New EU opportunities open up

THE expansion of the European Union to include several countries from Central Europe from May will  open potential new markets for Western Australian exporters, according to the Australian Trade Commission.

On May 1, former communist block countries Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary and Slovenia will be included in the EU, making the new expanded Europe the world’s largest trading bloc.

The EU’s population will increase from 378 million to more than 455 million, in the process creating a consumer market larger than Japan, Canada and the US combined.

Austrade’s business development manager Warsaw (Poland), Bozena Swierbutowicz, said there had been major changes in each of the eight countries awaiting EU membership, including rapid rises in privatisation, competition and the development of a new, dynamic market-driven economy.

“As a requirement of EU accession, these countries have been forced to undertake radical changes to their social, legal, regulatory and economic frameworks,” Ms Swierbutowicz said.

“They are looking for new technologies and new systems, not just to comply with set regulations, but also to become internationally competitive.

“Opportunities for Australian companies are across the spectrum of industries; in food, wine and consumer goods, IT, education, tourism and technology products.”

Ms Swierbutowicz is currently in Australia to drum up interest from companies in Central Europe for an Australia-led trade mission to Poland and the Czech Republic.

She will be in Perth on February 11 and 12 to meet with and advise Western Australian companies on how to compete for business in the new EU.

Austrade’s chief economist Tim Harcourt, who will visit Central Europe later in the year to complete a study on the new member countries and the implications for Australian exporters, said Central European economies had gone through an enormous transition in business development.

“The previously state-owned enterprises suddenly had to respond to price signals and had to deal with openness and transparency and had to understand marketing and consumer behaviour,” Mr Harcourt said.

While this adjustment was difficult, many Central European economies avoided the “short, sharp, shock” treatment experienced by Russia, which caused “notorious corporate governance difficulties and sharp inequalities in wealth”.

“Although there are variances for different countries, according to the Economist Intelligence Unit, this year’s GDP is expected to grow on average by over 4.5 per cent per year across the region,” Mr Harcourt said.

Estimated at more than $US34 billion in 2002, foreign investment in the region is forecast to reach $US40 billion in 2004, he said.

“In fact, progress in these countries, in only their second decade of transition towards a market economy, has occurred at a rate of change that has far exceeded the expectations of economic commentators, governments and multilateral lending institutions,” Mr Harcourt said.

Austrade’s WA State manager Jennifer Mathews said the organisation was working with many new and existing exporters to match them to opportunities in the region.

“We [Austrade in WA] have a number of new exporters that fall into those categories [mentioned by Ms Swierbutowicz]. In particular in food, wine, e-commerce and niche IT companies,” she said.

“We have some good small companies with some innovative environmental technologies and solutions, which would be useful to these economies as they develop.”

Ms Mathews said WA-based company Nannup Timber Processing – a participant in Austrade’s New Exporter Development program – had recently secured a small contract to supply jarrah timber flooring to Hungary.

Ms Swierbutowicz said success in Central Europe would be facilitated through local presence and partnerships with local companies.

But developing partnerships and opportunities would take time and patience, she said.