APPENDIX 12
Memorandum from British Trade International
INTRODUCTION
British Trade International, established in
May 1999, brings together the work of the DTI and FCO on trade
development and the promotion of inward investment. It delivers
services through its two operating arms, Trade Partners UK (TPUK)
which is responsible for trade development and promotion, and
Invest UK (INUK), formerly the Invest in Britain Bureau, which
aims to attract, retain and add value to overseas investment in
the UK. As part of its enquiry, the Committee has indicated that
it wishes to consider "the adequacy and effectiveness of
the representation of the UK's commercial interests in the US".
As British Trade International is responsible for the commercial
and inward investment work of embassies and other diplomatic posts,
the Committee may find it helpful to have a separate memorandum
on this issue.
Trade policy issues relevant to the USA are
the responsibility of the Trade Policy Directorate in the DTI
and are not addressed in this document.
THE US MARKET
The USA is the largest export market for British
goods and services, and has consistently been the largest single
investor in the UK. It is home to approximately four per cent
of the World's population, 275 million people and comprises 50
states and one federal district covering six time zones.
The US/UK trade statistics can be separated
into two different sets of figures, goods and services.
The UK exported goods worth £29.1 billion
in 2000 (20.1 per cent up on 1999), giving us a 3.8 per cent share
of the total US import market worth in excess of $1,314 billion.
The US imports of services from the UK in 2000
totalled $26.8 billion, giving the UK just over 12 per cent of
the US services import market or about 25 per cent of the UK's
total earnings on services overseas.
In return, the UK imported £28.5 billion
worth of goods (2000) and £10.9 billion worth of services
(1999) from the US. [2000 figures for services not yet available]
This means that the UK is placed sixth in the
US import table behind Canada, Japan, Mexico, China and Germany.
Conversely the UK is the fourth largest export market for the
US.
The balance of visible trade has narrowed and
now stands at £1 billion yearly in the US's favour (UK figures
as at May 2001).
Foreign direct investment by UK companies in
the US continues to grow significantly and totalled $229.8 billion
in 2000 (historic cost). This is twenty times larger that UK investment
in Germany, our second largest export market.
There has been a real slow down in GDP growth
in the US over the last year with the annual growth rate for Q2
2001 dropping to 0.2 per cent (showing a further drop from Q1
2001 when it was running at 1.3 per cent). These figures compare
with growth rates of 2.3 per cent in Q1 2000 and 5.7 per cent
in Q2 2000. Whilst this has major implications for both export
and inward investment performance, the mood remains cautious but
optimistic. Consumer spending remains solid but there are signs
of weakness around the edges.
The USA is the leading source of inward investment
for the UK. As in previous years, Invest UK results for 2000/2001
showed that nearly 50 per cent of all foreign investment projects
recorded were from the USA (421 out of a total of 869), ahead
of Germany (71 projects), Canada (56 projects) and Japan (51 projects).
Latest ONS data shows that the stock of US investment in the UK
continues to grow and was at £90.1bn in 1999—40 per
cent of all UK stock inward investment. The US Department of Commerce's
latest statistics show that the UK has 41 per cent of all US investment
in Europe—double that of its nearest rival, The Netherlands.
Invest.UK's market priorities reflect the emphasis
in the last two Government Competitiveness White Papers on developing
high value, knowledge driven business. Inward investment resources
are targeted at the software, IT, telecoms, electronics, e-business,
automotive, lifesciences and financial service sectors which are
the source of most projects handled.
THE BRITISH
TRADE INTERNATIONAL
TEAMS IN
THE US
The size and importance of the USA as an export
market and as a source of inward investment are reflected in the
resources attached to our teams there. These are managed from
New York by the Director-General, Trade & Investment with
a Director, Trade USA and a Director, Investment USA reporting
directly to him. The different objectives of TPUK and Invest.UK
mean that we operate through two discrete networks to deliver
our objectives and work with our different target audiences; however,
the two teams work together on major areas of mutual interest.
(a) Trade Partners UK
The 117 staff working full or part time for
TPUK in 14 offices in the USA represent the organisation's largest
overseas commercial team. These offices are located in New York,
Washington, Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles,
Miami, San Juan, San Francisco and Seattle and (most recently
opened) Denver and Phoenix. The commercial teams in most posts
are led by a UK commercial manager. Locally engaged officers,
predominately US nationals and known as Trade Officers, are recruited
for their industry and local knowledge on three-year contracts.
There are 34 full time trade officers including sector specialists.
Since the 1999 inspection, US Posts have significantly increased
salaries for local staff to help the Consulates compete in the
very competitive recruitment market and to motivate existing staff.
The US team works in close co-operation with
the North America Unit in Trade Partners UK in London (17 staff
with US responsibilities working on a sectoral basis plus three
Export Promoters (businessmen on secondment). Further support
for the network in the US comes from the activities of Business
Group in Trade Partners UK which leads on global sectoral strategies.
(b) Invest.UK
Invest.UK also has its largest overseas presence
in the USA with seven Regional Inward Investment Teams (RIITs)
based in Consulates around the US, headed by a UK Consul Investment.
There are 36 staff with full-time inward investment responsibility
in the USA. The Consuls-General play an important role in pursuing
TPUK and Invest.UK objectives with the major companies and key
figures in the US. Invest.UK teams in the US comprise FCO, DTI
and locally engaged staff together with secondees from the private
sector who over recent years have had specialist knowledge in
banking, law, accountancy, audit and telecoms technology.
The Americas Team, of Invest.UK in London has
17 staff and two telecoms technology consultants. It works closely
with DTI sector directorates, development agencies in England,
Wales, Scotland and Northern Ireland, Departments of Health, Treasury
and specialists in human resources, telecommunications, tax and
property to ensure that specific requirements of overseas clients
are properly understood and met.
(c) Joint Activities
The London staff of TPUK and Invest.UK work
with the North America Department of the FCO to support the Minister
for International Trade and Investment who also has specific responsibility
for North America.
Since Invest UK became part of British Trade
International there has been increasing co-operation between the
Trade Partners UK and Invest.UK teams with joint visits and activities
where appropriate.
The UK and Overseas Teams liaise closely with
DTI, FCO and other Government Departments, to identify and exploit
opportunities for the UK. They also have close links with the
UK's Regional Development Agencies and Devolved Administrations
and seek to work closely with them to deliver the objectives in
their regional international trade and economic development strategies,
all of which identify the UK as a key market for their organisations
and companies. In many cases the Agencies and Administrations
have their own offices in the US, offering opportunities for collaboration
in the market with the British Trade International teams.
SPECIFIC SERVICES/ACTIVITIES
(a) TPUK
Emphasis in TPUK is increasingly on developing
companies' skills to tackle the US market so that they can compete
effectively on a long-term basis. The full range of traditional
TPUK services are available including tailored market reports,
production of New Products from Britain stores and assistance
with finding agents and distributors. Exporters are encouraged
to segment the target to tackle eg the East Coast or the Pacific
North West in distinct chunks, not to try to cover the whole market
in one go.
In 2000, the UK network provided 253 reports
for UK companies. 1,360 companies attended 74 trade fairs in the
USA with SESA[125]
and Trade Officer support, and 320 firms went to the US under
the Outward Missions scheme. Over 30 per cent of those companies
were visiting or exhibiting in the US for the first time. Additionally,
New York, where all publicity material for US purposes is written,
has been the flagship for TPUK overseas by going fully electronic
from the start of 2001. There is a dedicated web-site for the
US media and business customers at www.tradepartnersuk-usa.com
where all forms of promotion/publicity are available.
A number of services and activities have been
developed specifically for the US market, including:
— Export USA—an innovative approach
to government export help which provides a package of assistance
for a flat fee of £1,000 based around the key role of a mentor
(trade officer at Post) providing ongoing assistance over six
to twelve months. Training in marketing skills needed in the North
American market is a key feature. Over 160 companies have been
involved in the programme so far.
— Tailored seminars and events to promote
particular sectors or skills needed in the market. A course on
Internet Marketing in North America stressing the importance of
a good and current web-site for the North American market has
been run over 50 times around the UK. Seminars on exhibiting effectively
at US trade shows have been equally well received.
— In conjunction with a generous private
sector sponsor, the North America Unit of TPUK working with the
British Consulate-General in Chicago has organised marketing scholarships
at the prestigious Kellogg Business School at North Western University
in Illinois. An Alumni Association of past scholars has recently
been established.
— Pilot trade development packages
are being developed by the North America Unit involving DTI sector
directorates, the regions, Posts and our Export Promoters. The
packages concentrate on developing exporters' skills to tackle
the US and include a managed group visit to the market, to learn
and make key contacts. High performance engineering, IT, beer
and bridal wear are examples of sectors where this work is being
developed.
(b) Invest UK
Invest UK's main activity in the US is to identify
potential inward investment projects. Invest UK teams then provide
the UK options for those projects with the aim of winning for
them for the UK.
With around 6,000 US firms located in the UK,
there is a very large task to be undertaken of developing relationships
with them to develop their businesses to exploit opportunities
for expansion and counter threats of rationalisation and contraction.
Invest.UK co-ordinates an International Investor Development Programme
with partners in the UK and US, but because of resource limitations
this effort is modest in relation to its target audience.
One of the objectives of the Opportunity For
All White Paper[126]
was to pilot a scheme to attract global entrepreneurs in high-tech
sectors to invest in the UK. Invest.UK is taking this forward
in the US and Canada. If successful, the three-year pilot will
be extended to other markets.
Invest.UK has its own usa-site at www.investuk-usa.com
and more general information is available on www.britainusa.com.
(c) Other Joint Activities
Nine ministerial trade visits have taken place
in the last 12 months with strong input from Posts to support
the UK's trade and investment opportunities with the US.
A recent introduction to the US network has
been a group of four Sector Specialists with the specific remit
of working to develop the national knowledge base and contacts
within one particular sector and to use that information to support
the work of both Invest.UK and Trade Partners UK. The specialists
also work with and support the network of six International Technology
Promoters (ITPs) for the US. The Sector Specialists have been
in existence for over a year and cover the following four sectors:
Lifesciences, IT, Film and Automotive. Oil and Gas is also covered
by a special arrangement. The specialists use their expertise
to help others develop and enhance their work. The Lifesciences
Sector Specialist has worked particularly well with the ITP for
Lifesciences, the relevant trade officer, the North America Unit
in London, Invest.UK and the DTI Sector Directorate on a major
event in San Diego last June, BIO 2001. Chemicals Directorate,
in liaison with Invest.UK, have also part funded a Chemicals Specialist
based in the Midwest who is using his experience to attract high
value chemicals projects to the UK.
The ITPs are managed by the Innovation Service
in DTI. Their specific remit is to promote inward technology transfer
into the UK, but in the course of their work they make contacts
which are of considerable value to both parts of British Trade
International. We work in partnership with them for mutual benefit.
The network of ITPs for North America has recently increased from
two to six and work is already in hand to brief new recruits and
identify ways to work together even more. The network of ITPs
for North America has recently increased from three to six covering
life sciences (two), optoelectronics, digital content, energy
and sustainable technologies, and manufacturing industries.
BTI also works with the FCO's US S&T network,
which is charged inter alia with ensuring that UK industry has
access to the best of US innovation and technology. The S&T
network does this by: acting as the US portal for International
Technology promoters and for technology missions (8-10 a year);
promoting links between US science and technology provides and
uses; and promoting research collaboration to benefit the UK science
base.
The FCO has recently made a major commitment
to strengthen the network's technology transfer work by adding
eight new posts in Boston, San Francisco, Houston and Los Angeles,
in addition to the existing S&T unit (five staff) in the British
Embassy in Washington.
Invest.UK and TPUK participate in a large number
of business events and trade shows in the US, working closely
on major events in targeted sectors to win business for the UK.
SUCCESS STORIES
The Committee may wish to note just a few examples
of successful BTI activity in support of trade development or
inward investment. Further examples can be provided if the Committee
wishes.
(a) Premier Hydraulics enrolled on the inaugural
round of the Export USA programme in December 1998, which provides
a package of assistance based on mentoring by US Posts and marketing
training. Since then, it has been building on its initial success
in the market. The company produces state of the art products
for the aerospace and related industries and is responsible for
the design and manufacture of a revolutionary type of vacuum hose
for autoclaves known as "Vortex", which now boasts Millennium
Products status. The USA is undoubtedly a key market for Premier,
and the company provides an excellent illustration of how Export
USA helped them to break into the US market.
(b) The Halcrow Group Ltd has recently won
the contract for the £2.8 million Comprehensive Port Improvement
Plan (CPIP) for New York and New Jersey. This came about because
of contact with Trade Partners UK in the UK and more particularly
with the British Trade Office in New York, building on a tailored
market report which was commissioned in September 1999 and was
followed up by the trade officer concerned with Halcrow and US
contacts.
Jointly funded by state, federal and city agencies,
the project aims to develop an economically viable and environmentally
sustainable plan for the development of the Port of New York and
New Jersey and associated inland transport infrastructure over
the next few decades. Halcrow staff in the UK and a joint Halcrow
led UK/US team in New York will carry out the work over the next
three years.
(c) Invest.UK
Invest.UK's Annual Review of 2000-01 records
and analyses the total of successful investment decisions made
in favour of the UK, highlighting some of the key projects won.
Invest UK's teams in the US and London were involved in approximately
35 per cent of the 421 decisions made by US companies. One example,
the largest in job terms, was the Arizona-based PC distributor
and software group, Insight Enterprises, which approached Invest.UK
to discuss the UK as a possible location for the company's European
Headquarters. After receiving detailed information, numerous visits
and meetings, Insight's management elected to locate their £83.5
million investment to Sheffield. The project, upon completion,
will employ 1,757 people, 735 of which will be highly skilled
software developers and programmers.
British Trade International
September 2001
125 Sponsored Exhibitions and Seminars Abroad scheme,
which provides support to UK companies to exhibit at overseas
trade fairs seminars and exhibitions. Back
126
Opportunity for All in a World of Change, Cm 5052. Back
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