Central American bananas had caused over $190 million in damages to the U.S. banana industry (the U.S. had claimed damages in the amount of $500 million). In response to the WTO ruling, President Clinton directed the U.S. Customs Service to begin assessing 100 percent ad valorem customs duties on a wide range of items imported from the EU, effective retroactively to March 3, 1999. In addition, the EU agreed in April 1999 to amend its banana import regime and is now considering how to do this. The list of items issued by U.S. Customs is as follows:

• Bath preparations, other than bath salts;
• Handbags, with or without shoulder straps or without handles, with outer surface of sheeting of plastics;
• Articles of a kind normally carried in the pocket or handbag, with outer surface of reinforced or laminated plastics
• Uncoated felt paper and paperboard in rolls or sheets
• Folding cartons, boxes, and cases of noncorrugated paper or paperboard
• Lithographs on paper or paperboard, not over 0.51 mm in thickness, printed not over 20 years at time of importation
• Bed linen, not knit or crochet, printed, of cotton, not containing any embroidery, lace, braid, edging, trimming,
• piping or applique work, not napped
• Lead-acid storage batteries other than of a kind used for starting piston engines or as the primary source of power for electric vehicles
• Electrothermic coffee or tea makers, for domestic purposes (except Italy)

As can be seen from this rather arcane list, trade disputes can indeed lead to unforeseen results which have no relation to the products involved in the actual dispute. For this reason. all Louisiana importers of products from Europe need to continually monitor U.S.-EU trade disputes because they might have a direct impact on their business.

U.S. Beef and Other Potential Problem Areas

A similar trade problem between the U.S. and the EU involving U.S. beef exports continues to simmer. However, this case is potentially more important to both parties since the U.S. is charging that U.S. industry has suffered over $900 million in damages. By way of background, in 1989 the EU imposed a ban on imports of animals and beef treated with hormones. U.S. beef products typically contain hormones, which are added to promote animals’ growth. The U.S. government responded to the EU ban by suspending trade concessions to the EU worth about $100 million, which were later lifted while alternate means of resolving the dispute were sought. In 1997, the WTO found that the EU ban was not based on scientific evidence, risk assessments, or international standards. And in 1998 the WTO Appellate Body found that the EU restrictions were not consistent with the EU’s obligations, and the EU was directed to come into compliance with the WTO ruling by May 13, 1999. As in the dispute over bananas, the U.S. government is hopeful that the EU will accept its obligations before the U.S. is compelled to apply sanctions, although in late-April 1999 the EU suspended imports of supposed non-hormone treated U.S. beef allegedly because trace residues of hormones were found.

There also are a number of other current irritants in U.S.-EU trade relations that, if not worked out, could led to lead to rancor and the menace of further trade sanctions. For example, consumers in EU member states are generally less likely to buy genetically altered foods or food products made from genetically altered foods (e.g., grains). EU resistance to imports of such foods could lead to serious conflicts in the years ahead as the U.S. produces ever greater quantities and varieties of genetically altered crops.

In another example, EU states for reasons of noise pollution are moving to terminate landings at EU airports of airliners outfitted with sound-absorbing "hush kits". The EU says that airlines should buy newer, quieter planes. The U.S. argues that this EU initiative discriminates against the U.S. since: (1) the noisy supersonic Concorde jet (operated only by Air France and British Airways) is allowed to land in Europe; (2) a disproportionately large number of U.S. airliners are equipped with hush-kits; and (3) all hush-kits are made in the U.S.. In retaliation, the U.S. government has threatened to deny the Concorde landing rights in the U.S..

Another potential area of economic dispute to monitor the next five to ten years involves telecommunications. For example, the U.S. has urged the EU to remain open to emerging internationally-recognized standards for mobile telecommunications equipment, and to not move precipitately – as the EU did in adopting the GSM technology standard in cellular telephony – to adopt a single exclusive technology. Another potential dispute in the high-tech arena, is the EU position that there should be added multilateral control over the Internet. The U.S. disagrees with this approach and generally favors less, rather than more, regulation of the Internet.

For its part, the EU has complained to the WTO about two separate provisions in U.S. trade law. First, it has condemned what it deems is the "extra-territorial application" of U.S. law contained in a portion of the Helms-Burton anti-Castro law that makes EU companies liable to sanctions under U.S. law as a result of those companies’ activities in Cuba. Second, the EU has also complained of the "unilateral" nature of Section 301 of the U.S. 1974 Trade Law which allows the U.S. government to take action against trading partners without the sanction of the WTO.

HOW LOCAL BUSINESSES VIEW LOUISIANA-EU PROSPECTS

Local executives are uniformly bullish over prospects for Louisiana-EU trade, investment, and tourism. Glenn Stoudt, president of the New Orleans export office of Rochester Midland Corporation (a manufacturer of industrial cleaning products), believes there is enormous potential for sales of his products in the EU, and in the new market economies of central and eastern Europe as well. Stoudt cautions, however, that U.S. companies need to stay current on the many health and environmental regulations promulgated in the EU, and to tailor products to the varying tastes and cultures of the individual EU countries.

Marwan Kabbani, vice president of Baumer Foods, is likewise optimistic on prospects for the EU. However, food producers exporting to EU countries, he notes, will have to take increasing care to ship with distinct product labeling for each national market.

The managing director of the Doubletree Hotel in New Orleans, Robert "Tico" Bevier, says he expects Europeans to continue to tour the state in greater numbers during the years ahead.

Robert Chamberlin, Whitney National Bank’s chief of international banking, believes that the EU countries will maintain a high demand for Louisiana products. Chamberlin cautions, however, that the recent wave of mergers and acquisitions in the EU market will make EU companies more competitive, and thus U.S. companies will have to maintain their research and development and cost-pruning efforts.

Michael Conwell, Hibernia Bank’s international banking manager, agrees that the EU market is likely to remain strong, though he sees spot weaknesses in pockets of the EU, such as the UK. He notes that local companies with niche products in the service and technology areas are currently expanding sales to Europe.

William Cummins, BankOne’s international banking chief, sees EU companies showing great interest in investing in the U.S. market. He also notes that EU importers are demonstrating a growing interest in doing business in Europe and suggests that Louisiana exporters will need to familiarize themselves with the exchange risks and other facets of dealing in a currency other than the U.S. dollar.

Several organizations focus on promoting trade and investment between Europe and Louisiana. The most active is the French-American Chamber of Commerce-Louisiana chapter (FACC/LA), which is one of the fastest growing chapters of the French-American Chamber of Commerce in the United States. Another organization that promotes trade with Europe is the Europe/Louisiana Business Council ("ELBC"), a confederation of all Louisiana business groups which promote business ties with Europe. The ELBC can be contacted through the fulltime executive director of the FACC/LA, who serves as its coordinator.

CONCLUSIONS

On balance, both the current state of Louisiana-EU economic relations and the prognosis for future relations are generally healthy and robust. There is every indication that Louisiana’s exports to the EU will increase with rising incomes throughout Europe. Imports from the EU through Louisiana’s ports, always strong, will remain so as long as overall U.S. import demand remains heavy. Tourism from Europe will likely continue to be vigorous into the 2000’s. Investment from Europe continues to grow, albeit perhaps at a rate lower than rates achieved in some other Southern states. Once largely limited to investments in hydrocarbons, EU investments in Louisiana have begun to branch out into new areas and opportunities and need to diversify still more in the future.

It bears remembering that no U.S. state’s economic ties with EU countries are immune to general U.S.-EU trade disputes. As illustrated above with the banana dispute, such controversies can disrupt trade in a range of products not directly related to the dispute itself. Though unlikely at the moment, there always exists the possibility that a trade dispute could blossom into a full-blown trade war involving scores or even hundreds of commodities and a dramatic fall in bilateral trade and, beyond that, in world trade. The disruptive effects of the recent banana dispute, still relatively small in magnitude, are expected to disappear once the EU has corrected its banana import regime. Nonetheless, other disputes – such as the EU ban on imports of U.S. beef treated with hormones – could wreak much greater damage on bilateral trade if not contained by the parties. Thus, it behooves Louisiana businesses to remain alert to developments in U.S.-EU trade disputes and to maintain trade in a wide variety of product areas if they can.

To a large degree, more extensive and complex economic ties will come about through better information becoming available about opportunities in the respective regions. Fortunately, the flow of information and people continues unimpeded between Louisiana and the countries of the EU. Europeans continue to flock to Louisiana for both business and pleasure and, conversely, Louisianans to Europe. The advent of the Internet and other fast, multi-dimensional communications media will serve to speed productive communications and economic interaction. Similarly, the appearance of the euro is likely to have an effect akin to that of the Internet, since it should help speed and streamline trade, in addition to its expected role in spurring EU income growth.