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U.S. Department of State
United Kingdom Country Commercial Guide
Office of the Coordinator for Business Affairs


                         COUNTRY COMMERCIAL GUIDE

                              UNITED KINGDOM

                                JUNE 1995



                         CONTENTS

SECTION I    EXECUTIVE SUMMARY

SECTION II   ECONOMIC TRENDS
  -  Major Trends and Outlook
  -  Principal Growth Sectors (host-country perspective)
  -  Government Role in the Economy
  -  Balance of Payments Situation
  -  Infrastructure Situation

SECTION III  POLITICAL ENVIRONMENT
  -  Nature of Political Relationship with the U.S. 
  -  Major political issues affecting business climate
  -  Brief synopsis of political system - schedule for election and 
orientation of major political parties.  

SECTION IV  MARKETING U.S. PRODUCTS & SERVICES
  -  Distribution & Sales Channels
  -  Use of Agents & Distributors; Finding a Partner
  -  Franchising
  -  Direct Marketing
  -  Joint Ventures/Licensing
  -  Steps to Establishing an Office
  -  Selling Factors/Techniques
  -  Advertising & Trade Promotion
  -  Pricing Product
  -  Sales Service/Customer Support
  -  Selling to the Government
  -  Protecting your Product from IPR Infringement
  -  Need for a Local Attorney
  -  The "Showcase Europe" Initiative.

SECTION V - LEADING SECTORS FOR U.S. EXPORTS & INVESTMENT
  -  Best Prospects for Non-Agricultural Goods & Services
  -  Best Prospects for Agricultural Products

SECTION VI TRADE REGULATIONS & STANDARDS
  -  Trade Barriers, including tariffs, non-tariff barriers and import 
       taxes
  -  Customs Valuation
  -  Import Licenses
  -  Export Controls
  -  Import/Export Documentation
  -  Temporary Entry
  -  Labeling, Marking Requirements
  -  Prohibited Imports
  -  Standards (e.g. ISO 9000 Usage)
  -  Free Trade Zones/Warehouses
  -  Special Import Provisions
  -  Membership in Free Trade Arrangement

SECTION VII INVESTMENT CLIMATE STATEMENT
A1.  -  Openness to Foreign Investment (including information on 
          investment barriers)  
A2.  -  Conversion & Transfer Policies
A3.  -  Expropriation and Compensation
A4.  -  Dispute Settlement
A5.  -  Performance Requirements/Incentives
A6.  -  Right to Private Ownership and Establishment
A7.  -  Protection of Property Rights 
A8.  -  Regulatory System: Laws and Procedures
A9.  -  Efficient Capital Markets and Portfolio Investment  
A10.  -  Political Violence
B)  -  Bi-Lateral Investment Agreements
C)  -  OPIC & Other Investment Insurance Programs
D)  -  Labor
E)  -  Foreign Trade Zones/Free Ports 
F)  -  Capital Outflow Policy (Do not repeat Ch. IV. info)
G)  -  Foreign Direct Investment Statistics 
H)  -  Major Foreign Investors
I)  -  Opportunities in Northern Ireland.

SECTION VIII TRADE & PROJECT FINANCING
  -  Brief Description of Banking System
  -  Foreign Exchange Controls Affecting Trading (as opposed to 
       investment)
  -  General Financing Availability
  -  How to Finance Exports / Methods of Payment
  -  Types of Available Export Financing and Insurance (including bi-
       lateral)
  -  Project Financing Available
  -  List of Banks with Correspondent U.S. Banking Arrangements

IX BUSINESS TRAVEL
  -  Business Customs
  -  Travel Advisory and Visas
  -  Holidays
  -  Business Infrastructure

IX  ADDENDICES:
  A)  Country Data  
  B)  Domestic Economy
  C)  Trade
  D)  Investment Statistics
  E)  U.S. & Country Contacts
  F)  Market Research
  G)  Trade Event Schedule




This Country Commercial Guide (CCG) presents a comprehensive look at the 
United Kingdom's commercial environment through economic, political and 
market analyses.

The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annually at U.S. Embassies 
through the combined efforts of several U.S. government agencies.



I.  EXECUTIVE SUMMARY

Political stability, low rates of direct taxation, assured property 
rights, a flexible labor market, first-class financial markets and a 
geographic location in close proximity to the continental European 
markets make the United Kingdom especially attractive to  U.S. exporters 
and investors.  Entry into the market by U.S. firms is greatly 
facilitated by a common language, legal heritage and similar business 
institutions and practices.  

For the last decade and a half the UK  government has striven to expose 
the economy to the invigorating influence of market forces and to 
encourage freer movement of capital and labor.  It has pursued a policy 
to reduce the role of the state in the economy, cut public spending, and 
to revive UK industry.  Specific measures taken include; tax reform, 
abolition of capital controls, privatization of national industries, 
deregulation of financial services, telecommunications and 
transportation, and labor law reform.  These steps have generated 
significant structural changes in the economy and increased its 
efficiency.  

As a result, the United Kingdom has entered a period of sustained, if 
modest, economic expansion with a leaner, more competitive business 
sector.
   
The UK's government perceives its primary role as developing a stable 
macroeconomic environment, with low inflation and sound public finances 
as the cornerstone, as well as ensuring a physical infrastructure 
adequate to sustain business development.  A high degree of labor 
flexibility is also seen as essential to national competitiveness.

The United Kingdom (UK), remains solidly entrenched as the United 
States' largest European market and fourth largest worldwide (after 
Canada, Japan and Mexico).  In 1994, UK imports from the United States 
reached $26.8 billion, generating a $1.7 billion U.S. trade surplus.  
Given just its size and growth potential, the United Kingdom represents 
a uniquely important overseas market, and over the next few years new 
and established U.S. exporters can expect to find exceptional trading 
opportunities.  

The UK market is based on a commitment to the principles of free 
enterprise and open competition.  International trade is vital to its 
economy.  The absence of major trade barriers and the relative ease of 
doing business ensure that the United Kingdom remains an attractive 
marketplace.  Demand for U.S. goods and services is growing as the 
sustained recovery in the United Kingdom's industrial sector strengthens 
and as corporate investment is stepped up to meet the competitive 
challenges of an integrated European Union.

Establishing an initial trading relationship with the United Kingdom is 
an effective means to gain access to, and experience in, the European 
Single Market of 370 million consumers.  The abolition of many internal 
trade barriers within the Single Market enables European-based firms to 
operate relatively freely, and thereby achieve the economies of scale 
necessary to compete on a regional and international basis.  From the 
United Kingdom, U.S. firms are well-positioned to take advantage of the 
full range of opportunities that regional integration and a return to 
economic growth in Europe are providing.  Excellent transport and 
communications infrastructure, and accommodating political and 
commercial environment have already established the United Kingdom as a 
gateway to Europe for many companies.   

An important strand in our bilateral commercial relationship is the 
investment each nation has made in the other's economy.  The United 
Kingdom is the largest investor in the United States, and has 
traditionally been the most important destination of U.S. direct 
investment in Europe.  One in eight of the United Kingdom's five hundred 
largest companies is an affiliate of a U.S. company.  This economy 
provides a unique commercial base for gaining entry to the markets of 
the European Union (EU) and beyond through direct sales and investments, 
or through strategic alliances formed with UK firms.  In 1992, the UK 
economy attracted 40 percent of all U.S. investment into the EU.
   
The United Kingdom imposes no impediments to foreign ownership, nor 
restrictions to the free-flow of capital.  Its regulatory environment is 
pragmatic, featuring a deregulatory trend consistent with the 
government's intention to provide a stable and unfettered commercial 
environment in which private enterprise can flourish.  Within the EU, 
Her Majesty's Government (HMG) has shown itself to be a staunch defender 
of the rights of any British- registered company, irrespective of 
national ownership.

Soaring productivity in recent years has resulted in a rapid decline in 
real terms of unit labor costs, and has put the United Kingdom in the 
low-cost lead among the Group of Seven leading industrialized countries.  
In addition, low inflation and interest rates, and the reputation as a 
hospitable commercial environment, have enabled the United Kingdom to 
maintain its position as the preferred investment location in Europe for 
U.S., Japanese and other firms based outside this region. 

The United Kingdom shares a long cultural heritage with the United 
States, and the great sense of affinity which the British generally feel 
toward Americans translates into a high level of receptivity to U.S. 
goods, services and investment.      

Bilateral trade and investment relations between our two countries are 
generally harmonious, if not exemplary, reflecting a shared commitment 
to the principles of an open and expansive multilateral trade system.  



II.  ECONOMIC TRENDS AND OUTLOOK

  MAJOR TRENDS AND OUTLOOK

The resurgence of the British economy in the 1980's roughly paralleled 
the return of the Conservative Party to power in 1979.  The recovery 
began in 1981 and continued for nine years, the longest running growth 
period in British postwar history.  Labor productivity in manufacturing 
rose 4.8 percent a year from 1979 to 1989, and the 2.2 percent rate of 
real GDP growth achieved in that period was among the highest rates in 
EU countries.

After successfully emerging from its 1979-81 recession, the United 
Kingdom was able to avoid the slowdown in economic growth in Western 
Europe in the early 1980's that resulted, in part, from high interest 
rates.  UK government policy was to maintain a tight control over 
domestic demand while engineering a competitive devaluation of the 
pound.

Signs of economic overheating began to emerge in 1988 and were 
unmistakable by 1990, as retail price inflation reached a rate of 
approximately 11 percent and average annual wages were growing at nearly 
10 percent.  The government response to overheating and inflation 
employed several strategies.

A tight monetary policy featuring higher interest rates was established 
to rein in the momentum of the economy.  Base (prime) rates were raised 
incrementally from 7.5 in mid-1988 to 15 percent by the end of 1989.  To 
help curb inflation, the United Kingdom shifted from a floating exchange 
rate system and entered the fixed Exchange Rate Mechanism (ERM) of the 
European Monetary System in October 1990.  Joining the ERM required the 
government to maintain a fixed exchange rate of sterling against the 
Deutsche mark (DM) at DM 2.95, a rate which proved increasingly 
difficult to maintain. 

By early 1990, the effects of monetary restraint were producing a 
slowdown in the economy.  Consumer spending declined sharply as 
households paid off personal and mortgage debt incurred during the 
earlier period of low interest rates.  Concurrently, companies' fixed 
investments declined, and inventories were drawn down.  The resulting 
recession, which was the longest since the 1930's, caused widespread 
business failures and unemployment, and significantly increased the 
public sector borrowing requirement.  Both consumer and business 
confidence were seriously undermined.  Small firms were particularly 
hard hit as larger companies stayed afloat by cutting costs, postponing 
investment and by delaying payments to creditors.

From a high of 10.9 percent at the beginning of the recession in 
September 1990, the underlying rate of inflation dropped to 2.6 percent 
in April of 1995.  (The UK Treasury prefers to monitor the "underlying" 
rate of inflation instead of the "headline" rate which includes mortgage 
interest payments exaggerating inflationary trends.  The latter was 3.3 
percent.)  Steep declines in domestic demand early in the recession 
drove down inflation;  high levels of unemployment and restrained wage 
growth should keep the underlying inflation rate from going much over 
3.0 percent in 1995.

Interest rates were maintained at relatively high levels until September 
1992, when intense speculative pressure on the currency exchange markets 
caused the United Kingdom to withdraw from the ERM and allowed the pound 
sterling to float.  Freed from the constraints of the ERM, the UK 
Treasury brought down the base rate from 10 percent in September 1992 to 
5.25 percent in June 1994. 

Very high levels of economic growth in mid-1994 prompted monetary 
tightening from September.  Three 50-basis point increases to 6.75 
percent appear to be contributing to a slowing of growth to a more 
sustainable level.   

The economic recovery, which began in mid-1992, has already lasted 12 
quarters.  However, it has been restrained by persistently low levels of 
consumer confidence, in spite of vigorous export growth.  The effective 
devaluation of sterling upon leaving the ERM, and the return of economic 
growth in the United States, had a positive impact on UK exports during 
1993 and 1994.  Also half the United Kingdom's trade is now with other 
members of the EU, and economic recovery in Europe has contributed to 
demand for British exports.  At the same time, imports have remained 
restrained so that the narrowing of the trade deficit made a significant 
contribution to growth.

Real GDP grew at 3.8 percent in 1994, and in Q1 1995 GDP growth slowed 
slightly to the annual rate of 3.7 percent.  The UK Treasury stands 
ready to raise interest rates again if necessary, but growth appears to 
be slowing.  The Government expects growth of about 3.2 percent in 1995 
and most forecasters project slightly less than 3.0 percent in 1996.

Unemployment, which had been rising since mid-1990, peaked in January 
1993 at 10.6 percent.  The manufacturing sector was significantly 
disrupted, and many white-collar jobs have been permanently lost.  
Although employment has fallen, output has climbed back to early-1990 
levels, indicating that firms are finding ways to operate more 
productively with reduced staffing levels.   The rate of unemployment is 
falling slowly now, and remained at 8.3 percent in April of 1995.  It is 
expected to remain at relatively high levels for some time, however.  

Grappling with a growing fiscal deficit, which reached 7.25 percent of 
GDP in 1993-4, the Government's budgets of April and November 1993 
contained a package of revenue enhancement and spending control measures 
which, the UK's Treasury projects, will erase the fiscal deficit by the 
year 2000.  These include an extension of goods subject to the value 
added tax, and a freeze on the total salary bill for the country's 5 
million public sector employees through 1997.  Any salary increases for 
public sector employees must be paid for through productivity gains, and 
by reductions in the administrative cost of providing public services.  
These fiscal measures were received favorably by the business community 
and financial markets, which appear to view them as a credible solution 
to the deficit problem.  

The November 1994 budget reaffirmed these measures, and on the basis of 
higher-than-expected growth and lower-than-expected inflation, actually 
increased fiscal tightening.  The Government succeeded in reducing the 
deficit to about 5.0 percent of GDP in 1994/95 and projects a further 
reduction to 3.0 percent in 1995/96.  A downside risk to this forecast, 
however, is the strong likelihood of election-related tax cuts to shore 
up an increasingly unpopular Conservative government.

The UK Treasury has set a target of maintaining the underlying rate of 
inflation in the lower half of the monitoring range of one to four 
percent.  The rate remained well within the target range in 1994, but 
has since reached 2.8 percent before falling back to 2.6 percent in 
April 1995.   Average earnings for the whole economy only rose 3.75 
percent in 1994, influenced  by a 1.5 percent pay ceiling imposed on 
public sector employees.  Manufacturing sector rises for the same period 
were 4.75 percent.

The expansion in indirect taxes, contained in recent budget statements, 
has exerted upward pressure on prices as well as rising commodity prices 
and a weaker pound sterling.  The rate of increase in producer price 
inflation appears to be slowing, and has remained at 4.2 percent for 
both April and May 1995.  Headline retail price increases slowed from 
3.5 percent to 3.3 percent in April 1995.  With slowing economic growth 
and continued moderate wage inflation, most economists expect underlying 
inflation to slow shortly after reaching 3.0 percent later in 1995.

Productivity, expressed as output per person employed for the whole 
economy, rose by 13 percent between 1984 and Q1 1993.  However, the rise 
for manufacturing industries was 40 percent during the same period, an 
annualized rate of 4.5 percent.  Productivity growth accelerated 
dramatically during the tail end of the recession and into the recovery, 
with manufacturing output surging by 6.0 percent in the Q3 and Q4 1994, 
before falling back to a more sustainable rate of 3.0 percent in the 
first quarter of  1995.  This has resulted in a rapid decline in real 
terms of unit labor costs, and has put the United Kingdom in the low-
cost lead among the Group of Seven leading industrialized countries.       

Consumption, which comprises about 63 percent of GDP, was clearly the 
driving force behind recovery in 1992 and 1993, turning positive in 1992 
and growing at 2 percent in 1993.  As expected, it dipped in Q2 1994 
after the implementation of tax increases, but it recovered in Q3 and Q4 
ending 1994 with 2.6 percent growth.  Higher taxes and tighter money 
appear to have caught up with the consumer, however, and consumption 
actually contracted by 0.1 percent in Q1, 1995.  Most analysts project 
between 1.5 and 2.0 percent growth for all of 1995.   
   
Reaching self-sufficiency in crude oil production in 1981, the  economy 
has maintained its role as a net exporter ever since.  Output reached 
2.3 million barrels per day (MMBD) in 1993 and is likely to continue to 
rise at least until 1996 before beginning a gradual decline.  However, 
the recent reductions in margins for oil producers have resulted in a 
decline in national revenues.  Natural gas production is rising and will 
account for an increasingly high proportion of the hydrocarbon resources 
produced.  The formerly state-owned coal industry has been privatized.

PRINCIPAL GROWTH SECTORS

The service sector now accounts for approximately 70 percent of the 
United Kingdom's GDP, a share which has grown consistently over the last 
few decades.  The financial services sector is particularly strong.  

Productivity growth in the manufacturing sector has increased at a rapid 
rate since the early 1980's, driven by a high degree of labor 
flexibility, acceptance of innovative technologies, and a supportive tax 
regime.  

The United Kingdom offers markets for the full gamut of U.S. exports.  
The current government's commitment to open markets, deregulation and 
privatization of industry will continue to offer opportunities for 
competitive U.S. firms.  Increasingly, public sector procurement policy 
emphasizes "best value for money," regardless of origin, and 
'outsourcing' is encouraged as a means of improving the quality of 
public services, while containing cost.
 
Major domestic developments, notably recent pollution control 
legislation, further planned privatization of state-owned industries, 
reforms in the National Health Service, and further deregulation of the 
telecommunications market, have created outstanding commercial 
opportunities for U.S. exporters in such diverse sectors as healthcare, 
environment, telecommunications, utilities and transport.  

Plans to privatize all or part of the railroads, part of the prison 
service, and air traffic control offer potential to exporters and joint-
venture partners.  Britain's telecommunications sector is probably the 
most liberal in Europe, and presents significant opportunities for both 
equipment manufacturers and service providers. 

The UK healthcare market, especially as the state-funded National Health 
Service (NHS) restructures, presents opportunities for U.S. suppliers of 
equipment and services, particularly where they can provide demonstrable 
productivity gains.     

The United Kingdom is a major market for agricultural products, taking 
about $936 million in agricultural imports from the U.S.  In addition, 
some $223 million in forestry products and $93 million in seafood is 
imported from the U.S.  

In Europe, growing public awareness of the consequences of environmental 
pollution is creating higher EU and national environmental standards, 
and more rigorous enforcement of existing regulations.  U.S. 
technological development has placed our environmental firms at a 
distinct competitive advantage.  

The UK Ministry of Defense (MoD) welcomes participation of U.S. 
companies in procurement competitions.  The MoD's procurement policy is 
to secure "best value for money."  In many competitions, U.S. companies 
bring management expertise and leading edge technology not available 
within the UK defense industrial base. Generally, the MoD's policy 
enables U.S. companies to compete on a level playing field, whether as 
prime contractor, or as a major sub-contractor to UK industry.
 
The U.S. Department of Defense (DOD) and UK's Ministry of Defence have a 
Reciprocal Procurement Memorandum of Understanding (MOU) for defense 
equipment.  This MOU constitutes an effort by both governments to look 
at each other's existing weapons systems to satisfy their requirements 
and reduce legislative restrictions to reciprocal procurements.  Of all 
our allies, the UK military enjoys the closest operational relationship 
with U.S. forces. Traditionally, this cooperation has resulted in many 
UK procurements of U.S., or U.S.-compatible defense equipment.

  GOVERNMENT ROLE IN THE ECONOMY   

With its emphasis on deregulation of industry, free trade and minimal 
intervention in the marketplace, the economic philosophy of the current 
UK administration is perhaps closer to that of the United States than to 
those of any of its European trading partners.  

Since coming to power in 1979, the ruling Conservative  government's 
specific policies have included the return to private ownership of 
state-owned industries, the reduction of both personal and corporate tax 
rates, and the abolition of capital controls and labor law reform.  In 
addition, the Conservatives deregulated financial services, 
telecommunications, and transportation, liberalized mortgage regulations 
and transformed much of the public housing stock into owner-occupied 
dwellings. These changes have increased the efficiency and growth 
potential of the economy, and made the United Kingdom more competitive 
in world markets.

Since 1979, HMG has privatized the telephone, water, gas and electric 
utilities.  It also sold its majority interest in the country's major 
automobile and aerospace companies, and in its national airline.  
Moreover, it has encouraged contracting, to private sector firms, many 
of the services provided by national and local government.   Future 
candidates for privatization include the rail system, coal mining, the 
prison and postal services, and air traffic control system. 

HMG perceives its primary role as developing a stable macroeconomic 
environment, with low inflation and sound public finances as the 
cornerstone, as well as ensuring a physical infrastructure adequate to 
sustain business development.  A high degree of labor flexibility is 
also seen as essential to national competitiveness.

HMG has also demonstrated a firm commitment to the goals of the European 
Single Market.  However, plans for the UK's participation in a 
politically and financially-united "federal" Europe are less clear.  
"Euro-skeptics" from both the ruling Conservative Party and the 
opposition Labour Party assert the unease among much of the country's 
population over the effects the "New Europe" will have on the country's 
political and economic sovereignty.  Although the current Conservative 
government holds a small majority in Parliament, it is nonetheless 
confident that it has the political means to carry out its policies.
 
The current administration views the near collapse of the ERM in mid-
1993 as a vindication of its earlier decision to withdraw from the 
mechanism, and it appears unlikely that the United Kingdom will soon 
participate in any form of monetary union.  The problems of the ERM and 
the difficulties experienced by several EU members ratifying Maastricht 
have also reduced the momentum for greater political union, which built 
up in the late 1980's.  There are clear indications that, in the short 
term, European "pro-marketeers" will shift their efforts towards the 
more achievable goals of strengthening commercial cooperation between 
member countries.   The Conservative government also favors the 
rapid integration of Eastern Europe into the Union.  

The Social Chapter of the Treaty on European Union (Maastricht Treaty) 
codifies, across the European Union, issues of employees' rights in the 
work place, equitable wages, communal bargaining and employee 
consultation.  By securing for the United Kingdom the right to "opt-out" 
of the Social Chapter, HMG wishes to sustain the climate of minimal 
intervention in labor markets which has prevailed during its 
administration.   It hopes to facilitate job-creation and maintain the 
UK's position as a competitively  attractive destination for foreign 
investment.  It is generally supported in this endeavor by the private 
sector, which fears the increased business costs experienced on the 
Continent by conformance to the Social Chapter's provisions.

HMG does not have a formal policy to protect its defense industrial 
base. The MoD's "best value for money" procurement policy has forced UK 
defense companies to rationalize the industrial base in order to remain 
competitive internationally. Some senior UK MoD officials have indicated 
that certain sectors of the defense industrial base (aerospace, tanks, 
shipbuilding, and nuclear technology) will not be allowed to perish.  
Additionally, the increased emphasis on UK "industrial participation" 
(offsets) in contracts awarded to offshore firms bolsters the economy by 
maintaining quality jobs.

The MoD preferred procurement policy is to purchase "off-the-shelf" via 
a direct commercial contract with industry.  "Off-the-shelf" normally 
entails long, complex development programs, and the MoD usually expects 
the prime contractor to assume all risks.  The UK industrial base has 
failed to retain its portion (13%) of the global market in 1994/95.  
Industrial associations have organized to bring pressure on HMG to 
support the defense industrial base.  They are asking HMG for changes in 
the procurement policy which, if adopted, would favor UK sources in 
competitions or would reduce the number of procurements conducted in a 
competitive environment.
 
Occasionally, DoD officials will limit U.S. defense equipment sales to 
FMS only.  MoD officials continue to question this policy when pursuing 
U.S. systems designated "FMS" only. Some senior UK MoD officials have 
indicated that certain sectors of the defense industrial base (systems 
integration, process technology, materials and structures, aerodynamics, 
sensor systems/data fusion/data processing, high-integrity/real-time 
software, simulation/modelling/synthetic environments) will not be 
allowed to perish.

Taxation and Fiscal Policy:
The government seeks to minimize the tax burden on both individuals and 
corporations, and direct tax rates are among the lowest in the EU. 

The highest personal tax rate of 40 percent is applicable to only the 
top 6 percent of income earners.  The majority fall within the lower 25 
percent tax rate, known as the base rate.  It is the stated intention of 
the current government to reduce the base rate to 20 percent, when 
economic conditions permit.  A start has already been made in that 
direction with the 20 percent rate applying to the first tranche of zero 
to 3,000 British pounds sterling (BPS) of taxable income.  

The full corporate tax rate of 33 percent applies to companies with 
profits in excess of BPS 1.25 million.  Partial tax relief is available 
to firms with  profits of less than BPS 250,000 to bring their effective 
tax rate to 25 percent.  Profits between these limits are taxed on a 
formula basis which results in a total tax rate between 25 and 33 
percent. 
  
A central theme of the current government's fiscal policy has been its 
emphasis on taxing spending rather than earnings.  Since coming to 
office, it has increased indirect taxes while reducing direct income 
taxes to the levels outlined above.  The United Kingdom now levies a 
value-added tax (VAT) of 17.5 percent on the purchase price of most 
goods, a rate which is comparable to those charged by other EU 
countries.

  BALANCE OF PAYMENTS SITUATION

Following a modern trend for the United Kingdom, the recent deficit in 
"visible" trade, that is trade in tangible goods, has been partially 
offset by a surplus in "invisible" trade, the gains from financial 
transactions and the provision of services.  In 1994 visible exports of 
US$206.9 billion and visible imports of $222.9 billion produced a UK 
merchandise trade deficit of  $16.0 billion (1993: $30.7 billion).  
However, service credits of $59.2 billion exceeded debits by $3.7 
billion and, when combined with a $17.1 billion net investment surplus, 
produced a current account deficit of under $300 million.

The economy has run a deficit in visible trade since 1983. This surged 
during the "boom" of the late 1980's, as consumer demand for imported 
goods ballooned.  Once the recession took hold, imports dropped, 
reducing the visible trade deficit dramatically in 1991.  The 
depreciation of the pound, following the UK's September 1992 withdrawal 
from the ERM, increased the cost of imports and enhanced UK 
competitiveness.  This turn of events came as the global economy was 
expanding and UK exporters were able to gain market share.


The United Kingdom is the second largest overseas investor (behind only 
the U.S.) with the United States the favorite destination.  The 
cumulative total of British investments in the United States reached $96 
billion in 1993.  The United Kingdom has an extremely important service 
sector, of which banking and insurance are the largest and contribute 
close to 20 percent of GDP.         

  INFRASTRUCTURE SITUATION 

Sea Transport:  
Excellent transportation facilities exist between the United States and 
the United Kingdom.  There are daily sailings of cargo vessels and 
scheduled air freight services from U.S. ports and major cities.

The United Kingdom has 80 ports of commercial significance. 
Major development projects have recently been completed at eastern and 
southern ports.   The most important for container traffic are London, 
Felixstowe, and Southampton.  The major ports for roll-on/roll-off are 
Dover, Harwich, Felixstowe, and Grimsby/Immingham.   

New facilities are being developed to accommodate bulk and container 
shipments on the Medway, and for bulk and roll-on cargoes on the Humber. 
Terminals and supply bases for offshore oil and gas installations have 
been built at a number of ports in Scotland.

Air Transport:  
There are reportedly 137 licensed commercial airports in the United 
Kingdom, of which 7 are owned and operated by BAA plc, the successor 
company to the statutory British Airports Authority.  The seven airports 
owned by BAA include Heathrow, Gatwick and Stanstead in England, and 
Glasgow, Edinburgh, Prestwick and Aberdeen in Scotland.

These airports handle 72 percent of air passengers and 83 percent of 
airfreight in the United Kingdom.  Heathrow Airport, located 15 miles 
from London, is one of the busiest airports in the world.  Gatwick 
Airport, 25 miles south of London, was developed as a second airport 
serving the city. The main airports used by international scheduled 
airlines are Heathrow, Gatwick, and Prestwick.

Highways:  
Road haulage accounts for nearly 80 percent of all inland freight 
movement with most of the traffic carried in vehicles of over 25 tons 
gross laden weight.  International road haulage has grown rapidly, and 
nearly 7 million tons of freight are transported annually by UK vehicles 
to and from Continental Europe and Ireland.

There are 363,000 kilometers of well-maintained highways, and population 
centers are connected by an excellent system of 'motorways.'   Plans are 
currently being implemented to widen large stretches of motorway to 
relieve congestion, particularly in the London area. 

Railroads:  
The state-owned railroad system provides excellent service between major 
cities and towns.  A system of express freight trains, called freight 
liners, has been developed and serves a freight rail system having more 
than 20 major freight terminals.  As of March 1988, British Rail had 
23,557 miles of standard gauge lines and sidings in use.

Channel Tunnel:  
In 1994 the United Kingdom ceased technically to be an island.  The 
Channel Tunnel project provides twin rail tunnels between the United 
Kingdom at Folkestone and France near Calais.  Separate passenger and 
freight shuttles operate in the 31-mile tunnel between the two 
terminals.  In addition, a high-speed rail link will be constructed over 
the next few years to connect the Tunnel to London and beyond.  This 
will service the increased freight and passenger traffic expected.    


  MAJOR INFRASTRUCTURE PROJECTS UNDERWAY

Major projects include the Cross-London Rail Link, the extension of 
London Underground's Jubilee Line to Canary Wharf, the construction of 
the High-Speed rail Link to the Channel Tunnel, revitalization of the 
main west-coast rail line and the planned construction of another runway 
for Heathrow Airport.      



III.  POLITICAL ENVIRONMENT
 

  NATURE OF THE POLITICAL RELATIONSHIP WITH THE UNITED STATES

The important Anglo-American partnership is one of the most enduring of 
our bilateral relationships.  It remains securely anchored in historical 
traditions, common political systems and values, compatible security 
interests and a shared cultural heritage.  At the government level, the 
closeness of the relationship ensures a remarkable degree of cooperation 
on a very broad range of issues.

With the end of the Cold War and the diminished relative importance of 
security issues, and with the movement towards European integration, our 
bilateral relationship has further evolved.  The United States now 
emphasizes to a greater extent than previously the value of our economic 
interests in Asia and Latin America.  The United Kingdom, for its part, 
is working now more closely with its European partners on political, 
trade and other economic matters.

Yet the US-UK alliance continues to be a key one for both countries, and 
the pattern of productive cooperation is expected to continue.  We share 
very similar, if not identical, views on such priority issues as 
extending security to Eastern Europe, promoting political and economic 
reform in the former Soviet Union, and furthering peace in the Middle 
East.


  MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE

None


  BRIEF SYNOPSIS OF POLITICAL SYSTEM, SCHEDULE FOR ELECTIONS, AND 
ORIENTATION OF MAJOR POLITICAL PARTIES

Constitutional System:
The United Kingdom of Great Britain and Northern Ireland is comprised of 
four national entities: England, Scotland, Wales (together making Great 
Britain), and Northern Ireland.  The United Kingdom is a constitutional 
monarchy.

The constitution is largely unwritten, and almost all political power is 
vested in one chamber of the bicameral Parliament--the House of Commons. 
The other chamber, the House of Lords, consisting of hereditary and life 
peers, as well as senior officials of the Church of England, has limited 
legislative powers.  The House of Commons consists of 651 members -- 524 
from England, 72 from Scotland, 38 from Wales, and 17 from Northern 
Ireland. Members are elected from specific geographic constituencies, 
each representing about 60,000 voters.

Because of population shifts, constituencies in England vary 
considerably over time.  General elections are held no more than five 
years apart, the last having been in April 1992.  They are always held 
at a date of the government's choosing.  The next election must be held 
by the spring of 1997. 

The government, a cabinet headed by a Prime Minister, is formed by 
whichever party, or coalition of parties, can command a majority in the 
Commons.  Legislation is passed by majority vote.

At present, the major parties are the ruling Conservatives (Tory Party) 
and the opposition Labour Party.  The Liberal Democrats constitute the 
only other significant political force.

Administratively, the United Kingdom acts as a centralized state.  The 
national government, consisting of some 17 cabinet-level departments, 
plus smaller entities, is staffed by career, nonpartisan civil servants.  
Only the three or four senior policy positions in each department (the 
Secretary of State, the Minister of State, and the junior ministers) are 
occupied by political appointees.  They are drawn from the ranks of the 
ruling party in the House of Commons or the House of Lords.

The current Conservative government under Prime Minister John Major is 
pro-business in orientation and seeks to maximize the growth of private 
enterprise.  While still coping with the economic and social effects of 
having "weathered" Britain's longest recession in decades, it remains 
enthusiastically committed to the philosophy and policies of the 
previous Thatcher administration.  

Even though firmly focused on implementing the Single Market program, 
some Conservative Members of Parliament express deep concern over the 
effects that full European integration will have on the country's 
sovereignty.  Britain opted out of the "social chapter" of the 
Maastricht Treaty and deferred a decision on joining the European 
Monetary Union, if and when it becomes operational.  Division over these 
and other related issues has led to a spate of factional disputes, at 
times weakening the Conservatives' capacity to present a united policy 
front.

Since the early 1980's, the opposition Labour Party has attempted to 
widen its popular appeal by moving steadily towards a more  moderate 
position nearer to the political center.  In the process, it has reduced 
the traditional dominant influence of the trade unions over party 
policies.  It is not anticipated that a future Labour government would 
seek to re-nationalize privatized industries and utilities, or 
significantly reverse legislation restricting trade union business 
sector activities.  A Labour government would most probably pursue 
orthodox fiscal and monetary policies.  Labour is more pro-European than 
the Conservatives; it endorses the Maastricht "social chapter," but has 
its own concerns about European Monetary Union, such as the need for 
economic convergence of all member states in such a union.

The third major force in British politics is the centralist Liberal 
Democrats, formed in the early 1980's when several Labour Party Members 
of Parliament, dissatisfied with the strongly left-wing orientation of 
their party at that time, joined forces with the majority of the small 
Liberal Party.  The Liberal Democrats have commanded a sizable share of 
the popular vote.  However, due to the current "first-past-the-post" 
voting system, they have managed to secure only 25 seats in Parliament.  
Cultivating an independent identity, strongly pro-European and 
supporting Parliamentary reforms favoring increased openness in 
government, the Liberal Democrats might conceivably hold the swing vote 
in any future "hung" Parliament.      



IV.  MARKETING U.S. PRODUCTS AND SERVICES


  DISTRIBUTION AND SALES CHANNELS

Import Channels:
The United Kingdom has a well-developed network of import channels.  
British importers are well versed in foreign trade and have long 
experience in handling all types of products.  Import channels vary with 
the nature of the product.  Selection of an appropriate marketing 
channel is of critical importance to the success of any export marketing 
venture.

Channels through which foreign goods move range from the branch offices 
of overseas manufacturers to import houses that purchase abroad and sell 
on their own account.  Between these two extremes are sales agents (some 
of them manufacture equipment similar to the products they import), 
commission agents, specialized importers, brokers, and importing 
distributors.  Frequently, larger business firms engaged in manufacture 
or domestic trade buy directly from overseas suppliers, while smaller 
firms find it more convenient to buy through intermediaries.

Industrial equipment is generally handled by sales agents, while office 
machinery is sold through branch offices or representatives of overseas 
manufacturers.  Chemical products are largely imported by merchants.  
Foodstuffs and some consumer products move through specialized 
importers.  Computers, traditionally handled by a sales agent and, more 
preferably, by a distributor, have been successfully marketed by 
"salesmen" that have evolved as an interface between suppliers and 
distributors.

In the case of capital goods and raw materials, direct selling is 
sometimes employed by foreign manufacturers, since the range of buyers 
is more limited.  The distinction between the various types of import 
channels is not clear cut. Considerable variation exists even within a 
single group of products.

A recent development is the appearance of organizations that take care 
of the costing, warehousing, distribution, pricing, and factoring 
(guaranteeing of manufacturers' invoices) of import goods. These firms--
sometimes referred to as "importers/ factors"--began as forwarding 
agents.  As market conditions changed, they gradually extended their 
activities. Today, importers/factors still provide shipping, forwarding, 
and customs clearance services. 

Developing sales is still the responsibility of exporters.  They can 
hold inventories and control sales in the United Kingdom through the use 
of these importers/factors, thus dispensing with
subsidiaries.

Larger UK distributors have an annual turnover which greatly exceeds the 
average manufacturer.  Consequently, they expect that foreign 
manufacturers will already have their products adapted for local sale 
and use.  This is especially relevant for the mass marketing of 
computers.

Distribution methods of U.S. firms selling to the UK market vary with 
the product, and depend on the firm's knowledge of local market 
conditions.  Generally, firms new to the UK market find it more 
convenient to appoint one distributor to cover the whole country.  
Later, in order to achieve greater market penetration, they often 
appoint other regional distributors.

Wholesale and Retail Channels:
There are many types of wholesale establishments in the United Kingdom.  
Some wholesalers carry a wide range of complementary and competitive 
merchandise, extending credit to retailers and even financing 
manufacturers.  At the other extreme are commission agents or brokers 
who operate without inventory (and frequently on credit), placing orders 
only to cover their sales and, therefore, operating on an especially low 
markup in comparison with other wholesalers who carry out more 
functions.

Methods of distribution vary according to the type of merchandise 
handled. Fresh fish, for example, is distributed directly by importers 
and wholesalers to processors (canners, curers, and meal and oil 
processors), freezers, and fast-food manufacturers.  Importers also sell 
fresh and chilled fish to large catering and local retail outlets.

Medical equipment sales are most effectively promoted by the use of 
specialist importers or in collaboration with UK manufacturers of 
noncompetitive equipment.  Electronic components marketing through 
agents and distributors is the standard practice for sales of non-
customized components; specialized components may require a different 
approach.

In recent years, independent wholesalers have faced increasing 
competition from large-scale retail organizations with direct access to 
manufacturers. They are able to promote sales through their own retail 
outlets and through mail-order businesses.  As a result, only a portion 
of the trade in consumer goods now passes through wholesalers.

This change has stimulated the creation of new forms of wholesale 
organizations for the benefit of both wholesalers and retailers.  
Smaller retailers, as a defense against the larger groups, have joined 
organizations incorporating one or more wholesalers.  Through these 
organizations, they benefit from economies of bulk purchasing without 
the loss of independence with the advantages of sales promotion schemes.

Computer marketing and sales practices have changed dramatically in 
recent years.  As computers have become like other commodities, 
marketing practices have evolved to resemble those found in the United 
States. 

As declining prices and margins have made distributors and dealers' 
profits vulnerable, retailing is likely to evolve into heavy-volume, 
small-profit selling by superstores and value-added hardware sales that 
incorporate software and systems integration.  By the second half of 
this decade the majority of all personal computer sales will eventually 
be made by retailers.

Defense Sector:
UK defense equipment acquisition programs are driven by senior level 
approved military requirements, much like DoD programs. The central 
staff (Land, Sea, Air, and Joint Systems) Operational Requirements 
departments are responsible for defining these equipment requirements, 
and obtaining the funding line.  Once approved for acquisition, the 
MoD's Procurement Executive (PE) acts as the main executive agent for 
program competition in the UK. The U.S. Embassy's Office of Defense 
Cooperation maintains a close liaison with all of these organizations. 
Additionally, the MoD's New Suppliers Services and Defense Export 
Services Organization are excellent sources of information for U.S. 
companies on: application procedures for acceptance to the MoD's Defense 
Contractors List; the MoD's acquisition organizational structure; and UK 
industry points of contact for teaming and sub-contract possibilities.

Agriculture:
The majority of retailers, wholesalers, manufacturers and caterers let 
importers and distributors handle logistics and take the risks 
associated with importing food products.  Some retailers, who deal in 
large volumes of produce, occasionally import directly.  In such cases, 
the retailer has a buyer or produce technician in the United States who 
places the order.

Many importers of non frozen and chilled foods have in-house 
distribution networks and warehousing facilities, while smaller 
importers contract out.  Many fresh produce importers have controlled 
atmosphere warehousing facilities and even pack houses catering to the 
growing retail demand for pre-packed, and sometimes trimmed fruits and 
vegetables.  Almost all importers of frozen and chilled foods contract 
out to specialized storage, handling and distribution companies.

Tourism:
U.S. tourism providers seeking to secure a significant share of the UK 
travel market must first negotiate with tour operators for inclusion in 
the next season's brochures.  The structure of the UK travel industry is 
such that, unless a destination or attraction is included in a tour 
operator's catalog, it is unlikely to be booked by other than 
independent travel agents, who are in the minority.  



  USE OF AGENTS/DISTRIBUTORS:  FINDING A PARTNER 

Agency Agreements:
The United Kingdom has rules and practices concerning agency agreements.  
Companies should obtain legal advice, both in the United States and in 
the United Kingdom, to ensure that they are not violating U.S. antitrust 
laws and that they are in compliance with local UK laws and business 
practices.

National laws governing the relationships between agents/ distributors 
and manufacturers/suppliers are being harmonized throughout the European 
Union.  The EU Directive, which is the basis of these laws, establishes 
the rights and obligations of the principal and his agents, the agent's 
remuneration, and the conclusion and termination of an agency contract.  
Each member state can choose between two options for compensation in 
case of termination of a contract: indemnity (based on past and 
anticipated performance) and damages (based on immediate costs at the 
time of termination.)

The Directive, concerning EU-based contracts, has been effective since 
January 1994 and applies to anyone who is "self employed" and has 
authority to negotiate and/or conclude sales or purchases of goods on 
behalf of a principal.  With this broad definition, the Directive covers 
a wide variety of business people ranging from sales representatives to 
territorial sales agents. 

General duties of the agent, outlined by the Directive, include 
negotiating and concluding transactions as well as communicating to the 
principal all necessary information.  The responsibilities of the 
principal include providing the agent with adequate documentation on the 
goods covered and keeping in close contact with his agent on any 
commercial transactions involving both parties.  

The Directive also sets rules pertaining to payment, conditions 
pertaining to commission, and the circumstances for termination of the 
agency contract.   

Prospective agents overseas normally have standard agency agreements 
that they sign with foreign manufacturers.  The Commercial Section in 
the U.S. Embassy in London can provide advice with respect to these 
types of agreements and can also supply a list of attorneys in the 
United Kingdom whom the U.S. Embassy has found to be reliable.  Local 
U.S. Department of Commerce district offices, international banks, and 
freight forwarders also may know attorneys who specialize in foreign 
agency agreements.

Agent/Distributor Service:
The Department of Commerce's Agent/Distributor Service (ADS) helps U.S. 
firms identify prospective distributors or sales representatives in 
overseas markets.  Through the ADS application form, the U.S. company 
representative specifies the characteristics sought in a prospective 
overseas representative.

That information and appropriate product information is forwarded to the 
Commercial Section in the U.S. Embassy in London, which then makes a 
search of its database of appropriate local companies and consults with 
trade associations and chambers of commerce to determine the suitability 
and interest of UK firms in representing an American company's product 
or service.

The process takes about 60-90 days from receipt of an ADS request.  An 
ADS report intends to identify a minimum of three qualified firms that 
have expressed interest in a proposal.  A typical ADS report includes 
the name and title of the person to contact, the telephone number, the 
cable address and telex number, and brief comments about the firm or its 
stated interest in the proposal.

The Commerce Department sponsors a variety of trade events for the 
purpose of bringing U.S. exporters in direct contact with potential 
agents, distributors and, in certain cases, joint venture partners or 
licensees.

Commerce Department-sponsored events provide U.S. corporate participants 
with previously screened appointments, booth space and utilities, pre-
show promotion, etc.  Information on these events can be obtained from 
Department of Commerce district offices located throughout the United 
States.

The U.S. Embassy in London houses the Commerce Department-operated 
International Marketing Center (IMC).  The IMC provides a prestigious 
venue for all types of promotional events, exclusively for American 
companies, their subsidiaries, agents, or distributors.  Facilities 
include a 2,000 square-foot exhibition hall and an auditorium, 
complemented by a comprehensive range of marketing support services.  
The latter includes assistance in identifying business prospects, 
printing show catalogs, flyers, invitations and arranging appointments. 
The service also includes secretarial assistance and other logistical 
needs.  Booking of the IMC is made directly with its staff; telephone: 
011 (44-171) 409-2927; fax: 011 (44-171) 495-2944.

The U.S. Embassy's Office of Defense Cooperation and the Foreign 
Commerce Section are excellent sources of information on the UK defense 
business climate.  Information is available on UK industrial 
capabilities and various consultancy services.  The MoD's New Supplier 
Service and Defense Export Services Organization provide information on 
UK industry for teaming and sub-contract opportunities.

The Office of Agricultural Affairs at the U.S. Embassy, London can 
assist U.S. food and agricultural commodity exporters to identify 
potential importers for their products/commodities.  Resource materials 
available include:   an annual American Food Directory (cross-referenced 
listing of UK importers handling U.S. foods and beverages); a USA Wine 
Directory, computerized importer listings by product/commodity under the 
AgExport Connections database. 


  FRANCHISING

Franchising is a relatively new but widely accepted form of business in 
the United Kingdom.  As a low-risk method of doing business, it has 
outstanding potential in the UK market.  Even during the last economic 
recession, the franchise sector in general experienced positive growth 
and significantly outperformed the economy as a whole.  The availability 
of a pool of relatively inexpensive labor, coupled with a regulatory 
environment in the UK which encourages labor flexibility, help reduce 
the risk and costs in establishing a labor-intensive service franchise.

A principal advantage for new U.S. entrants is the number and generally 
good reputation of U.S. franchise enterprises already present.  Frequent 
exposure to U.S. franchises has generated positive feelings about 
American brand name products and services which has made their 
acceptance in these overseas markets even easier.  The UK is also 
America's largest source of tourists, and many returning British 
vacationers have brought back an appreciation for the service and value-
for-money which they experienced with franchise operations in America.  
This has made the UK exceptionally receptive to American franchises, 
particularly in food services and retailing.


  DIRECT MARKETING

Although direct marketing in the United Kingdom is similar in many ways 
to that of the U.S., legal restrictions, postal requirements, subtle but 
key linguistic and cultural differences, and differences in list 
management/availability and response mechanisms make it advisable to use 
a UK advertising agency or direct marketing house to create parallel UK 
direct marketing campaigns, or to adjust U.S.-generated promotions for 
the UK market.  

The British Code of Advertising Practice (CAP) has established rules for 
direct mail advertising and list and database management.  The rules set 
the obligations of advertisers on conformity to product standards, 
delivery times, goods sent on approval, customer lists and privacy 
protection, etc.  The code and the supplementary rules can be obtained 
from the CAP at Brook House, Torrington Place, London WC1E 7HN; 
telephone: (44) 171 580-5555; fax: (44) 171 631-3051.

Postal Importations:
The Post Office's bulk handling center in Swindon handles more than 230 
million items per year.  Growth is expected in the telemarketing and 
product fulfillment services.   

Consignments of goods imported by letter or parcel post must comply with 
internationally agreed arrangements that are established in UK postal 
and customs regulations.  One essential requirement is that postal 
packages must be accompanied by a properly completed customs 
declaration.  Normally, a formal Customs and Excise import entry is only 
necessary for consignments of high value, for goods eligible for certain 
tariff relief, or where further information is required.


  JOINT VENTURES/ LICENSING

Joint-venture and licensing agreements are common practice in the United 
Kingdom.  Recent developments in the economy include the further 
privatization of state-owned industries, reforms in the National Health 
Service and further deregulation of the telecommunications market.  
These developments present opportunities to U.S. firms as joint-venture 
partners and licensors.   

Plans to privatize all or part of the railway system, the  prison 
service and air traffic control offer significant joint venture 
possibilities to U.S. businesses.  The inclusion of private U.S. firms 
possessing the products, operating experience and best practices as 
partners with established UK firms can add credibility to their bids for 
franchises.  Such Anglo-American joint ventures have been successful in 
winning franchises for operating prisons, and the national lottery.    

The requirement for industrial participation in major UK defense 
acquisition programs has driven U.S. contractors to establish commercial 
partnerships with UK companies.  In various programs, U.S. contractors 
have chosen a UK firm to lead the bidding as prime contractor, in order 
to overcome the "buy national" advantage of onshore competitors.


  STEPS TO ESTABLISHING AN OFFICE

Establishing an office in the United Kingdom is relatively inexpensive 
and straight-forward.  A wide range of support services are available to 
assist in this task.  The appointment of a local representative already 
established in the market and experienced in the ways of doing business 
in the United Kingdom, is a simple task.  The Foreign Commercial 
Service, the Travel and Tourism Office, and the Agricultural Trade 
Office, all at the U.S. Embassy in London, are able to provide advice 
and assistance.  The Invest in Britain Bureau of the British Department 
of Trade and Industry offers help to those interested in investing in 
the United Kingdom.  (Please see the contact list in the Appendix.)

Tax Treaty with the United States:
A convention between the United States and the United Kingdom with 
respect to income taxation has been in existence since April 1945.  A 
number of protocols amending this basic convention have since come into 
force.  Details relating to double taxation arrangements between the 
United States and the United Kingdom can be found in Statutory 
Instrument 568, entitled Double Taxation Relief (Taxes on Income) (USA).  
The convention applies to the taxation of profits arising from a 
permanent, commercial establishment in the United Kingdom.  Copies of 
this document are available from Her Majesty's Stationary Office at 49 
Holborn, London WC1 6HB, Tel: 011-44-71-873-0011, or by calling their 
representative in the U.S., Kraus-Thompson Publishing, at (914) 762-
2200.

Under the provisions of the U.S.-UK Double Tax Treaty, certain classes 
of income arising in the one country are exempt from the other country's 
tax, if the income flows to a resident of the other country who is 
subject to tax on it there.  For taxation purposes, foreign-owned firms 
are categorized as non-resident companies, that is, companies controlled 
and managed abroad but conducting business through a permanent 
establishment in the United Kingdom.  A company which is merely 
represented by a commission agent or a broker is not regarded as a 
permanent establishment unless the agent has the authority to negotiate 
and conclude contracts on behalf of the foreign principal.  The term 
"permanent establishment" includes branches, offices, factories, 
workshops, mines, oil and gas wells, quarries, or other places of 
extraction of natural resources, and building, construction or 
installation projects that exist for more than 12 months.

Business may be carried on through a broker, general commission agent or 
other independent agent, or through a salesman not authorized to 
conclude contracts, without incurring permanent establishment status.  
In addition, licensing another company to make and sell products in the 
United Kingdom will produce royalty income exempt from UK withholding 
tax under the tax treaty.


  SELLING FACTORS/TECHNIQUES

The Competition Act:
The U.K.'s Competition Act (of 1980) governs agreements such as 
exclusive agency, exclusive chain selling, exclusive supply 
arrangements, exclusive purchasing contracts, restrictive terms, and 
other related matters.  Manufacturers and exporters are able to appoint 
exclusive agents and to determine the method of distribution.  However, 
they may not prevent the import or sale of competitive goods from other 
sources, including parallel, or "grey" imports from dealers and 
distributors in other countries.

Practices of concern under the act are those anti-competitive measures 
that restrict the production/distribution pattern to benefit the 
manufacturer by making it difficult for competitors of the 
manufacturer's appointed agents to attract customers or suppliers.  Such 
restrictions may make it difficult or impossible for new competitors to 
enter a market and may be subject to challenge under the Competition 
Act.

On the other hand, "vertical restraints" may improve the efficiency of 
distribution without harming competition.  Such circumstances would not 
amount to an anti-competitive practice under the act.

Anti-competitive practice is defined in the act as a course of conduct 
pursued by a person in the course of business that has, or is intended 
to have, the effect of restricting, distorting, or preventing 
competition in connection with the production, supply, or securing of 
goods or services in the United Kingdom, or any part of it.

The act does not apply to agreements between a UK resident and a 
nonresident.  These agreements are generally covered by contract law, 
which takes a laissez-faire approach to terms and conditions freely 
agreed upon between the parties.

The European Union has adopted legislation establishing the obligations 
and conditions of European agents and their foreign suppliers.  The 
purpose of this legislation is to harmonize the laws and provisions of 
the member states.

The directive also establishes conditions regarding remuneration of the 
agent and the conclusion and termination of the agency contract.  To 
date, implementation of the directive has been slow, but U.S. firms 
entering into agency contracts in the European Union should be aware of 
the principles of the directive.

Changes to British law and the increased regulation of the principal-
agent relationship will encourage U.S. exporters to determine carefully 
the most advantageous channel of distribution, and the ensuing legal 
responsibilities of all parties.  Alternatives to the appointment of 
self-employed commission agents include the use of distributors or the 
hiring of salespersons as company employees.  All forms of 
representation should be carefully explored with legal counsel.


  ADVERTISING AND TRADE PROMOTION (INCLUDING LISTING OF MAJOR NEWSPAPERS 
AND BUSINESS JOURNALS)

It is advised that print and other advertising designed for the U.S. 
market be vetted by a UK advertising agency or direct marketing house to 
modify promotions for legal, cultural, and other differences between the 
two countries. (See Direct Marketing, above).

Advertising in the United Kingdom is highly developed and practices are 
similar to those of the United States.  Several hundred advertising 
agencies operate in the United Kingdom, and most of the major American 
agencies have a significant UK presence.  The full range of specialist 
advertising and market research services is readily available. 

The industry is self-regulating, with the Advertising Standards 
Authority, located at Brook House, 2-16 Torrington Place, London WC1E 
7HN, overseeing the practices of the advertising industry and enforcing 
the provisions of the British Code of Advertising Practice (CAP).  
Advertisers should become familiar with the CAP regulations.

Of the approximately $12 billion in annual advertising expenditures, 60 
percent goes to press advertisements and 31 percent to commercial 
television.   

The main vehicles for press advertising are the 130-odd national daily 
and Sunday newspapers.  Of these, there are 12 dailies and 9 Sunday 
newspapers with national circulation.  They are classified as either 
"quality" or "popular" papers on the basis of their style and content.  
With their immense circulation and deep penetration throughout the 
country, these newspapers are extensively used by manufacturers to 
advertise their products.  Total circulation of national newspapers is 
approximately 15 million on weekdays and 18 million on Sundays.

Major national 'broadsheet' newspapers include The Times, Financial 
Times, Daily Telegraph, Guardian, and Independent.  National 'tabloids' 
include the Daily Mail, Daily Mirror, and The Sun. (see Appendices for 
list of specialist publications.)  

Commercial television programs are delivered on a regional basis, and 
advertisements may be run either regionally or nationally.  The state-
sponsored British Broadcasting Corporation (BBC) does not accept 
commercial advertising on its radio or television stations.   The quasi-
governmental Independent Broadcasting Authority (IBA) regulates 
television advertising through its code of advertising standards and 
practices.   In any one hour of broadcasting, the commercial time is 
limited to nine minutes.  However, the average hourly time for 
commercials per day cannot exceed seven minutes.  Certain types of 
commercials--such as cigarette and gambling ads--are prohibited. 

Key U.K. food and agriculture trade journals include; The Grocer, Fresh 
Produce Journal, Caterer and Hotelkeeper, Frozen & Chilled Foods, Super 
marketing, Timber Trades Journal, Meat Trades Journal, Fish Trader and 
Farmers' Weekly.  Contact details for these publications are available 
from the Foreign Agricultural Service of the U.S. Embassy in London (see 
Appendix E).


  PRICING PRODUCT

The United Kingdom represents a strongly competitive market with high 
receptivity to U.S. goods.  When pricing product for sale in the United 
Kingdom, U.S. exporters need to be aware of some additional costs which 
could reduce profit margins below those available in the United States.

A value-added tax of 17.5 percent is charged on the majority of goods 
sold in the United Kingdom (with food and children's clothes the major 
exceptions).  In addition, imported goods may be subject to customs 
duty.  The costs of transportation, freight forwarding and customs 
brokerage charges will further diminish margins, as will commissions to 
agents and distributors.

UK retailers have tended to demand higher profit margins than those in 
the United States.  However, increased competition from large European 
and U.S. chains, as well as the arrival of warehouse clubs, are 
beginning to eliminate excessive profits.     

  SALES SERVICE/CUSTOMER SUPPORT

As an advanced economy, the United Kingdom offers a full array of sales 
and customer support services.  Advice on accessing these may be 
obtained from the Foreign Commercial Service at the American Embassy.  

A full array of market research services is available. In addition, the 
American Embassy in London provides periodic economic and financial 
country data, as well as market research reports and timely business 
information bulletins.  These data may be accessed on the National Trade 
Data Base (NTDB), a CD-ROM which is widely available throughout the 
United States in major libraries, or through subscription.  For more 
information, write to the U.S. Department of Commerce, Office of 
Business Analysis, HCHB Room 4885, Washington, DC 20230, Tel: (202) 482-
1986.

  SELLING TO THE GOVERNMENT

The UK government adheres to a general policy of "best value for money" 
in public procurements.  In both central and local government, there is 
a strong trend towards "out-sourcing" of services previously provided 
in-house.  Most government departments are subject to the GATT MTN 
Procurement Code.  This requires that tenders for public procurement 
over a specified value threshold must be advertised in a timely manner, 
and that bidders from GATT signatory countries should be given non-
discriminatory treatment.  Urgency or national security reasons can be 
used to justify procurements outside GATT rules.

Certain industries, notably telecommunications and transport, are 
exempted from the MTN Procurement Code.  The 1993 US-EU agreement on 
reciprocal market access in the electrical utilities sector has paved 
the way for further market access liberalization. 

Since Great Britain has no official journal, procurement intentions are 
published in the EU Official Journal.  In addition, trade publications 
and specialist bulletins are used to advertise future tenders for the 
procurement of equipment, works, or services that are industry-specific.  
Such tender announcements supplement EU Official Journal entries, they 
do not substitute for them.

The UK MoD prefers a direct commercial sales approach for its major 
defense acquisition programs.  Its acquisition policy calls for 
competitive "firm fixed price" contracting, wherever possible. Rarely 
will it fund developmental costs for a new start program.  The majority 
of its competitions focus on off-the-shelf equipment, which often 
requires some development to meet the specifications.  This approach 
entails selecting a single prime contractor who will accept all program 
risk (including development risks for adapting off-the-shelf technology 
to meet the operational requirement).  The MoD's policy is to amortize 
this cost over the production run of the system.  Many of their programs 
call for total package procurement to include: training infrastructure, 
ammunition, parts and maintenance support, development testing, and 
various performance guarantees.
 
The MoD publishes a biweekly digest called the MoD Contracts Bulletin. 
The bulletin contains information of possible future purchases, 
competitive contracts awarded, single-source contracts awarded, and 
prime contractor sub-contracts requirements.  It is available to U.S. 
contractor subscribers.  The American Embassy also utilizes the Commerce 
Trade Opportunities Program (TOP) to advertise pertinent information on 
pending procurements.

The growing UK health care market is dominated by the state-run National 
Health Service (NHS).  Procurement is the responsibility of several 
Regional Health Authorities, each of which takes the lead in procuring a 
range of products and services for the entire NHS. 


  PROTECTING YOUR PRODUCT FROM IPR INFRINGEMENT

UK intellectual property rights laws are strict, comprehensive, 
rigorously enforced and conform to the harmonized approach to IPR 
adopted by the EU.  The UK's IPR positions in international fora, such 
as the World International Patent Organization (WIPO) and GATT 
negotiations, parallel those of the United States.

The UK has legislation also in effect for the protection of patents, 
trademarks, and industrial designs.  The British Patent Office is 
responsible for the administration of the Patent Acts, the Registered 
Designs Act, and for dealing with issues related to the Copyright Acts.  
The United Kingdom is a member of the "Paris Union" International 
Convention for the Protection of Industrial Property (1958 Revision).  
Recent UK copyright law is designed to make copyrighting a more 
simplified, user-friendly procedure and has permitted the United Kingdom 
to join the Berne Convention.

Implementation by the United Kingdom of the 1989 EU Trademark Directive, 
which will establish a unitary trademark system for the European Union, 
will make it easier for UK trademark holders to obtain protection in 
other countries.   The UK's ratification of the Madrid Protocol on the 
international registration of marks will enable trademarks to be 
registered in all signatory countries with a single application.   Until 
the EU's Trademark Office is opened in Alicante, Spain in mid-1995,  EU 
trademarks will be registered on a national basis. 

A Single European Patent, valid throughout the EU, does not yet exist, 
since the Community Patent Convention has been ratified only by Germany 
and Greece. 

Applications for patents and for design protection in the United Kingdom 
should be filed with the Comptroller, The British Patent Office (BPO), 
25 Southampton Buildings, Chancery Lane, London, WC2.  Trademark 
applications should be filed with the Registrar, The Patent Office, 
Trade Marks Registry, also at the above address.

Private professional advice is normally provided by patent or trademark 
agents.  The Chartered Institute of Patent Agents, located at Staple Inn 
Buildings, High Holborn, London WC1V 7PZ telephone: (44-71) 405-9450, 
maintains a list of patent agents.  The Institute of Trade Mark Agents, 
at Suite 3-5, Panther House, 38 Mount Pleasant, London WC1X 0AP 
(telephone: (44-71) 833-0875), does the same for trademarks agents.

Some attorneys have a significant practice in trademark law, but it is 
not a legal specialty that many handle on a regular basis.  Most 
attorneys will consult a trademark or patent attorney when necessary, 
but it is often easier for firms to deal directly with a patent or 
trademark agent.

Patents:
Under UK law, three kinds of patents are granted.  These include basic 
patents, patents of addition, and secret patents.  Basic patents are 
issued on new inventions and discoveries for a period of 4 years from 
the date of application and are renewable every year for up to 20 years.

Patent applicants first file a request for the granting of a patent that 
protects the patent for the first year.  The protection ends unless a 
"request for search" is filed.  The third step is the applicant's 
request for "substantive examination."  The granting of patents is 
usually completed in less than four years from the initial filing date.

There are prescribed fees for each step of the process and for annual 
renewal of the patent.  The patentee must work the invention 
commercially within three years after issue of the patent; otherwise, a 
compulsory license may be ordered.  Compulsory licenses can be granted 
to prevent abuse of a monopoly position.  Special compulsory licensing 
applies to the pharmaceutical sector.

Patentees may elect to grant "licenses of right" under which they permit 
any interested person to work the invention upon payment of royalties. 
Revocation of a patent is possible two years after issuance if it is 
still not properly worked.

The United Kingdom is a signatory to the International Patent 
Cooperation Treaty (IPCT).   Under the IPCT, an inventor may file a 
single patent application with the BPO, which will then stake a claim in 
49 other countries, including 15 European nations and all the major 
industrial nations.

Thirty months after filing, if the examination report is favorable, the 
inventor must file separate applications and translations in the 
individual countries. 

Industrial Designs:
Industrial designs can be registered and protected for five years from 
the date the application is filed.  Registration is renewable for two 
terms of five years each.  The same design may be registered for more 
than one article.  Non-use of a design will not cause its registration 
to be cancelled, but a compulsory license can be ordered if the design 
may also be subjected to secrecy restrictions similar to those enforced 
on patents for national security purposes.

Trademarks:
The first user of a mark is entitled to its registration.  Trademarks 
are registered for 7 years from the date of application and are 
renewable for periods of 14 years each.  Applications should be filed 
with the Registrar, The Patent Office, Trade Marks Registry, at the 
address given earlier for the Patent Office.  The Trade Marks Register 
is divided into two parts (A and B).  Graduated fees are charged for the 
application, registration, and renewal.

To qualify for part A, which offers better protection, a trademark must 
be distinctive of the goods of the proprietor so that it will 
distinguish those goods from those of others.  The validity of trademark 
registration in part A is considered conclusive seven years after its 
registration.

The purpose of part B is to permit the registration of trademarks that 
are not inherently distinctive but may become so eventually after use.  
The law provides for removal of a trademark if the applicant has no 
intention of using it or if it has not otherwise been used continuously 
for five years.

Copyrights:
Both the United Kingdom and the United States are signatories of the 
Universal Copyright Convention.  This convention affords mutual 
copyright protection.

Copyrights are granted in the United Kingdom for the life of the author 
and for 50 years after his death, subject in the latter period to 
licensing stipulations.  Any one member state is able to grant 
protection which is applicable throughout the EU.

In 1986, the United Kingdom began to provide protection for service 
marks, a form of trademark, where a particular product or service is 
associated with a particular trading entity.  Both service marks and 
trademarks have to be examined for compliance with three basic 
principles of trademark law: whether it is distinctive, not deceptive, 
and does not conflict with another mark.

Trademark protection is available for almost any word or symbol that can 
have the attribute of becoming exclusive if sufficiently used.  Certain 
words and marks cannot be registered simply because they are laudatory 
or are used in the industry to describe goods or services.  For example, 
words and symbols that cannot be registered are those such as "best" for 
a particular product or service, a crossed fork and knife for a 
restaurant, or a money symbol for a bank.

Well-known geographical locations are not registrable even though they 
may have become distinctive of a particular company's products.  This 
rule, though, may  be differently applied to services.  The "Virginia" 
restaurant may be registrable, for example, while "Virginia" cookies 
would not.

A mark can acquire distinctiveness after considerable use.  Examples 
include very common surnames which are recognized by the public in 
connection with specific businesses.  A rough test for distinctiveness 
is whether competitors inherently would want to use the word or symbol 
as part of their business.

A mark can not be deceptive and may not imply that the business is other 
than what the trademark indicates.  The final requirement is that the 
mark not belong to another person or company.  There cannot be a prior 
registration for the same product or service for the same, or very 
similar, mark.

The phrase "the same goods or services" is important.  In the United 
Kingdom, a trademark is registered for a specific statement of goods in 
one of a number of classes.

Goods and services have been classified by an international system into 
over 40 classes ranging from live animals to machinery, to services such 
as banking, insurance, and finance.  UK registration for one class does 
not prevent use in another class.  If a company has far ranging 
activities, each class of activity will need to be protected.


  NEED FOR A LOCAL ATTORNEY

Circumstances in which an attorney would be necessary are very similar 
to those in the United States.  Many large U.S. law firms maintain 
branches in London or work in cooperation with local British lawyers.  


     "SHOWCASE EUROPE" INITIATIVE

The EU's Single Internal Market:

The European Union of fifteen nations, encompassing a market of $7 
trillion and 372 million consumers, is by far the largest and most 
important global economic partner for the United States, and our most 
important market for the remainder of the nineties.  The United Kingdom 
is currently the largest customer for U.S. goods and services within the 
EU. 

Due to the vast size of the EU market, the modest anticipated 3 percent 
annual growth in the EU's GDP is equivalent to the creation of a new 
market for U.S. products the size of Taiwan's every year.   

The EU's Single Market objective, established in law, is to remove 
internal barriers to the movement of goods, capital, labor, and 
services.  This has created major opportunities for American exporters 
and investors, and along with them some new challenges.  For example, a 
significant advantage for the U.S. is that they will be able to 
manufacture to a single set of product standards, whereas previously 
each country had set its own product standards. 
 
The Commercial Service of the U.S. Department of Commerce is currently 
transforming its organizational structure in Europe, and attuning its 
business support services, to meet the needs of American firms operating 
within the Single European Market for Europe-wide assistance.  Based on 
a new vision for U.S.-European commercial relations, a newly-developed 
commercial plan - dubbed Showcase Europe - has been designed to help 
U.S. firms exploit the commercial opportunities presented by the immense 
European Union market, and the emerging markets of Eastern Europe.

There is a potent opportunity for U.S. export gains in Europe by 
increasing U.S. market share through aggressive export promotion 
efforts.  For example, U.S. firms have an 11 percent share of the UK's 
import market but less than 6 percent of the rest of the EU.  Consider 
also that the German economy is 70 percent larger than the UK economy - 
yet American firms export 40 percent more to the UK than to Germany.  
Also, approximately 25 thousand American firms export to the UK and only 
18 thousand to Germany and 12 thousand to France.   Success in the UK 
appears principally related to marketing effort.  A promotion and policy 
focus on other EU markets has the potential to raise U.S. market share 
throughout the EU to the level now enjoyed only in the UK.

At the same time, the remarkable transformation of the countries of 
Central and Eastern Europe into increasingly free market-oriented 
democracies has created a wealth of opportunities for U.S. exporters and 
investors.  Although starting from a low base, the market in these 
countries could triple by the year 2000.  As trading relations between 
the EU and East European countries strengthen, access to these emerging 
markets by U.S. firms may most effectively be gained through West 
European affiliates.

The Showcase Europe plan aims to provide U.S. business with the support 
needed to embrace these opportunities.  It seeks vigorously to open up 
transatlantic trade through reductions in tariffs and standards 
barriers, mutual recognition of product testing and certification, full 
access to government procurement opportunities and national treatment 
for investors.  Another goal of the plan is to accelerate the 
integration of the economies of Central Europe, Russia and the Newly 
Independent States into the world economy as full and open partners.  
Finally it seeks to expand U.S. exports to Europe by approaching the 
market on a regional basis and by encouraging existing exporters and 
investors to move into additional EU or East European markets.

These changes have required that the Commercial Service modify the old 
"compartmentalized" approach to supporting U.S. exports, with each 
country treated as a separate market, in favor of an integrated 
structure offering uniform, pan-European programs and services managed 
and coordinated from centers of excellence in embassies throughout the 
EU.  To help U.S. firms fully realize the opportunities flowing from 
Central and Eastern Europe, the Commercial Service is creating new 
resources and developing new partnerships, and information on these is 
being actively promoted to U.S. firms already operating in the EU.  More 
attention is being paid to the interests of U.S. investors, with more 
counseling and information on investment opportunities, joint ventures 
and financing.      
       
To accomplish the goals of Showcase Europe, the Commercial Service is 
implementing three broad-based strategies.  They include:  adopting a 
Single Market Approach to address the European market in regional or 
sub-regional terms, rather than in national terms, in order to attract 
U.S. companies into additional European markets;  creating an American 
Business Network to develop new promotion and policy initiatives with 
clients and partners in the private sector in order to increase market 
share in Europe; and developing a Commercial Information Infrastructure 
to utilize new communication and information technologies in order to 
deliver market intelligence and trade and investment opportunities more 
efficiently to its U.S. clients.   


The Single Market Approach:
Taking cognizance that Europe is rapidly becoming one market, and that 
U.S. firms should trade and invest throughout Europe, our trade 
promotion and information programs are being revamped to provide a 
continent-wide support base.  For example the Commercial Service is 
implementing a European-wide approach to bringing foreign buyers and 
decision makers to U.S. trade shows, and a regional approach to 
identifying, supporting and counseling American companies interested in 
expanding their activities in Europe.

Initially the Single Market Approach is focusing on four pilot industry 
sectors - aerospace, power generation, information technology and 
environmental technologies.  Market research in these sectors is being 
coordinated, and major European trade events are being promoted by all 
Embassies. 

To support investors, conferences have been arranged to inform U.S. 
firms with an established presence in Europe of opportunities and 
conditions in other markets within the EU and beyond, and of U.S. 
government programs to assist entry to these markets.  Due to the large 
number of U.S. firms based in the UK, and the ease of access to 
Heathrow,  London has been a favorite venue for these events. 

American Business Network:
We are establishing a policy reporting network to ensure that U.S. 
business interests are fully reflected in embassy activities to open 
markets, remove barriers, ensure international agreements are 
implemented and to develop an early warning network to avert emerging 
problems.  In addition, industry-specific and issue-specific U.S. 
business groups are being established with a Europe-wide focus.

The effort to support firms of U.S. parentage based in Europe  brings 
the goals of the Commercial Service into alignment with those of some 
host trade promotion and investment organizations whose own resources 
and networks can be mobilized.  
 
Aggressive Advocacy:
While Europe represents the most open and transparent market for U.S. 
companies, they are not always afforded equal treatment across the EU.  
In some sectors - such as electric power generation, telecommunications 
and audiovisual services - barriers still exist.  New product standards 
and product testing /certification rules can discriminate against non-EU 
firms, and American businesses can be prevented from participating on 
equal terms in the coming wave of privatizations.  Where such barriers 
persist, the U.S. Government will advocate aggressively to ensure that 
U.S. firms be allowed to compete fully throughout the integrated 
"borderless" market of Europe, and that European consumers enjoy the 
full benefits of genuine competition,     


UK Strategy:
Recognizing the current substantial comparative advantage in the U.K. 
marketplace, the London Embassy has developed a two-year trade promotion 
strategy to support the key objectives of Showcase Europe.  This 
strategy,  "the U.K./U.S. Business Partnership for Europe", features two 
parts:  the European Launch-Pad and Strategic Sectors.  

The European Launch Pad strategy aims to build upon the current strength 
of the U.S. strategic commercial position in the United Kingdom.  The UK 
is our fourth largest trading partner in the world and the largest in 
Europe.  It is the destination of 40 percent of U.S. investment in the 
EU, and is the host to the regional headquarters of over 50 percent of 
U.S. corporations with operations in more than one European country.  
London's role as Europe's pre-eminent financial center reinforces the 
UK's unique position as the most effective gateway to the EU and a 
staging post for entry into Central Europe, Russia, the NIS, the Middle 
East and Africa.

Integral elements of the European Launch-Pad include:  the development 
of a client database of U.S. firms exporting to the U.K. and nowhere 
else, the design of an aggressive, systematic outreach campaign to major 
U.K. business centers, the development of tools to allow us to counsel 
U.S. clients interested in the U.K. or other opportunities in the larger 
European marketplace, and the marketing of Commercial Service products 
and services directly to U.K.-based U.S. clients seeking to enter other 
European and regional markets.

Coupled with the European Launch-Pad is the London Embassy's focus on 
supporting the four pan-European strategic sectors - aerospace, 
electrical power generation, environmental products and services, and 
information technologies - as well as three which represent exceptional 
opportunities in the UK market - biotechnology and health care, consumer 
products and building materials.   

From the standpoint of U.S. commercial interests, Europe could well be 
the most promising market for the remainder of the 1990s.  The 
Commercial Service is well on its way to restructuring its trade 
promotion programs to take advantage of some very promising 
opportunities. 


V.  LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT


  BEST PROSPECTS PRODUCTS AND SERVICES FOR U.S. EXPORTERS

Ranking based on greatest estimated 2-year growth in U.S. exports, the 
best prospects in the UK's market are as follows:

Industrial Goods:

1)  AIRCRAFT AND PARTS  (AIR)
2)  INDUSTRY COMMENTS:     
The UK Aerospace industry, which suffered in FY 1993 as a result of 
excess capacity and declining levels of demand, has shown signs of 
revival.  Long-term growth prospects for the industry are very positive.  
Projections for the commercial market over the next fifteen years 
anticipate that European air passenger traffic will grow from 394 
billion in 1990 to over one billion by the year 2010.  This will 
translate into the need for more than 10,000 new aircraft and an 
estimated $1,000 billion in airline expenditure.   

Aircraft parts suppliers will also have major opportunities to enter the 
UK aerospace market as the need to service aging fleets is becoming more 
pronounced.  British Air, one of the industry's leading performers, has 
an ambitious plan for fleet expansion.  Due to the introduction of noise 
control regulations, airlines such as BA will either need to upgrade or 
replace older Boeing 727's and 737-200's as well as DC-9's by the 
beginning of the next century.

Airlines will look to plane manufacturers to develop new high technology 
products and airliners that can efficiently handle the increasing number 
of travelers while maintaining a lower operating cost than aircraft 
flying today.  It has been speculated that new multi-million dollar 
projects aimed to ease congestion at the UK's busiest airports may 
include a "super jumbo" jet and a supersonic successor to the Concorde.  

3)  MARKET DATA (US$ millions)  1994    1995    1996
                                      (est.)  (forecast)   
A)  Total Market Size           4,973   5,105   5,513  
B)  Total Local Production      8,806   9,043  11,119
C)  Total Exports              10,948  11,223  12,554
D)  Total Imports               7,115   7,286   7,908
E)  Imports from the U.S.       3,356   3,617   3,912


1   COMPUTER SOFTWARE  (CSF)
2  INDUSTRY COMMENTS
The U.K. market for computer software is expected to continue to grow in 
1996.  The trend away from bespoke applications running on proprietary 
mainframes and mini-computers should continue and more firms are 
expected to adopt client/server solutions.  In 1995 the fastest growing 
segments of the market was software development tools which grew by 14 
per cent.  PC software packages running under Microsoft Windows will be 
in high demand as figures for 1995 show that Windows is installed on 64 
per cent of all PCs.  In recent years the financial services sector has 
been the biggest spender on I.T. services and software.

3   MARKET DATA (US$ millions)  1994    1995    1996
                                       (est.)  (forecast)
A)  Total Market Size          7,388   7,937   8,373
B)  Total Local Production     5,700   6,190   6,700
C)  Total Exports              1,170   1,269   1,422
D)  Total Imports              2,858   3,016   3,095
E)  Imports from the U.S.      1,370   1,627   1,723




1)  POLLUTION CONTROL EQUIPMENT   (POL)
2)  INDUSTRY COMMENT
Little has changed in the last year in the U.K. pollution control 
equipment market.  The Government is continuing to promulgate new 
legislation that will drive this market, and this will continue to 
create opportunities for U.S. companies.  In 1995 the Government 
launched its new Waste Strategy, establishing a waste hierarchy, with 
waste minimization at the top, followed by reuse, recovery and finally 
disposal.  The Government will also enact the Environment Act, 1995, 
which sets out new proposals for dealing with contaminated land.  In 
1996 a new U.K. Environment Agency will be established to amalgamate 
several agencies and impose a more rigorous enforcement regime on 
polluters.  Also a tax on landfill will come into effect.  All this will 
stimulate demand for pollution control equipment.  

The U.S. is second only to Germany in air pollution control, and in 
water pollution control France has less than half the U.S. import share 
of the UK market.  The current value of the dollar is encouraging U.K. 
buyers look towards the United States where previously they had relied 
on European suppliers in these sectors.  The market is expected to grow 
by about 10% from 1995-96.    

3)  MARKET DATA
(US $ millions)                 1994    1995    1996
                                       (est.)  (forecast)
A)  Total Market Size          3,010   3,300   3,696  
B)  Total Local Production     2,450   2,695   3,018
C)  Total Exports                520     572     640
D)  Total Imports              1,070   1,177   1,318
E)  Imports from the U.S.        260     312     374

The above statistics are unofficial estimates.



1)  APPAREL     (APP)
2)  INDUSTRY COMMENTS:
Despite the on-going recession throughout many European countries, the 
British economy has been enjoying a recovery since 1993.  This is 
reflected in the womenswear market where sales increased by 4.6 percent 
in 1993.  With a further growth of between 3 and 4 percent forecast each 
year throughout the 1990s, this can only fuel its strength.  The 
clothing sector represents nearly 6 percent of the total expenses of 
British households, with women's clothing accounting for 48 percent of 
the whole clothing trade.

The menswear market in both the U.S. and U.K. continues to grow with an 
emphasis on quality and simplicity.  It has been predicted that the 
menswear industry will be expanding at a larger rate than womenswear.  
Due to an increase in the male population between the ages of 45 - 64, 
retailers have been targeting a less fashion conscious group and 
returning to classic styles.  As in womenswear and childrenswear, 
American designers continue to supply functional casual wear as opposed 
to the impractical European looks.  Ralph Lauren, Levi's and 'The Gap' 
are expanding in the U.K. offering a wide range of comfortable and easy 
to wear clothes. 

3)  MARKET DATA (US$ millions)          1994    1995   1996
                                                (est.) (forecast)
A)  Total Market Size                 13,117  13,750  15,000
B)  Total local Production            11,048  11,600  12,450
C)   Total Exports                     3,702   3,900   4,050 
D)  Total Imports                      5,771   6,050   6,600
E)  Imports from the U.S.                390     425     470



1   DRUGS & PHARMACEUTICALS  (DRG)
2  INDUSTRY COMMENT
The UK market for all medicinal and pharmaceutical products was $8.5 
billion in 1994.  This breaks down as $5.6 billion through pharmacies, 
$0.9 billion through medical facilities and $2.0 billion over-the-
counter (OTC) sales.  The UK market is the 6th largest in the world.  
The conservative prescribing habits of UK doctors means that the UK 
market is barely half the size of the German or French ones, yet with a 
population similar to France.  The National Health Service (NHS) 
accounts for 90 percent of prescription pharmaceuticals.  Prescription 
drug sales grew by 8 percent in 1994 and OTC products by 6.5 percent.

The primary distribution channel for pharmaceuticals in the UK is 
through pharmacies.  Over 80 percent of ethical drug and 70 percent of 
OTC products are made through the 11,000 pharmacies in the UK.

Drugs for 3 therapeutic areas account for over 50 percent of the UK 
prescribed market.  They are:  alimentary/metabolism, cardiovascular and 
respiratory (asthma drug sales alone run at about $600 million per 
year).  The largest sector of the OTC market is analgesics.  Sales 
reached $300 million in 1994.

All the major pharmaceutical companies compete in the UK market and many 
have research and production facilities here using the very strong 
science base.  The 1995 merger of 2 UK firms created the world's largest 
pharmaceutical company - Glaxo Wellcome.

The main driver of the market is the cost of healthcare.  Pharmaceutical 
prices in the UK are controlled by the Pharmaceutical Price Regulation 
Scheme (PPRS).  The scheme doesn't regulate individual drug prices, but 
rather individual company's Return on Capital (ROC).  However, the 
pressure on health costs also presents opportunities.  Therapies that 
can demonstrate savings in other areas of health will do very well - for 
instance, a drug that cures faster or removes the need for hospital 
care, even though it might be relatively expensive, will have a market.

In addition, cost pressure is fuelling demand for generic substitutes of 
branded drugs.  Currently about 50 percent of prescriptions written and 
40 percent of those dispensed are for generics.  Generic development in 
the European Union (EU) is, however, hindered to some extent by the 
system of supplementary protection for pharmaceutical products (the SPC 
system). This system prevents manufacturers from starting development of 
a generic until the branded protection ends.  U.S. generic suppliers 
that can develop products outside Europe should be able to beat their 
European competitors to market.

By September 1998 all prescription medicines sold in the UK will have to 
be in patient (original) packs.  The UK Medicines Control Agency (MCA) 
recently published details of the Patient Pack Initiative including 
details of the 3 year program for pack introductions.  The program has 
12 phases of 6 months, each covering drugs in a number of therapeutic 
areas.  The first phase began on June 1, 1995 for submissions, with the 
first patient packs due for introduction in December 1995.

The European Medicines Evaluation Agency (EMEA) recently opened in 
London.  Its remit is to oversee the implementation of European 
regulations and directives for product licenses across Europe.  There 
are 3 procedures for seeking product licenses: centralized (required for 
many biotechnology products), decentralized and national authorization 
for single, domestic markets.  Much of the industry believes that the 
EMEA's London location will act as a draw for companies to establish 
pharmaceutical research facilities, particularly biotechnological 
research, in the UK to best take advantage of its proximity.

3   MARKET DATA (US$ millions)     1994    1995    1996
                                           (est.)(forecast)
A)  Total Market Size             8,500   9,400   9,900
B)  Total Local Production       11,200  12,100  12,500
C)  Total Exports                 6,400   6,700   7,000
D)  Total Imports                 3,700   4,000   4,400
E)  Imports from the U.S.           380     440     480

The above statistics are unofficial estimates.


1)  BUILDING PRODUCTS  (BLD)
2)  INDUSTRY COMMENTS:
Activity within the U.K. construction industry has been markedly slow to 
throw of the effects of recession.  The economy grew strongly during 
1994, driven principally by increased capital expenditure and an 
improved overseas trade performance.  In contrast, consumer expenditure 
growth slowed in reaction to higher taxation, weak real income growth 
and concerns over rising interest rates.  Consumer confidence remains 
persistently weak and this frailty is reflected in the sluggish housing 
market.  Overall, it is the repair and maintenance sector of the housing 
market which is exhibiting signs of increased activity.  As new home 
owners continue to refurbish rather than 'trade up' or move on, 
prospects for one of the building products primary subsectors, that of 
the Do-It-Yourself (D-I-Y) market, will remain excellent.  The 
competition for U.S. exporters in most areas of the building products 
market is considerable but U.S. imports are perceived, in the main, as 
having superior quality particularly suited to the upper end of the 
market.  Good opportunities exist for suppliers of ornamental brickwork 
and facings and architectural metalwork; and also for all types of 
insulation products, including windows and doors, as Britain's older 
housing stock is updated.

3)  MARKET DATA (US$ millions)   1994    1995    1996
                                         (est.) (forecast)
A)  Total Market Size           16,202    17,775  18,000
B)  Total local Production      16,716    18,275  18,500
C)   Total Exports               2,811     2,850   2,900
D)  Total Imports                2,297     2,350   2,400
E)  Imports from the U.S.          355       375     400



1   MEDICAL EQUIPMENT        (MED)
2  INDUSTRY COMMENT  
The major purchaser of medical equipment in the UK is the National 
Health Service (NHS), followed by the residential care and private 
hospital sectors.  Growth has been steady, if not high, due to cost 
pressures within UK healthcare.  Growth in sales of electro-medical 
equipment has risen faster than that in the rest of the market.  The 
market is competitive with many UK and foreign suppliers.  U.S. 
companies are well represented as are the major German companies.

The sale of medical devices in the UK is governed by 3 European Union 
(EU) directives.  The Medical Devices Agency is the UK Competent 
Authority responsible for the implementation and enforcement of the 
regulations.  Those products that meet the regulations are awarded the 
CE mark which enables marketing of the product throughout the EU.

A common obstacle to the purchase of capital medical equipment by the 
NHS is tight Department of Health (DoH) spending controls.  The UK 
government has, however, recently introduced the Private Finance 
Initiative (PFI) which allows, within certain guidelines, private 
finance to be used for the purchase and running of equipment.  The NHS 
then pays for access/usage, typically less than full capacity, leaving 
the company free to sell the balance to other healthcare providers.  
Whilst the supplier assumes the financial risk, the initiative opens the 
market for the supply of capital equipment.

The tight financial controls mean that the NHS has an ongoing, though 
unspecified, interest in reconditioned capital medical equipment.  It 
has in the past bought substantial quantities of reconditioned 
equipment.  At present, and as a result of the changes in the NHS, there 
is an internal surplus of equipment which is reallocated as appropriate.  
This surplus is not expected to last long and in any case may not 
satisfy all requirements.  Reconditioned medical equipment is covered by 
the same regulations as new equipment.  In addition, the NHS requires 
suppliers of medical equipment, whether new or 2nd hand, to satisfy 
their own safety, quality and legal requirements.  The best 
opportunities will therefore be for properly reconditioned equipment 
accompanied by guarantees and service back up.

3   MARKET DATA (US$ millions)  1994  1995  1996
                                     (est.)  (forecast)
A)  Total Market Size          2,360  2,480  2,610
B)  Total Local Production     2,610  2,740  2,880
C)  Total Exports              1,370  1,440  1,510
D)  Total Imports              1,120  1,180  1,240
E)  Imports from the U.S.        350    370    390

The above statistics are unofficial estimates.



1)  SPORTING GOODS & RECREATIONAL EQUIPMENT (SPT)
2)  INDUSTRY COMMENTS:
Sports activities in the U.K. have grown spectacularly over the last ten 
years, driven by increased public awareness of general health and 
fitness.  This recently discovered 'fitness' has spawned an industry of 
magazines, books and videos on the subject of aerobics, golf, tennis, 
etc.  Additionally, many U.S. exercise products for home use are highly 
visible.  Major U.K. retailer Lillywhites has reported that according to 
sales, women's fitness is one of the fastest growing sports areas.  In 
fact, according to a recent report, predictions are that there will be a 
growth in the market of up to 70 percent by the year 2000.  

There are in excess of 27 million active sports participants in the U.K.  
Each year it is estimated that one in four of them suffers a sports-
related injury.  It is therefore not surprising that with the growth in 
self-treatment and increasing consumer awareness, the market for sports 
supports in the U.K. sports trade is growing at a phenomenal rate of 24 
percent year-on-year.

The new 'craze' in the U.K. is roller blading, or in-line skating as it 
is also known.  The glamour and style of the sport appeals hugely to the 
younger age group making in-line skating potentially a huge money 
spinner for sports retailers in the U.K., and an excellent opportunity 
for U.S. manufacturers of sports related products.   

3)  MARKET DATA (US$ millions)   1994    1995    1996
                                         (est.) (forecast)
A)  Total Market Size           1,038  1,110  1,165
B)  Total local Production        514    590    625
C)   Total Exports                203    230    235
D)  Total Imports                 721    750    775
E)  Imports from the U.S.         155    160    165



1)  DEFENSE EQUIPMENT  (DFN)
2)  INDUSTRY COMMENTS:
Like most western countries, the UK defense budget is being trimmed.  As 
a result, a "best value for money" policy has been adopted.  Competition 
is key; it will be expanded by "market testing" proposals which will 
allow private firms to bid for such traditional military tasks as 
aircraft maintenance and certain transport roles.  Due to budgetary 
constraints, the acquisition process has focused increasingly on "off 
the shelf" systems, and money for research and development has been 
limited.  While significant opportunities do exist, the competition for 
contracts has intensified as more firms are bidding for fewer jobs.  

Major defense projects offering opportunities for U.S. business in the 
defense sector include: Aircraft and parts for the Attack Helicopter, 
Airlift Modernization, Maritime Patrol Aircraft Replacement programs, 
Mission Systems Integration technology for various major equipment 
procurement programs (as prime contractor or sub-contractor) and major 
sub-contracting opportunities in the electronic component/test equipment 
and telecommunications equipment fields.

Other best prospects for U.S. firms include: aircraft, electronics 
industry production and test equipment, electronic components, avionics 
and ground support equipment, lasers and electro-optics, and 
telecommunications equipment.  Construction and engineering services and 
computer and software services present the greatest defense sector 
business opportunities within the service categories.  Major defense 
competitions during the next two years are:  Conventionally Armed 
Standoff Missile (CASOM);  Air Launched Anti-Armor Weapon; Attack 
Helicopter; Bowman Combat Radio; Tactical Reconnaissance Armored Combat 
Equipment Requirement (TRACER); Maritime Patrol Aircraft Replacement; 
Sea King Airborne Early Warning Helicopter Upgrade; Future Medium Range 
Air-to-Air Missile; Ballistic Missile Defense Systems Studies; and 
Launch Vehicle for Skynet IV Satellite.

Please note that figures on imports and exports of defense equipment are 
only rough estimates as the sector is generally broken up to be included 
under such categories as aircraft and parts, computer software, 
electrical, etc.


(US $ millions)
                              1994  1995     1996
                                   (est.)  (forecast)
D)  Total Market Size       12,232  12,142  12,142
E)  Total Local Production  12,809  12,722  12,722
F)  Total Exports            1,877   1,860   1,860
G)  Total Imports            1,300   1,280   1,280
H)  Imports from the U.S.      342     342     342

Note: The above statistics are unofficial estimates.  No official 
estimates were available for 1996 expenditure at time of writing.  
However, no significant change is anticipated over the 1995 figures.



1)   FRANCHISING  (FRA)
2)  INDUSTRY COMMENTS
Sales of products or services through franchised outlets have grown 
exponentially in the United Kingdom.  The value of goods and services 
sold through franchises grew by 500% from 1984 to 1993.  Throughout the 
United Kingdom there are 414 franchise systems in operation.  An 
estimated 175,900 people work in 26,400 franchise outlets, and a further 
16,400 are employed by the franchise systems.  Total sales by franchises 
were estimated at $8.8 billion in 1994, a 10 percent increase over the 
previous year.  

The United Kingdom is exceptionally receptive to American franchisors, 
particularly in food services and retailing.  The common language, and 
similar cultural and business customs, has made the United Kingdom the 
logical first choice in Europe for American franchisors, and an ideal 
base for franchise expansion into the Continent.  In a recent study by 
NatWest Bank, 47 percent of the UK's franchisors plan to expand their 
operations into the Continent by 1999, and 20 percent claim to be doing 
so already. 

There are approximately 85 non-British owned franchise systems operating 
in the UK, about 60 of which are American-owned.

The expansion of U.S. franchises has often been at the expense of small 
indigenous retailers unable or unwilling to match their levels of 
organization and marketing, customer service, cleanliness and value.  In 
many cases, smaller UK firms have been slow to respond to changing 
patterns in consumer lifestyles which, to a large extent, have been 
similar both in the U.S. and the UK.  Generally, if a franchising idea 
has proved successful in the U.S., it has an excellent chance in the UK 
and Northern Ireland, particularly among the young.    

Factors which will continue to drive the growth of franchising in the UK 
include: the expected overall improvement in the economy; increasing 
consumer confidence; shifting demographics, such as the growing number 
of retirees, and the increase in the number of women working outside the 
home.

There are several large UK-owned food service and hospitality 
corporations which are potentially very competitive.  Through their 
substantial investments in the U.S., some of these are the parents of 
American franchisors.  For example, Grand Metropolitan owns Burger King.  
However, many of these large corporations have occasionally found it 
more effective to act as franchisees in the UK rather than as direct 
competitors, attesting to the cache attached to a successful U.S. brand 
name.  
Best franchising prospects include food services, specialty store 
retailers, businesses catering to retirees and two wage-earner families, 
cleaning and repair services, day care services, home renovation and 
decoration, and leisure products and services.

3   MARKET DATA (US$ millions)      1994  1995  1996
                                         (est.)  (forecast)
A)  Total Sales                    8,000  8,8000  9,680
B)  Domestic Sales by Local Firms  8,000  8,800   9,600
C)  Foreign Sales by Local Firms     n/a    n/a     n/a
D)  Sales by Foreign-owned Firms     n/a    n/a     n/a
E)  Sales by U.S.-owned Firms        n/a    n/a     n/a

(The above statistics are unofficial estimates.  Franchisees are 
considered local firms.  There are no separate figures available for 
sales by units of which the franchisor is non-British). 

The table below shows the number of franchise systems and franchise 
units operating in the United Kingdom in 1994.

SECTOR                        SYSTEMS    UNITS
Building Services                  39      925
Catering & Hotels                  55    3,095
Cleaning Services                  15    1,510
Commercial & Indstr'l Services     55    1,085
Distribution                       51    2,910
Domestic & Personal Services       25    1,110
Employment Agencies & Training     16       530
Estate/Business Transfer Agents    16      435
Parcel and Courier Services        13    1,095
Quick Print/Design                  8      635
Retail                             86    4,515
Vehicle Services                   28    1,555

(Source: NatWest Bank - Small Business Services)




Agricultural Sectors:

1.  AGRICULTURE - FOREST PRODUCTS  (FOR)
2.  COMMENT:  
This table includes roundwood, softwood lumber, temperate hardwood 
lumber, tropical hardwood lumber, softwood veneer, temperate hardwood 
veneer, tropical hardwood veneer, softwood plywood, temperate hardwood 
plywood, tropical hardwood plywood, hardboard, medium density 
fiberboard, insulation board, and particle board.

Temperate hardwood lumber and softwood plywood represent the sectors 
with the greatest U.S. imports at 121 and 268 thousand cubic meters 
respectively. Third country competitors in the temperate hardwood sector 
are Canada and Germany, but the U.S. is by far the largest supplier.  
Canada is also the major competitor in the softwood plywood sector of 
the forest products market.   

3.  MARKET DATA ('000 cubic meters)
                               1992  1993  1994
A)  Total Market Size         20,056  20,993  21,253
B)  Total Local Production    10,669  11,639  11,848
C)  Total Exports                397     394     335
D)  Total Imports              9,784   9,748   9,740
E)  Imports form U.S.            626     604     485



1.  AGRICULTURE - TURKEY MEAT 
2.  COMMENTS:
Although the UK is a net exporter of turkey meat, imports of turkey 
breast meat are required to fulfill consumer preference.  Imports of 
processed turkey meat are bound under GATT at a tariff rate of 17 
percent.  This binding avoids the EU sluice gate price.  Under the U.S. 
- EU Blair House Agreement this rate will be halved to 8.5 percent with 
GATT implementation.  United States processed turkey meat is presently 
bought by UK retailers and further processors.  France and the 
Netherlands are the major competitors.

3.  MARKET DATA ('000 metric tons)
                              1992     1993    1994
A)  Total Market Size          230     249     258  
B)  Total Local Production     246     252     253  
C)  Total Exports               38      32      31  
D)  Total Imports               20      26      36  
E)  Imports from the U.S.        6       4       4  



1.  AGRICULTURE -  SEAFOOD
2.  COMMENTS:
U.S. Seafood is generally competitive on both price and quality, 
especially in the high value seafood sectors. The most promising 
subsectors within the seafood market are, and are likely to be, crab and 
crab meat, and other specialty products.  However, salmon remains by far 
the largest single U.S. seafood export to the UK.  The major third 
country competitor in both farmed and seafish is Norway.  

3.MARKET DATA ('000 metric tons)
                               1993  1994  1995
B)  Total Market Size           462   464   470
C)  Total Local Production      380   386   398
D)  Total Exports               365   384   384
E)  Total Imports               442   464   453
F)  Imports form the US          25    18    22


1.  AGRICULTURE - TREE NUTS
2.  COMMENTS:
United States tree nuts continue to be competitive on quality and to a 
lesser degree on price.  The above table includes the  four major tree 
nut varieties imported to the market - almonds, pecans, pistachios and 
walnuts.  The most promising subsectors within the tree nut market are 
almonds and pecans.  Major third country competition comes from China, 
India and Iran.

3. MARKET DATA ('000 metric tons)
                            1992  1993  1994
B)  Total Market Size         21    21    22
C)  Total Local Production    --    --    --
D)  Total Exports              4     4     4
E)  Total Imports             25    25    26
F)  Imports from U.S.         13    11    11


1.  AGRICULTURE -  PET FOODS
2.  COMMENTS:
Local production dominates the canned "moist" pet food market but 
imports are rising as demand for other types of pet food increases.  The 
most promising subsectors for imports are complete dry dog food, dietary 
products and treats.  Major third country competition comes from 
Thailand with intra-EU trade also supplying the market.

3.  MARKET DATA ('000metric tons)
                             1992  1993  1993
A)  Total Market Size       1,415  1,403  1,341
B)  Total Local Production  1,348  1,248  1,245
C)  Total Exports             192    148    160
D)  Total Imports             259    303    256
E)  Imports from U.S.          18     24     29


Tourism:

1)  TOURISM
2)  INDUSTRY COMMENTS:
In 1995 the United Kingdom is again forecast to be the second largest 
overseas provider of tourists to the United States.

The U.S. is the top long-haul destination for UK travelers, and  the 
forecast for 1995 is for nearly 3 million UK residents to visit the 
United States and provide almost $7 billion in export earnings.  This 
represents a 2.4% growth in arrivals and a 5.9% increase in spending 
over 1994.

There remains great potential in the UK-to-US travel market for the 
continued growth over the next several years, both with first-time 
visitors and with the 70% of repeat travelers exploring further afield 
to lesser-known and rural destinations.

Florida bookings, which declined following the highly-publicized tourist 
killings in that state more than a year ago, are showing recovery.  As 
British visitors become more sophisticated, they also search for new 
places to visit in the U.S., beyond the typical first visit of a "stay-
put two-week holiday" at a sunshine destination.  USTTA marketing 
efforts in 1995 and 1996 will focus on six niche markets: golf/tennis; 
soft adventure; theater/arts/culture; skiing; lesser-known state and 
national parks; and shopping.

The British pound sterling buys few bargains for the British traveler in 
Europe these days (even with the recent devaluations of the Spanish and 
Portuguese currencies) but does buy bargains in the USA.  Favorable 
exchange rates should rekindle British interest in visiting America in 
1995-96.  This factor alone could cause an upturn in U.S. arrivals from 
the UK.

While most prospective travelers are aware of the potential for violence 
in any city in the world, security concerns must be a priority for U.S. 
destinations hoping to attract UK visitors.  The British tend to regard 
the U.S. as a "gun culture," an image that has been amplified by the 
Oklahoma bombing and the subsequent media coverage of its link to 
heavily armed militia groups in the U.S.

In addition to addressing safety issues, focusing on value-for-money and 
new destination possibilities in the United States is important to 
ensure continued growth of this market.

International competition for UK visitors is heating up, with new and 
aggressive long-haul destinations offering inclusive holidays with 
charter flights at costs comparable to the favorite UK destination, 
Florida.  It is now possible to fly to Australia by charter flight for 
approximately the same cost as the cheapest scheduled flights to Los 
Angeles and San Francisco.

The Gambia and Kenya in Africa, Sri Lanka, Goa in India, Thailand and 
several Caribbean islands, as well as European and Mediterranean 
destinations such as Greece, Turkey, and Israel, are investing millions 
of dollars in advertising and promotion campaigns to court the UK 
traveler.

These and other competitor-nation tourist office investments are paying 
handsome dividends for their home countries in increased tourism while 
they erode US market share.

Statistics from the UK Central Statistical Office document this trend:  
For the three months to December 1994, when UK outbound travel increased 
by 10% over the previous year, UK visits to North America fell 5%, while 
travel to Western Europe rose 7%.  Spain, one of the biggest spenders in 
this market , increased its UK visitor numbers 23.8% between January and 
November 1994.

An interesting parallel is that the UK, another nation cutting back its 
national tourist office budget in times of heavy competition from other 
nations, is also losing market share.

In previous years the USA, like the UK, could rely on the assumption 
that people "will come anyway."  This assumption is still technically 
true, but the hot and heavy global competition for the tourism dollar 
has brought a new focus to the international tourism picture.  The rules 
of the global tourism game have changed, and market share is 
increasingly moving to the marketers.  


VI.  TRADE REGULATIONS AND STANDARDS

  TRADE BARRIERS

The United Kingdom has international trading obligations under its 
membership in the European Union (EU), the General Agreement on Tariffs 
and Trade (GATT), the Organization for Economic Cooperation and 
Development (OECD),the International Monetary Fund (IMF), and the United 
Nations Conference on Trade and Development (UNCTAD). 

Our relations with the United Kingdom reflect a shared commitment to an 
open and expansive multilateral trade system.  The UK presents no 
significant impediments to trade and investment or foreign ownership of 
corporate assets, nor restrictions on the free-flow of capital.  
However, there are several specific sectoral barriers:

Bilateral Issues:

 -  Air Services:  The bilateral air services agreement restricts 
competitive opportunities for U.S. carriers between points in the United 
States and Great Britain.  Limits on access to Heathrow Airport are a 
particular problem.

 -  Telecommunications Services:  While the UK telecom services market 
is the most open in Europe, regulatory and other barriers limit the 
ability of U.S. operators to compete, particularly in facilities-based 
international service.

EU Issues:

 -  EU Directives:  Implementation of EU directives, notably the 
Broadcast and Utilities Directives, could create trade barriers in a 
previously open market.  

 -  Agriculture:  Potential disapproval of dairy products containing 
BST, EU requirement for food plant approvals, EU requirement for 
hormone-free beef, efforts to change standards for seasoned turkey meat 
imports, and other EU directives limit access.

 -  Defense:  While the UK is generally open to defense competition, 
economic and political commitments can advantage internal and EU 
contract awards in favor of UK and other European firms.

 -  Product Standards, Testing and Certification:  Formulation and 
implementation of EU standards and procedures can constitute a barrier 
to trade.  Of particular current concern are EU efforts to define 
standards for "environmentally-friendly" products.   

-  Tourism: Fear of violence in the U.S. is a concern of foreign 
visitors.  


Specific Issues:
Bilateral trade disputes between the United States and the United 
Kingdom are rare.  There have been recent instances where British 
authorities have been reluctant to provide expanded access to the UK 
market sought by U.S. firms in telecommunications, and a larger presence 
at Heathrow Airport for U.S.-flag carriers.  However, most trade 
barriers of concern to the U.S. are the result of EU regulations, rather 
than actions by the British government or UK companies.

Product Standards:
The ongoing EU harmonization of product standards, labelling, testing 
and certification requirements will substantially simplify U.S. 
exporters' ability to offer a suitable choice of products across the 
Union, while reducing costs significantly.  However, the potential 
exists to use product standards as a means of restricting market access 
to non-EU Manufacturers.

Government Procurement:
The EU's "Utilities Directive" covering purchases in the water, 
transport, energy and telecommunications sectors came into effect in 
January 1993.  While the directive required open, objective bidding 
procedures--a benefit to U.S. firms--it discriminated against non-EU 
bids, except in the electric power sector, absent an international or 
bilateral agreement.  EU procuring utilities may exclude bids with less 
than 50 percent EU value without additional justification.  In addition, 
accepted bids with a majority of EU content must receive a three percent 
price preference over non-EU bids.

In April 1994, U.S. and EU negotiators reached an agreement under the 
GATT government procurement code covering the electrical utility sector.  
As a result, exports of heavy electrical equipment are no longer subject 
to the discriminatory provisions of the Utilities Directive.  However, 
the United States and European Union were unable to reach agreement on 
procurement by telecommunications utilities, but pledged to continue 
negotiations.  In the United Kingdom, only British Telecom and Kingston 
Communications are subject to the EU directive; other UK companies are 
exempt.

Because of the failure to reach agreement on telecommunications 
procurement, U.S. sanctions imposed under Title VII of the 1988 Trade 
Act, imposed on certain EU member states, will remain in effect.

Broadcast Quotas:
HMG's Department of National Heritage is charged with enforcing the 
quota provisions of the 1989 EU Broadcast Directive.  As mandated by the 
directive, it requires that channel providers broadcast a majority of 
European-origin programming "where practicable."  HMG has generally 
interpreted the "where practicable" language liberally.  HMG is under 
increasing pressure from the European Commission to press individual 
channel providers to set mileposts for increasing their European 
content.

Telecommunications:
HMG opened the UK domestic market for competition in 1991 and continues 
to pursue a policy of encouraging competition.  Last fall, the U.S. and 
the UK declared each other "equivalent" for purposes of international 
simple resale.  In December OFTEL continued to work to resolve the issue 
of interconnection with British Telecommunications with the publication 
of "A framework for Effective Competition."  These moves went a great 
deal towards reducing some of the few remaining market barriers.

Some problems remain.  U.S. companies face concerns over access deficit 
charges, interconnection, number portability and the unwillingness of 
HMG to grant international facilities-based licenses. 

Government Support for Airbus:
The Airbus consortium, of which British Aerospace is a member, has 
benefitted in the past from government financial support programs.  A 
U.S.-EU bilateral agreement reached in July 1992 imposed limitations on 
future support provided to the Airbus program by governments of the 
Airbus consortium members, along with an obligation for the consortium 
to repay past state aid.  An effort is currently being made under GATT 
auspices to extend this bilateral agreement to encompass other countries 
that are currently or potentially major players in the international 
aerospace marketplace. 

Defense:
There are no major barriers to U.S. contractors in the UK defense 
sector, other than national security exclusions, and the industrial 
participation requirements previously mentioned.

 
  TARIFFS AND IMPORT TAXES

The United Kingdom is a member of the European Union which provides for 
a common external tariff, a common agricultural policy, a joint 
transportation policy, and the free movement of goods, labor, and 
capital within its member nations.  

Import Duty Information:
UK import duties applicable to specific products exported to the United 
Kingdom (and all other EU member states) may be obtained from the Office 
of European Union Affairs, International Trade Administration, Room H-
3036, U.S. Department of Commerce, Washington, D.C. 20230, telephone: 
(202) 482-2905; fax: (202) 482-2155.  The actual customs tariff document 
can be obtained from H. M. Stationery Office, Atlantic House, Holborn 
Viaduct, London EC1P 1BN.   

Inquirers should be able to provide a complete product description, 
including the Harmonized System nomenclature numbers, if known.  
Assistance in determining the Harmonized System number can be obtained 
from any Department of Commerce district office.

Most raw materials enter duty free or at low rates of duty, while rates 
on most manufactured goods fall within a range of 5 to 7 percent.  As an 
exception, textiles are up to 15 percent; some electronic products reach 
14 percent; and there are food products at comparably higher rates.

Customs charges are payable in British pounds sterling at the time the 
goods are cleared through customs.  However, importers can arrange with 
UK Customs and Excise authorities to defer payment of certain duties and 
other charges for a 30-day period, provided that adequate security is 
given.

Value-Added Tax:
The United Kingdom applies a valued-added tax (VAT) on most goods and 
services, whether domestically produced or imported. The standard 
current rate is 17.5 percent.  The VAT is imposed as a flat rate and is 
applied on the c.i.f. duty-paid value of the goods and services.   
Certain items--such as most foods, medicines, children's clothing and 
shoes, and books--are exempt from VAT.  Other exemptions include the 
transfer of shares and bank bonds, the transfer of businesses and of 
land, commissions paid on goods exported, the forwarding of goods 
abroad, property rental, banking and financial transactions, and 
insurance.

VAT is paid when the goods enter the country or after the expiration of 
the deferral period granted to importers and forwarding agents, who must 
arrange for monetary guarantees.  The ultimate consumer bears the full 
burden of the tax.

The VAT can be recovered on such business expenses as trade fairs and 
exhibitions, conferences, hotel accommodations, subsistence meals, and 
car rentals by foreign firms.  A number of private companies in the 
United States, for a fee, offer VAT refund services, as do a number of 
UK-based companies.

Personal Effects:
Generally, duty and VAT will not be charged on bona fide personal 
effects of temporary visitors to the United Kingdom.   Personal articles 
of persons intending to stay in the United Kingdom will be admitted free 
of duty and tax if the items have been in the visitor's ownership and 
use for specified periods.

Whatever the length of stay, all goods for commercial use, professional 
effects, and any prohibited goods--including drugs, firearms, plants, 
meat and live animals, and everything in excess of duty-free allowances-
-must be declared.

Goods for Exhibition:
Goods imported for exhibition may also be entered under bond, deposit, 
or ATA Carnet.

Professional Equipment:
Professional equipment may be temporarily imported into the United 
Kingdom free of duty and tax under the Customs Convention on the 
Temporary Importation of Professional Equipment.  For this purpose a 
carnet is obtained from the U.S. Council of the International Chamber of 
Commerce, referred to in the section entitled "Special Customs 
Provisions."

Departure Tax:
The UK government introduced a departure tax in their annual budget 
released November 30, 1993 which added a mandatory 10 (USD 15) 
departure tax to the price of all long-haul airline tickets and a 5 
(USD 7.50) tax on airline tickets to EU destinations.


  CUSTOMS VALUATION

When goods are imported into the United Kingdom, UK Customs and Excise 
is responsible for the collection of any charges, duty, value-added tax 
(VAT) or other levies for which the goods are liable under UK or EU 
regulations.

The applicable duties are imposed on the cost, insurance, and freight 
(c.i.f.) value of the shipment.  Virtually all import duties are levied 
on an ad valorem basis.  Thus, import duties are calculated as 
percentage charges levied on the landed value of the imported goods.

Briefly stated, the value is the normal price of goods at the time of 
importation, negotiated under open market conditions in the United 
Kingdom between buyer and seller, independent of each other.

The price includes freight, insurance, commission, and all other costs, 
charges, and expenses incidental to the sale and delivery of the goods 
to the buyer at the place of importation, with the exception of any 
additional taxes.  Under these circumstances, the invoice value may be 
accepted as the basis for the normal price.

Where preferential price arrangements have been established between 
overseas suppliers and UK importers (agents, brokers, licensees, 
distributors, or concessionaires or business associates of the 
supplier), UK customs reserve the right to apply an appropriate 'arms-
length' value for purposes of levying duty.

Specific duties are levied on a small number of items.  These duties 
involve a fixed charge per unit of imported goods, for example, per 
hectoliter or 100 liters.  Where goods are dutiable according to weight, 
the term "gross weight" is taken to include packaging, and the term "net 
weight" means the weight of the goods alone, stripped of all inner and 
outer packaging.  In some cases, a fixed tariff is used to arrive at a 
net dutiable weight.


  IMPORT LICENSES

Only a very limited range of goods is subject to import licenses.
These include firearms and explosives, controlled drugs and controlled 
military equipment.


  EXPORT CONTROLS

The United Kingdom is a suitable destination for virtually all U.S. 
exports.  Exporters should be aware of both U.S. and UK export control 
regulations regarding the re-export of goods from the United Kingdom.  
Inquiries regarding UK export control regulations should be directed to 
the UK Department of Trade and Industry's Export Control organization:

Kingsgate House
66-74 Victoria Street
London SW1E 6SW
Tel: 011 44 71 215 5000 

U.S. industry officials often point to the U.S. defense export licensing 
process as a critical factor in the successful bidding for and award of 
UK acquisition contracts.  The U.S. Embassy's Office of Defense 
Cooperation (ODC) has successfully networked with Washington D.C. 
license approval hierarchy in support of several U.S. contractor 
applications.  For assistance, U.S. industry officials should approach 
ODC personnel early in the licensing process. Early orientation 
regarding DoD licensing, on the specifics of programs and U.S. industry 
requirements, can produce major benefits in successfully competing for 
UK programs.


  IMPORT/EXPORT DOCUMENTATION

Shipping Documents:
Consular documents are not required on shipments of goods to the United 
Kingdom.  The usual commercial documents required for shipments include 
the commercial invoice, bill of lading or air waybill, packing list, 
insurance documents, and, when required, special certificates (origin, 
sanitation, free sale, etc.).

The commercial invoice should accompany the shipment to avoid delays in 
customs clearance.  No special form of invoice is required, but all 
details necessary to establish the c.i.f. value of the goods should be 
given.  At least two copies of the invoice should be sent to the 
consignees to permit them sufficient time to clear the goods through 
customs.  "To order" bills of lading are acceptable and protected under 
the law.


  TEMPORARY ENTRY

Material may be imported temporarily into the United Kingdom without 
payment of duties and tax if such material is to be used in the 
production or manufacture of a product that is to be exported.  The 
importer gives security in the form of a guarantee from an acceptable 
bank or insurance company in the amount of applicable duties and taxes.  
Upon exportation of the finished product, the guarantee is released.

Temporary admission of goods intended for reexport in the same condition 
is permissible free of import duties and taxes upon approval of an 
application at the customs administration.

Temporary Imports and Re-exports:
Specific notices issued by British Commissioners of Customs and Excise 
govern the conditions and procedures for temporarily entering goods duty 
free and reexporting them.  These notices invariably require that 
importers give a security for the amount of the duty payable in the form 
of either a bond or cash deposit, which is released or refunded upon re-
exportation of the goods.  The time limit for re-exportation normally 
ranges from 6 to 12 months from the date of importation, but extensions 
of time may be obtained from the customs authorities.

Included among the categories allowed free-entry privileges are 
machinery, plant, and equipment imported by lease or loan for temporary 
use in maintaining production of a service in the United Kingdom.  Also 
included are goods imported solely for processing or repair that will 
not change their form or character, or goods imported for technical 
examination and standards testing.

Transit/Trans-shipment:
Transit and trans-shipment goods are consignments that are brought into 
the United Kingdom, other than under an international transit procedure 
(TIR), during the course of a journey which begins in one country and 
ends in a third.  Trans-shipment goods are imported and exported within 
the confines of one port or airport; transit goods are moved to a 
different port or airport for exportation there.

Since the United Kingdom in these cases is merely a staging post in the 
intrepid operation, the chief interest of Customs and Excise is to 
ensure that what comes in also goes out.  Under certain conditions, the 
goods can be regrouped or repacked.  All such goods must be removed from 
the United Kingdom within the period allowed for their exportation, and 
they must be in the same condition, any repacking aside, as when they 
were actually imported.

Abandoned and Re-exported Goods:
Goods stored in bonded warehouses and unclaimed may be removed to 
Queen's warehouses.  Considered property of the government, such goods 
are usually disposed of by sale.  Privately owned goods may be stored in 
Queen's warehouses if they are not entered within the time limit 
authorized.  These goods may be claimed by the owners, and if duty, 
taxes, and certain expenses are paid, entry for home use may be made.

Re-exportation is permissible, subject to the payment of certain 
expenses. If the goods are not cleared from Queen's warehouses within a 
reasonable time, they may be sold.  The proceeds will be used to satisfy 
the amount of the duty, tax, and expenses owed, with the balance being 
transferred to the former owner of the goods upon application to the 
customs authorities.


  LABELING, MARKING REQUIREMENTS

Marking and Labeling:
Certificates of origin are not required for goods imported into the 
United Kingdom from the United States except textiles and apparel.  No 
general requirements or indications of origin on imported goods are 
specified in the Trade Description Act of 1968.  The act provides for 
the prohibition of imports of goods and parts thereof bearing infringing 
trademarks, as well as any false trade description, including a false 
indication of the place of their manufacture, production, processing or 
reconditioning.

Under the provisions of the Trade Description Act, a conspicuous 
indication of the country of origin must be placed on certain imported 
goods.  It applies to imported goods bearing a UK name or mark, or any 
name or mark (whether or not such a UK name or a mark exists).  Excepted 
are goods used, as well as containers or labels in, on, or within which 
any goods are ordered or supplied.

Under EU rules, the origin of imported merchandise is established 
through documentation accompanying the shipments arriving in the United 
Kingdom and not through marking of products or their containers.  
Certain specified commodities, however, must be marked or labeled to 
show composition, and name and location of the manufacturer, in 
accordance with various UK laws and regulations.

U.S. exporters should determine from their importers the metric labeling 
requirements for their products.  For example, the labeling of heating, 
ventilating, and air conditioning equipment must include metric data 
such as kilowatts or joules.  The UK industry already uses System 
International (S.I.) metric units.

The use of metric data in sales and technical documentation is also 
required.  Importers are responsible for ensuring that metric data is 
provided.  If necessary, they must supply locally printed sales 
literature and labels with the equipment if compliant documentation is 
not provided by the manufacturer.

All third country food and agriculture imports are subject to compliance 
with EU/UK food and agriculture legislation.  

Packaged foodstuffs must comply with EU/UK food labeling, additive, 
flavoring and packaging legislation. 

Basic labeling legislation requires:

1.  The labeling and methods used must not:

  (a)  be such as could mislead the purchaser to a material degree, 
particularly:
  (i)  As to the characteristics of the foodstuff and, in particular, as 
to its nature, identity, properties, composition, quantity, durability, 
origin or provenance, method of manufacture or production;
  (ii)  By attributing to the foodstuff effects or properties which it 
does not possess;
  (iii) By suggesting that the foodstuff possesses special 
characteristics when all similar products possess such characteristics;

  (b)  Subject to EU provisions applicable to natural mineral waters and 
foodstuffs for particular nutritional uses, attribute any health claims 
to any foodstuff.

2.  Indication of the following particulars alone are compulsory on the 
labeling of foodstuffs:

-  the name under which the product is sold,

-  the list of ingredients,in descending order of weight, as recorded at 
the time of their use in the manufacture of the foodstuff,

-  in the case of prepackaged foodstuff, the net quantity.  Weights and 
measures must be declared in metric units.  In the case of liquids the 
declaration liter, centiliter or milliliter must be used as appropriate; 
in the case of solids the declaration must be given in kilogram or gram 
as   appropriate,

-  the date of minimum durability, or in the case of foodstuffs  which, 
from the microbiological point of view, are highly perishable, the "use 
by" date.  Date marking must be given in the order of day/month/year or:  
  'best before' and date in terms of the day and month for foods 
expected to keep for three months or less, or 'best before end' and date 
in terms of month and year only for foods expected to keep for more than 
three months but not longer than 18 months, or 'best before end' and 
date in terms of either month and year or year only for foods expected 
to keep for more than 18 months, 

-  any special storage conditions or conditions of use,

-  the name or business name and address of the manufacturer or  
packager, or of a seller established within the Community,

-  particulars of the place of origin or provenance in the case  where 
failure to give such particulars might mislead the consumer to a 
material degree as to the true origin or provenance of the foodstuff,

-  instructions for use when it would be impossible to make appropriate 
use of the foodstuff in the absence of such instructions, with respect 
to beverages containing more than  1.2% by volume of alcohol, the actual 
strength by volume

-  packaged foodstuffs must bear a 'lot marking' The lot shall be 
determined in each case by the producer, manufacturer or packager of the 
foodstuff in question, or of the first seller established within the 
Community.  The marking shall be proceeded by the letter 'L', except in 
cases where it is clearly distinguishable from other indications on the 
label.

-  nutritional labeling is compulsory where a nutritional claim  appears 
on the label, in presentation or in advertising, with the exclusion of 
generic advertising.  The only nutrition claims permitted shall be those 
relating to energy values and, to the following nutrients:  protein, 
carbohydrate, fat, fiber, sodium and prescribed vitamins, and to 
substances which belong to or which are components of, a category of the 
above nutrients.

Where a packaged foodstuff contains meat, poultry, dairy ingredients, 
then those foodstuffs must also conform to EU/UK animal health 
legislation, the EU Third Country Red Meat Directive and the EU/UK food 
hygiene legislation.  If a product is organically grown/produced and the 
statement "organic" appears anywhere on the product label, then that 
product must also conform to the EU Organic Food Legislation.

Fresh fruits and vegetables, foliage/plants and timber products are 
subject to compliance with the EU/UK Plant Health Legislation.


UK classified program documentation has to be handled according to the 
U.S./UK General Security Agreement.  The U.S. Embassy's Office of 
Defense Cooperation can assist U.S. industry in the data transfer 
process for many major MoD acquisition programs.


  PROHIBITED IMPORTS

There are certain products that are prohibited (as opposed to 
controlled) imports, which may not be imported into the United Kingdom 
under any circumstances.  These include AM citizen band radios, devices 
that project toxic, noxious or harmful substances, counterfeit currency 
and certain types of  pornography. 

Firearms, explosives, defense articles, and controlled drugs are not 
prohibited imports although they are subject to strict import licensing 
procedures.  HMG officials will provide guidance to U.S. companies for 
UK defense programs that require imports from the U.S.

In the agricultural sector, all red meat products must be sourced from 
EU-approved plants.  In the case of beef, it must be certified hormone-
free.  At the time of writing, poultry and poultry products must be from 
UK-approved plants.  Imports of whole, unprocessed potatoes are 
prohibited.  At the time of writing, imports of live cattle from the 
United States are also prohibited.


  STANDARDS 

Despite on-going efforts to harmonize EU standards, EU members have 
widely differing standards, testing and certification procedures in 
place for both industrial and consumer products.  The European Union has 
recognized these as barriers to the free-movement of these products 
within the Union, and has undertaken to minimize technical restrictions 
to the flow of goods.  

New EU directives for certain products stipulate new standards to 
protect the health and safety of consumers, and the environment.  Based 
on the concept of mutual recognition, products certified as meeting 
these standards in one member state can be freely marketed in another 
state.  Once corresponding European standards  are in place, the EU 
plans to implement a harmonized approach to testing and certification, 
as well as to provide for the mutual recognition of national 
laboratories accredited to test and certify products covered by EU 
directives.  

The United States has stressed the importance of maintaining an open and 
transparent EU standards development process, with the objective of 
assuring equal access for U.S. exporters to the standards, testing and 
certification system.

Technical Standards:
The harmonization of EU national standards is one of the major goals in 
its integration process.  When the process is completed, equipment in a 
number of key sectors manufactured in or imported into the EU will have 
to comply with those standards.   

In the United Kingdom, standards have been prepared by the British 
Standards Institute (BSI) for virtually all manufactured goods, for 
production processes and the testing of those goods, and for their 
installation and operation.  British standards can be identified by a 
"kite" symbol and the letter "BS" followed by four digits.  This number 
code defines the purpose of the individual standards, the way in which 
the standard must be evolved, and the presentation and drafting of the 
final document.  The BS designation is sometimes referred to as the 
"standard for a standard."  If a proposed standard duplicates an 
existing common European standard, that is, one established by the 
Comite Europeen des Normes (CEN), the CEN standard becomes the UK 
standard.

The ISO 9000, developed by the International Standards Organization 
(ISO) in 1987, is a basic quality assurance program.  Equivalent to 
ANSI/ASQC Q90 in the U.S., and the EN29000 in the EU, it is a generic 
standard to ensure a consistent level of quality goods and services.  
Over fifty countries throughout Europe, North and South America and Asia 
have adopted the ISO  9000.

If ISO standards are prepared subsequent to the issuance of CEN 
standards, and if they differ from the CEN standards, the ISO standards 
will prevail, and the UK national standard will be modified to conform.

Products that meet the British standards are described as compliant with 
or conforming to BS (number), but they cannot be described as being BS 
(number) approved unless they are tested for conformity by BSI or a BSI-
approved laboratory and a certificate of conformity is issued.

Manufacturer's test data are not accepted unless the test facilities 
have been approved under the National Measurement Accreditation Scheme 
(NAMAS). NAMAS is the quality assurance system supervised by the 
National Physical Laboratory (NPL), which is responsible for the 
integrity of the national system of measurement.

Test and certification by BSI or a BSI-approved test laboratory entitles 
the vendor to attach a "kite mark," or tag, to the product as evidence 
of its approved status.  The kite mark is an immediately recognizable 
visual indication and a valuable sales incentive for domestic appliances 
and consumer products, but of less relevance to industrial goods.

The end result of the standards harmonization process in the EU will be 
a hierarchical system, with national standards being traceable via CEN 
to ISO.  This tracing to ISO standards provides the basis for mutual 
recognition of national standards and may militate against acceptance of 
any industry-generated (nongovernmental) standards that do not have this 
qualification.

As soon as a national standard is published, previously accepted 
industry standards are superseded and are no longer accorded 
recognition.  As soon as an EU (CEN) standard is issued, the national 
standards are superseded.  When an ISO standard is issued, the EU or CEN 
standard is superseded.

U.S. firms should be aware that Underwriters Laboratories (UL) is not 
accepted as a testing or certifying body by either the British or EU 
standards authorities because UL is a nongovernmental body.  For the 
same reason, Federal Communications Commission-approved test 
laboratories in the United States have no standing in the generation or 
submission of test data for UK standards approval.

However, a U.S. industry standard or UL approval is often accepted as an 
assurance of product quality if no UK national standard exists. 
Similarly, National Electrical Manufacturers' Association standards and 
American Petroleum Institute standards are accepted in the United 
Kingdom. Such acceptance, though, is invalidated when national (UK) 
standards are accepted.

There are numerous mandatory and voluntary standards in existence that 
define products, processes, or procedures and embrace many fields.  BSI 
is the recognized authority for preparation, publication, and 
dissemination of standards for industrial and consumer products.  BSI is 
the central official source of product standards information and can be 
contacted at Linford Wood, Milton Keynes, MK14 6LE, England; telephone: 
011 (44-908) 221166; fax 011 (44-908) 320-856.

Additional information on British standards is available from the 
Standards Information Service Center, Technology Building 228, Room B-
166, National Institute of Standards and Technology, Gaithersburg, Md.  
20234; telephone: (301) 975-4037.

Another source of standards information is the American National 
Standards Institute (ANSI), an agent for BSI, located at 11 West 42nd 
Street, New York, N.Y. 10036; telephone: (212) 642-4900; fax (212) 302-
1286.

Standardized Packaging Units:
Europe-wide marketing strategies will have to incorporate product 
standardization, and consideration must be given to standardized 
packaging and instruction manuals, coordinated advertising and promotion 
campaigns, as well as standards for service and warranties that extend 
across borders. 

One recent development that incorporates such a Europe-wide tactic is 
the recent "partnership" deal between independent electric goods 
retailers and manufacturers.  Benefits to the partners, beyond economies 
of scale and expanded market shares, are expected in the form of 
simplified administrative and after-sales support, the ability to trade 
inventory from country to country, and the encouragement of bulk 
purchasing by dealers.  At the same time, independent retailers have 
joined ranks to gain the cost-cutting benefits of bulk buying and 
improved customer servicing.

Still, many manufacturers do not negotiate with dealers on a Europe-wide 
basis.  Sales and marketing operations are frequently handled by 
national subsidiaries without a coordinated strategy.  As a consequence, 
manufacturers' prices can vary as much as 35 percent between countries, 
and product guarantees are not uniform or transferable across borders, 
often because of national laws.  To overcome the latter hindrance, some 
firms now offer product insurance that enables customers to exchange 
goods bought in one country and damaged or broken in another.

Ultimately, Europe-wide marketing will be led by, and depend on, product 
standardization.  Certain products, such as the latest in consumer 
electronics, have already advanced to as much as 95 percent 
standardization of components, while other consumer durables, such as 
white goods, remain bogged down by an array of choices in design and 
operating specifications.

The European Union has established standardized packaging units for 
numerous products which should be consulted by U.S. exporters.  Detailed 
information on the European Union's metric and packaging requirements 
may be obtained from: Office of European Union Affairs, Room 3036, 
International Trade Administration, U.S. Department of Commerce, 
Washington, DC 20230, Tel: (202) 482-2905.


  FREE TRADE ZONES/WAREHOUSES

Entry and Warehousing:
Goods subject to customs duties may be warehoused in a customs warehouse 
approved by HM Customs and Excise.  While the goods are in the 
warehouse, no duty is payable on them.  Duty is payable when the goods 
are removed from the warehouse for use in the United Kingdom or other 
member states of the EU.  Duty is not paid if the goods are reexported 
to destinations outside the EU.

Goods imported with the intention of being stored in bonded warehouses 
must be cleared through customs by using a special entry form.  These 
warehouses are approved by customs authorities and are publicly or 
privately operated for the purpose of storing goods without payment of 
duty and taxes, until entry is made for domestic use.

With few exceptions, manufacturing operations are not permitted. 
Normally, the only permissible activities are those involving the 
preparation for sale of the goods, such as repacking and sorting of 
goods, and bottling of alcoholic beverages.

In addition to bonded warehouses, there are Queen's warehouses, provided 
by the government, or appointed by customs officials for the deposit of 
goods for their safe custody or for the security of the duty owed.  
These are principally utilized for depositing goods that have become 
government property due to forfeiture, abandonment, or not being entered 
with the allowable time limits.


Free Trade Areas:
There are six sites for free trade zones, called freeports in the United 
Kingdom; these are in Liverpool, Southampton, Birmingham, Glasgow-
Prestwick, Humberside, and Tilbury near London (see Section VII Part E, 
below for addresses).  

The freeports are enclosed zones within or adjacent to a seaport or 
airport.  Inside the freeport, goods are treated for customs purposes as 
being outside UK customs territory.

In general, customs duties are payable only when goods are consumed 
within the zone or pass from the zone into the local (United Kingdom) or 
other EU member state markets.


  SPECIAL IMPORT PROVISIONS

Samples and Advertising Matter:
Samples having no commercial value are exempt from duties and taxes. 
Samples of value, however, may be temporarily admitted duty and tax free 
under certain conditions.  Principally, such samples must be owned 
abroad, intended for reexport, and must then be reexported within six 
months from the time of importation or any additionally authorized 
period.

Also, samples of value may be imported solely to be shown or 
demonstrated free of charge in the United Kingdom to prospective 
customers soliciting orders for goods to be supplied from abroad.  Goods 
sent on sale or return conditions are not accorded duty and tax relief.  
Travelers may bring samples along with their baggage.  An importer may 
authorize an agent to enter or clear the samples on the importer's 
behalf or import directly.

As security for import duties and applicable taxes on samples directly 
imported, the importer must post either a deposit or bond at the time of 
importation.  If a bond security is given, the principal and surety to 
the bond must be resident persons or limited companies registered in the 
United Kingdom.

Importers resident in the United Kingdom must provide the bond.  Upon 
re-exportation, the deposit will be refunded or the bond canceled.

Carnets:
The United Kingdom is a member of the ATA Carnet System.  This system 
permits U.S. commercial and professional travelers to take commercial 
samples and professional equipment into member countries for 
demonstration or exhibition purposes for up to one year without paying 
customs duty and taxes.

Customs authorities in participating countries accept carnets as a 
guarantee that all customs duties and taxes will be paid if any of the 
carnet-covered items are not re-exported within the time period allowed.

Applications for carnets can be obtained from the U.S. Council for 
International Business, 1212 Avenue of the Americas, New York, N.Y. 
10036, telephone: (212) 354-4480; fax: (212) 575-0327.  Applications 
also are obtainable from any U.S. Council Regional Issuing Offices 
located in most major U.S. cities.

The basic carnet fee is determined by the total shipment value of the 
goods to be covered.  The carnet enables the temporary exporter to make 
customs arrangements for multiple countries in advance, at a 
predetermined cost, using a single document.

Import Licensing:
With a few exceptions, practically all goods originating in the United 
States can be imported without import licenses and free of quantitative 
restrictions.  There are, however, monitoring measures applying to 
imports of certain sensitive products.  The most important of these 
measures is the automatic import license for textiles.  This license is 
granted to UK importers when they provide the requisite forms.

Senate Concurrent Resolution 40, adopted July 30, 1953, invites U.S. 
exporters to inscribe, insofar as practicable, on the external shipping 
containers in indelible print of a suitable size: "United States of 
America."  Although such marking is not compulsory under our laws, U.S. 
shippers are urged to cooperate in thus publicizing American-made goods.

Inland Clearance Depots, Inland Rail Depots and Inter-Port Removals

Goods may be removed from the places of importation for entry and 
clearance at approved depots inland or at certain other ports or 
airports.  In general, the arrangements apply only to goods in 
containers, rail freight cars, or road vehicles that can be sealed, but 
certain types of unit load which cannot be sealed also qualify.


  MEMBERSHIP IN FREE TRADE ARRANGEMENTS

British imports from, and exports to, other member countries of the EU 
are duty free.  Also duty free are most British industrial goods exports 
to, and imports from Norway, Switzerland and Iceland, which together 
with the EU form the 18-nation European Economic Area.  In addition, the 
UK participates in the limited free trade arrangements negotiated by the 
EU with a number of countries in Central and Eastern Europe and the 
Mediterranean.

As an EU member, the United Kingdom can no longer accord Commonwealth 
Preferential duty treatment to Canada, South Africa, New Zealand, and 
Australia.  There continues to be very high receptivity to import goods 
from Commonwealth countries.  The UK offers tariff-free entry to certain 
goods from developing countries under the EU's Generalized System of 
Preferences (GSP). 

The United Kingdom is a member of the General Agreement on Tariffs and 
Trade (GATT) and the World Trade Organization (WTO). 


VII.  INVESTMENT CLIMATE

Political stability, low rates of direct taxation, assured property 
rights, a flexible labor market, first-class financial markets and a 
geographic location on the west of the huge European market have helped 
to make the United Kingdom an attractive destination for foreign 
investment.   Entry into the market by U.S. firms is greatly facilitated 
by a common language, legal heritage and similar business institutions 
and practices. There are no impediments to foreign ownership nor 
restrictions on the free-flow of capital.  Inflation is relatively low 
and industrial relations have improved dramatically over recent years.

The importance of foreign investment in the United Kingdom is growing.  
Of the US$ 330 billion invested in the last five years, US$ 60 billion 
came from overseas.  The percentage of foreign-owned assets in  
manufacturing industry has increased from 13 percent five years ago to 
20 percent today.  Foreign-owned companies provide 16 percent of the 
country's manufacturing jobs, 22 percent of its net output and 27 
percent of its net capital expenditure.  Both the United States and 
Japan, the biggest external investors in European industry, have 
invested more in the United Kingdom than in any other EU country.    

The United States is by far the largest foreign investor in the United 
Kingdom.  There are 3,500 branches, subsidiaries, and affiliates of US 
firms resident, compared to 1,000 from Germany and approximately 250 
from Japan.  In general, U.S. companies that have invested in the United 
Kingdom tend to be the faster growing, export-oriented industries that 
are in the technologically advanced sectors of the economy.  In 1993, 
U.S. direct investment in the United Kingdom represented over 40 percent 
of all U.S. investment in the European Union. 

To U.S. firms eager to establish a foothold within Europe the United 
Kingdom is seen as a particularly receptive economy, particularly for 
small to medium sized U.S. firms for whom it represents the easiest, and 
often the most cost-effective point of entry.


A1.  OPENNESS TO FOREIGN INVESTMENT

The United Kingdom does not discriminate between nationals and 
foreigners in the formation and operation of British companies.  A U.S. 
corporation establishing a British subsidiary encounters no special 
national requirements on directors and shareholders.

There are no restrictions on the repatriation of earnings, and foreign 
companies are treated the same as companies for tax purposes.  Non-
resident companies carrying on a business in the United Kingdom are 
taxed only on profits of the subsidiary or branch.  

There are no requirements for technology transfer.  Foreign owned firms 
have access the programs of the Export Credit Guarantee Department 
(ECGD), which provides export credit and insurance for the sales of 
British-manufactured goods overseas.  There are no requirements for 
joint ventures or local management participation or control.

The  Government has powers under the Mergers and Industry Act of 1986 to 
prohibit the take-over of important manufacturing undertakings by non-
residents.  Since 1968, the conduct of most takeovers has been subject 
to a code of practice.  This seeks to achieve a fair balance between the 
differing interests of parties in a takeover.  The code is administered 
by a panel composed of representatives of numerous financial bodies.  
There are no investment screening mechanisms.  Foreign investors receive 
national treatment, and foreign-owned companies are eligible for the 
same benefits as British companies.


Major Investment Barriers:
The UK Government welcomes investment from overseas, and such foreign-
owned companies are treated no differently than UK companies.  Persons 
resident outside of the country are generally able to invest in the 
United Kingdom on the same terms as those available to residents, and 
there are no exchange controls on the transfer of funds into or out of 
the United Kingdom. Restrictions to which investments might be subject 
are general ones,  such as whether a particular acquisition would give 
rise to monopoly considerations.

The  UK Secretary of State for Trade and Industry, who is also the 
President of the Board of Trade, has powers under:

The Mergers and Industry Act 1986, to prohibit the takeover by non-
residents of certain manufacturing operations which might be deemed 
vital to national interests.  Assets or shares of such entities, 
threatened from takeover by non-residents, may be compulsorily acquired 
by the Secretary of State for Trade and Industry.

The Financial Services Act 1986 outlines UK policy with respect to other 
countries' treatment of UK financial institutions.  It permits the 
application of the principle of reciprocity,  rather than that of 
national treatment.  The Act confers sweeping powers on HMG's officials 
in responding to cases where UK persons are deemed not to have received 
reciprocal treatment overseas in their conduct of investment, insurance 
and banking business.  

The United Kingdom does not operate any investment screening mechanisms.


A2.  CONVERSION AND TRANSFER POLICIES

There are no exchange controls restricting the transfer of funds 
associated with an investment.  All exchange controls were removed in 
1979 and the enabling legislation for the controls was repealed in 1987.  
As the United Kingdom has a large foreign exchange market and there are 
no restrictions on the amount of foreign currency which is available, 
queuing for foreign exchange is unnecessary. 

In general, there are no controls on any type of capital movement into, 
or out of, the United Kingdom.


A3.  EXPROPRIATION AND COMPENSATION

As expropriation is alien to United Kingdom tradition, there is no 
established practice relating to the grant of compensation.  
Nationalization of an industry or service would require an act of 
parliament.  The present Conservative Party administration, expected to 
remain in office until 1997, is committed to transferring most remaining 
government-owned industries and services from the public to the private 
sector.


A4.  DISPUTE SETTLEMENT

Disputes over shareholding are resolved through the Queen's Bench 
Division of the High Court.  Efforts to resolve disputes in a takeover 
bid are made by the Panel on Takeovers and Mergers, which is 
headquartered in the London Stock Exchange.  There is a further right of 
appeal to its appeals committee.  Under a merger resolution accepted in 
September 1990, the European Union has jurisdiction over "concentrations 
with a community dimension".  Disputes involving larger companies will, 
therefore, also fall under EU jurisdiction.
  
Property and contractual rights can be effectively enforced through the 
law courts.  The Invest in Britain Bureau advises that, since 1990, 
there have been no disputes in which a U.S. investor has been in 
contention with the government.  

The Government accepts binding international arbitration of investment 
disputes between foreign investors and the state.  The United Kingdom is 
a member of the International Center For Settlement of Investment 
Disputes and of the New York Convention of 1958 on the Recognition and 
Enforcement of Foreign Arbitral Awards.


A5.  PERFORMANCE REQUIREMENTS/INCENTIVES

An appropriate entry clearance, obtained before arrival, must be held by 
all persons who come to the United Kingdom in order to establish 
themselves in business.  Such an individual applying for entry clearance 
who is not a EU national will need to show that at least 200,000 
(approximately US$ 300,000) is available to invest in the business and 
that the investment will create new paid full-time employment.  The 
200,000 minimum applies only where a person subject to immigration 
control wishes to establish himself and start a business.  The 
immigration rules do not affect those who wish merely to invest money in 
the United Kingdom nor do they prevent people from visiting the United 
Kingdom to transact business.

Investment Incentives:  Attracting inward investment into the United 
Kingdom is the responsibility at the national level of the Invest in 
Britain Bureau, an arm of the Department of Trade and Industry, which 
maintains offices in major cities throughout the U.S.

Financial assistance to a maximum of 25 percent of eligible costs may be 
granted for exceptional projects which meet certain criteria.  Such 
assistance is available for projects in all parts of the United Kingdom 
and is operated under Section 8 of the Industrial and Development Act 
1982.  Special incentives are available for investment in "assisted 
areas" which are considered to be in need of new industry to revitalize 
their economies.  The incentives are: Regional Selective Assistance 
(RSA) for both manufacturing and service industry projects (total awards 
for 1991/92 equalling US$ 315 million); Regional Enterprise Grants (REG) 
for firms with fewer than 25 employees; and Central Government 
Subsidized Rent or Purchase Cost of Commercial or Industrial Premises, 
with the possibility of rent free periods. 

The following bodies have been established on a localized basis:

1) Enterprise Zones:  Companies in these zones receive: exemption from 
local property taxes on industrial or commercial property; 100 percent 
capital cost allowances for expenditures on the construction; extension 
or improvement of industrial or commercial buildings; and reduced  "red 
tape".  Such assistance is given for ten years from the date of the 
zone's designation.  At the beginning of 1994 there were ten areas in 
the United Kingdom that still had enterprise status.  Three new 
enterprise zones are expected to be established by the end of 1994 in 
Nottinghamshire, South Yorkshire and Durham County.   

2) Urban Development Areas: Under the Inner Urban Areas Act of 1978, 
corporations provide grants and loans for a variety of purposes and 
assist with the initial renting of newly acquired premises in designated 
development areas.  Twelve such zones exist in urban areas of England 
and Wales.

3) New Towns: These are areas designed to take pressure away from 
congested cities and bring economic recovery to areas in the country.  
They offer a variety of industrial units available for lease;  serviced 
sites for development with space for expansion; and readily available 
housing for employees. 

4) Simplified Planning Zones: These are designated areas where the 
conventional planning process has been streamlined.  At the beginning of 
1994 six zones had been set up: three in England and three in Wales.

Local authorities in England and Wales have specific power under part 3 
of the Local Government and Housing Act of 1989 to promote the economic 
development of their areas.  Assistance under this power may include: 
providing grants, loans or loan guarantees; investing in an undertaking 
by acquiring share or loan capital; providing property, services or 
other financial benefit. 

The European Union, under its structural program's Regional Development 
Fund, provides financing for the development of economically depressed 
regions within member countries.  The funds are matched by grants from 
the recipient country's government,  which also administers 
disbursements.  In 1992/93, the EU provided 1.26 billion ECUs in funds 
(USD 1.5 billion, rate on 2/24/93).

The present government policy is to channel new industrial development 
away from the congested areas to localities where industrial sites and 
surplus manpower are available.  Aside from special assistance available 
to any firm locating in industrial development areas, there are no 
specific subsidies or benefits extended by the government to foreign 
investors.

Regional Incentives:
For nearly 60 years, successive  governments have attempted to channel 
investment towards certain geographic areas, recognizing the decline 
there in traditional industries.  Such areas are divided into two 
categories: Development Areas and Intermediate Areas.  Known 
collectively as "Assisted Areas", they cover parts of the United Kingdom 
in which 35 percent of the working population lives and are concentrated 
in Scotland, Wales, Northern Ireland, and the north of England.

To attract investment to the Development Areas where new industries and 
additional employment are needed, the government has programs providing 
special graduated benefits, such as grants towards capital expenditures 
on new premises and on capital equipment, tax allowances, training 
assistance, and special wage premiums.  These are available to both UK-
owned and foreign firms.

In the United States, the British Trade and Investment Office (located 
at: 845 Third Avenue, New York, N.Y. 10022; tel: 202- 745-0495) seeks 
out potential US investors and supplies relevant information to firms 
interested in investing in the United Kingdom.  In addition, Scotland, 
Wales, and Northern Ireland maintain offices in the United States to 
perform essentially the same functions.


A6.  RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT

Foreign and domestic private entities do have established rights.  
Competitive equality is the standard applied to private firms in 
competition with public enterprises.  This is especially marked in the 
arrangements for compulsory competitive tendering of services for which 
local authorities have responsibility and which have previously been 
undertaken exclusively by local authorities.  Foreign nationals are 
permitted to buy shares in privatized companies on the same basis as 
citizens.


A7.  PROTECTION OF PROPERTY RIGHTS

The legal system protects and facilitates the acquisition and disposal 
of all intellectual property rights, and the government adheres to key 
international agreements.

Patents:  
Under the Patents Act of 1977, in order for an invention to be granted a 
patent it must be new, involve an innovative step and be capable of 
industrial application.  A patent cannot be granted for:  an invention 
which would lead to offensive, immoral or anti-social behavior;  or for 
any variety of animal or plant or for any essentially biological process 
for their production which is not a micro-biological process or the 
product of such a process.

Section 48 of the act concerns compulsory licenses.  An application for 
a license under the patent may be made after three years from the date 
of the patent on the grounds that the patented invention is not being 
commercially worked or for other commercial reasons.

Under section 25 of the act, the term of a patent is twenty years.

Copyrights:  
In accordance with section 16 of the Copyright Designs and Patents Act 
of 1988, the owner of the copyright in a work has the exclusive right 
to: copy the work; issue copies of the work to the public; perform, show 
or play the work in  public; broadcast the work or include it in a cable 
program service; make an adaptation (including a translation) of the 
work.  Under section 21 of the act, an adaptation in relation to a 
computer program is considered to include a version of the program which 
has been converted into another computer language or code.  Section 18 
of the act specifies that restrictions concerning the issue of copies of 
sound recordings, films and computer programs to the public. Semi-
conductor chip layout designs are regarded as a protectable asset and is 
subject to the Copyright Designs and Patents Act of 1988. 

Trademarks:  
It is an offence under the Trademarks Act of 1938 to seek financial gain 
by applying a mark identical to, or nearly resembling, a registered 
trade mark to goods or to material for use in labeling, packaging or 
advertizing goods.  Section 26 of the act specifies that a registered 
trademark may be removed from the register on the grounds that a 
continuous period of at least five years had elapsed during which there 
was no bona fide use of the trademark in relation to the goods in 
question by any proprietor. 

In accordance with Section 22 of the act, the same trademark may be 
registered within more than one class.  In such an instance, the 
individual registrations have to be associated (or linked).  The same 
trademark may not be registered by more than one company, irrespective 
of the number of classes in which it is registered.

Trade Secrets:  
Commercially valuable information is, in itself, not subject to legal 
protection.  However, theft of information from business premises is 
subject to criminal law.  Action under employment law may also be taken 
against an employee who, by disclosing information, breaches a contract 
with his/her employer.


A8.  REGULATORY SYSTEM: LAWS AND PROCEDURES

The whole tenor of government legislative and regulatory policy since 
1979 has been related to the inducement of greater business competition.

The government aims consistently to reduce its burdens on companies 
through reducing red tape and avoiding other unnecessary 
responsibilities.  Whenever the government considers asking companies to 
undertake additional administrative tasks, an official estimate is made 
first as to how much it would cost the companies to implement such a 
request. 

The United Kingdom offers an attractive tax system, with a maximum 
corporation tax rate of 33 percent, and a range of tax incentives 
relating to industrial investment.  A series of tax treaties protects a 
foreign national against double taxation.  The United Kingdom has a 
simple system of personal income tax, and one of the lowest top rates 
(40 percent on incomes in excess of 23,700 pounds sterling) of any E.U. 
country.  There is generous tax relief for travel expenses for non-
domiciled employees during their first five years of employment in the 
United Kingdom.  

The Health and Safety At Work Act of 1974 requires the Health and Safety 
Commission (HSC) to develop workable proposals to update earlier 
legislation.  The old law has been largely replaced by modern legal 
provisions, supported by codes of practice and other guidance material.  
The Health and Safety Executive (HSE) has day-to-day responsibility for 
enforcing health and safety law.    

A.9  EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENTS

Government policies are intended to facilitate the free flow of 
financial resources and to support the flow of resources in the product 
and factor markets.  The City of London houses one of the largest and 
most comprehensive financial centers in the world.

Foreign investors are able to obtain credit in the local market at 
normal market terms; a wide range of credit instruments are available.  
The principles involved in legal, regulatory and accounting systems are 
transparent.  They are also consistent with such international standards 
as exist and with the nature of the markets.  In all cases, regulations 
have been published and are applied on a non-discriminatory basis.   

The regulation of investment business is conducted under the Financial 
Services Act (FSA) of 1986.  The act determines that all investment 
business must be conducted by authorized and regulated firms.  
Regulatory power over investment business lies with Her Majesty's 
Treasury, which in turn delegates most of its powers to the Securities 
and Investment Board (SIB), 2 Bunhill Row, London EC1Y 8SR.  tel: 44 1 
71 247 3215.  The SIB regulates fewer than 100 firms directly, but 
oversees the system of "practitioner-based regulation" whereby 
investment businesses are authorized through membership of the 
appropriate Self Regulating Organization (SRO).

The SRO's are: Securities and Futures Authority (SFA); Financial 
Intermediary Managers and Brokers Regulatory Authority (FIMBRA);
Investment Management Regulatory Organization (IMRO); Life Assurance and 
Unit Trust Regulatory Organization (LAUTRO).  The latter two are in the 
process of being replaced by the Private Investment Authority (PIA).

A.10   POLITICAL VIOLENCE

Since the declaration of ceasefires in Northern Ireland in late 1994, 
there has been virtually no political violence emanating from domestic 
UK origins.  Like all west European capitals, London is the scene of 
rare terrorist action by militant foreign political groups.  However, 
the number of such incidents has declined dramatically over the last 
decade.        

The Northern Ireland ceasefires have held remarkably well, and the 
possibility of a reversion to large-scale violence is fading.  Tensions 
persist, however, and there have been some public disturbances, as well 
as some isolated incidents of attacks against property by disaffected 
individual members of paramilitary groups acting on their own.  
Foreigners have not been the target of any of these incidents.   


B.  BILATERAL INVESTMENT AGREEMENTS

The United Kingdom has bilateral agreements with about 80 developing 
countries and economies in transition.  There is no bi-lateral 
investment treaty with the U.S.; investment relations are governed by 
the 1815 Convention on Commerce and by commitments made by both 
countries in the Organization for Economic Cooperation and Development.  
Both the U.S. and the UK are participating in OECD negotiations for a 
Multilateral Agreement in Investment.

Following is a list of the UK's bilateral investment promotion and 
protection agreements:

COUNTRY    DATE OF ENTRY INTO FORCE
Albania  Not yet
Antigua & Barbuda  12 June 1987
Argentina  19 February 1993
Armenia  Not yet
Bahrain  30 October 1991
Banglad  19 June 1980
Barbados  7 April 1993
Belarus  28 December 1994
Belize   30 April 1982
Benin  27 November 1987
Bolivia  16 February 1990
Brazil  Not yet
Burundi  13 September 1990
Cameroon  7 June 1985
China  15 May 1986
Colombia  Not yet
Congo   9 November 1990
Costa Rica  Not yet
Cote d'Ivoire  Not yet
Cuba  11 May 1995
Czechoslovakia  26 October 1992
Dominica   23 January 1987
Ecuador   Not yet
Egypt  24 February 1976
Estonia  16 December 1994
Georgia  15 February 1995
Ghana   25 October 1991
Grenada  25 February 1988
Guyana   11 April 1990
Haiti  27 March 1995
Honduras  8 March 1995
India   06 January 1995
Indonesia  24 March 1977
Jamaica  14 May 1987
Jordan  24 April 1980
Korea  4 March 1976
Kyrgz Republic  Not yet
Laos  1 June 1995
Latvia  15 February 1995
Lesotho  18 February 1981
Lithuania  21 September 1993
Malaysia   21 October 1988
Malta  4 October 1986
Mauritius  13 October 1986
Mongolia  4 October 1991
Morocco   Provisionally in force
Nepal  2 March 1993
Nigeria  11 December 1990
Pakistan  30 November 1994
Panama  7 November 1983
Papua New Guinea  22 December 1981
Paraguay  23 April 1992
Peru  21 April 1994
Phillippines  2 January 1981
Poland   14 April 1988
Romania  22 November 1976
Senegal  9 February 1984
Sierra Leone  Not yet
Singapore   22 July 1975
South Africa  Not yet
Soviet Union  3 July 1991
Sri Lanka  18 December 1980
St. Lucia  18 January 1983
Swaziland  5 May 1995
Tanzania  Not yet
Thailand  11 August 1979
Trinidad & Tobago  8 October 1993
Tunisia  4 January 1990
Turkey   Not yet
Turkmenistan  9 February 1995
Ukraine  10 February 1993
United Arab Emirates  13 December 1993
Uruguay  Not yet
Uzbekistan   24 November 1993
Venezuela  Not yet
Yemen Arab Rep.  11 November 1983
Zimbabwe  Not yet


C.  OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS

The U.S.-Anglo-Irish Agreement Support Act of 1986 authorized U.S. 
Overseas Private Investment Corporation (OPIC) programs to operate in 
Northern Ireland and in areas of the Republic of Ireland affected by 
civil disturbance.  The United Kingdom is a member of the Multilateral 
Investment Guarantee Agency (MIGA) through its membership in the World 
Bank.


D.  LABOR  
     
The population of the United Kingdom was 58.3 million in 1994, an 
increase of only 2.4 percent since the mid-1970's.  In Q1-1995 the work 
force was 27.888 million of whom 25.586 million were employed. 

While the work force has grown modestly since the 1960's, the number 
employed has fallen.  The resulting unemployment peaked in 1986 at 3.29 
million, a rate of 11.8 percent.  During a period of economic expansion 
in the late 1980's, unemployment declined steadily until mid-year 1990 
when it bottomed at 1.56, million or 5.5 percent.

During the 1990-92 recession, unemployment rose at a rapid rate, 
reaching a seasonally adjusted 2.99 million (10.6 percent) in January 
1993, before falling back steadily to 2.22 million (8.3 percent) in May 
1995.  Unemployment declined 1.1 percentage points in the last year, but 
the rate of decline has been slowing recently. 

During the recession job losses were across the board, with large 
companies shedding jobs at a faster rate than their smaller 
counterparts.  Output initially fell but has since begun to rise, 
implying that productivity gains have allowed firms to operate with 
reduced staffing levels.  The country thus emerged from recession with 
leaner, more competitive industries. 

A recent survey indicated a closing of the gap between wage rates in the 
three major global markets.  In 1994 Japanese workers earned $21.42 per 
hour compared to the United States at $17.10.  Within the EU, the United 
Kingdom's hourly average wage rate of US $13.62 was over 50% below that 
of Germany at $27.31, and well below that of France at $18.89.  The 
average cost of industrial labor is lower in Northern Ireland than in 
Great Britain and is currently at 86% of the Great Britain level.  

Labor relations in the UK have improved very dramatically over the last 
two decades.  Currently only one half of one percent of the work force 
is involved in any form of work stoppage.  Moreover, most disputes have 
been in the public sector, which accounts for approximately 5 million 
persons, and have resulted primarily from protests over job losses.  It 
is with considerable justification that the United Kingdom claims to 
have one of the best, if not the best, strike records in Europe.

A significant factor in the dramatic fall in the use of strike action 
has been modifications to the Employment Acts of 1980, 1982 and 1984.  
The main provisions of those acts are:

*  To hold secret ballots in choosing union officials for fixed terms, 
and to decide on industrial action.

*  To restrict the unions' immunity from civil action only to action 
taken relating to a lawful trade dispute.

*  To restrict lawful picketing to the pickets' own place of work.

*  To remove statutory protection for "the closed shop", i.e. a  work 
force composed exclusively of union members. 

Under the Employment Protection Act of 1978, each full-time employee 
must receive a written contract from his/her employer.  The act 
specifies practices relating to termination of employment, redundancy 
payments and appeals against unfair dismissal.
    
In line with the policies of the current government, there has been a 
shift in employment towards the private sector.  The proportion of the 
work force engaged in the private sector was 76 percent in 1992, almost 
the same level as in 1961 but well above the 1976 rate of 70 percent.  
The number of people employed in manufacturing industries is up slightly 
over the last year, but the long-term decline has been dramatic.  During 
the first quarter of 1995, there were only 4.39 million persons, 20 
percent of all the industries and services work force, employed in this 
sector, down from 25 percent in 1985.  Service sector employment 
increased from 66 to 73 percent over the same period. 

The composition of the work force is changing.  The 6.6 percent growth 
in the total work force throughout the 1980's was entirely due to 
increases in female employment.  The last recession also produced large-
scale unemployment among white-collar staff, especially middle managers.  
Many of these positions will never
be replaced as enterprises find ways to adjust to reduced levels
of management.   

Commonly expressed concerns in the United Kingdom over the direction and 
quality of education parallel attitudes in the United States.  HMG is 
responding with an elaborate program aimed at raising the educational 
and technical skills of the work force.  The teaching of basic skills 
and technology is being reinforced through a national curriculum and the 
adoption of uniform testing standards.  A national system of vocational 
qualifications has been developed, and employers are being encouraged to 
provide more training to their staff. 

The country's universities are ranked among the best in the world, and 
successfully attract a high proportion of overseas students.  U.S. and 
other multinational corporations generally find the UK work force to be 
well-educated, skilled and productive.        

   
Technological innovation is generally well received in the work place, 
as employees have tended to benefit from increased earnings, enhanced 
skills, and more interesting and responsible jobs.


E.  FOREIGN TRADE ZONES/FREE PORTS

Six free zones are now operating in the United Kingdom.  Within each 
free zone, goods are treated for customs duty purposes and the 
application of some quantitative restrictions as being outside the 
customs territory of the country.  Since August 1, 1991, the supply of 
imported goods in a free zone has been "zero rated" for the purposes of 
value-added-tax, on condition that the recipient clears the goods for 
removal from the free zone to home use.  Free zones offer the following 
advantages:

*  Cash-flow benefit resulting from exemption of duty, unless and until 
goods are exported or released into free circulation.

*  Greater flexibility in determining final destinations for goods, 
subject to quota restrictions.

*  Simplified customs procedures

The Free Zones in the United Kingdom are:

Southampton:  Seaport located on the south coast, with airport, serving 
routes to and from North America, the Middle East and the Far East.  
Free zone covers 10 acres with plans for expansion, and has 200,000 sq 
ft of covered warehouse space.  Land available for development.  
Contact:  

       Southampton Free Trade Zone  
       Southampton SO15 1HJ
       Tel: 011 44 1703 335 995;  Fax: 011 44 1703 335 997  

Prestwick:  Located on 100 acres, adjacent to Scotlands's principal 
international airport.  Good rail connections to Glasgow.  Federal 
Express is a big user.
Contact:  

       Freeport Scotland Ltd.
          c/o Barr Ltd,
          Heathfield, Ayr KA8 9SL
          Tel: 011 44 1292 281 311

Humberside:  Seaport located in the city of Hull on the northeast coast 
of England. The free zone covers just over ten acres with additional 
land for development, and comprises 200,000 sq ft of covered storage 
space.
Contact:  

        Pinnacle Storage
           West Carr Lane
           Stoneferry, Hull, HU7 0BS
           Tel: 011 44 482 839 839;  Fax: 011 44 482 839 565
      
Birmingham:  Inland location on 3 1/2 acres, eight miles from Birmingham 
city centre and linked to Birmingham International Airport, the free 
zone is home to about ten foreign companies.
Contact:   

        West Midlands Freeport
           Birmingham B26 3QD
           Tel: 011 44 121 782 0100;  Fax: 011 44 121 782 0119 

Tilbury:  London's main port, located 25 miles east of the city, handles 
6 million tons of cargo per year, mostly containers, forest products, 
general, ro-ro and bulk cargo. 
Contact:  

       Port of Tillbury
          Tillbury Freeport
          Tillbury, Essex, RM18 7EH
          Tel: 011 44 1375 852 428;  Fax: 011 44 1375 855 106
  
Liverpool:  Seaport located on the northwest coast of England, covering 
800 acres, UK's largest free zone, port facilities and internal 
railhead.  Designated as a future Channel Tunnel rail freight terminal.  
Small international airport ten miles away.  
Contact:   

        Liverpool Freeport,
           Maritime Center
           Port of Liverpool L21 1LA
           Tel: 011 44 151 949 6000;  Fax: 011-44-151 949 6020      


F.  CAPITAL OUTFLOW POLICY

There is no formal government policy regulating capital outflows 
currently enforced.  Capital may move freely into and out of the United 
Kingdom.



G.    FOREIGN DIRECT INVESTMENT STATISTICS
  
(All amounts below are calculated at the exchange rate of US$1.6 to the 
pound sterling) 

The cumulative total of overseas direct investment in the United Kingdom 
at the end of 1993 was US$191.896 billion.  This compares with a figure 
of US$183.054 billion at the end of 1992.

Direct investment into the UK in 1993 amounted to US$14.754 billion, an 
increase of US$648 million over the 1992 amount, but still a substantial 
reduction on the 1989 and 1990 figures.  North America accounted for 47 
percent of the investment into the United Kingdom in 1993.

Inward direct investment in the UK comprises mainly net investment by 
overseas companies in their affiliates, including the re-investment of 
retained profits.  

Note:  In the tables below the exchange rate used is that of June 1995, 
i.e. 1 pound = US$1.60.   Average exchange rates for the year's 
indicated were as follows: 1991 -1 BPS = $1.77; 1992 - 1 BPS = $1.77; 
1993 - 1 BPS = $1.50.   


Table 1:  UK Inward Investment Stock by Geographical Source: (in US$ 
million, 1 pound = US$1.6)

                       1991   1992  1993              
USA                  71,094  73,602  77,691    
Canada                7,083   6,504   6,675
EU                   55,219  57,386  59,614
    France           14,400  13,998  12,835
    Germany           7,355   9,003   9,464
    Netherlands      26,331  26,744  29,168  
EFTA                 16,902  17,582  16,006
    Switzerland      10,200  10,651  10,394
    Sweden            4,893   5,238   3,920
Other Western Europe    133     166     344
Other Asian          22,680  22,837  24,779
    Australia        12,248  12,933  13,733
    Japan             8,554   7,886   8,707
WORLD TOTAL         178,197 183,054 191,896

(Source: The British Central Statistic Office)


Table 2:  Inward Investment Flows by Geographical Source: (in US$ 
million, 1 pound = US$1.6)

                        1991   1992  1993   
USA                    3,006  5,997  6,968
Canada                   424   (74)     85
EU                     7,286  5,272  2,624
Of which:
 France                2,133  1,283   (45)
 Germany                 396  2,018  1,066
 Netherlands           2,335  1,816  1,922
EFTA                       -  1,299    774
Of which:
 Switzerland             638  1,136    776
 Sweden                    -    206   (32)
Other Western Europe       -     27     24
Other Developed Asian  2,250    616  2,299    
Australia              1,499    544  1,586  
Japan                     77    (35)   621
  WORLD TOTAL         13,469  14,106  14,754  

(Source: The British Central Statistic Office)



Table 3:  UK Inward Investment Stock by Industry Sector:
              (listed in US$, 1 pound = US$1.6)

                    1993  
Total Manuf.       64,408  
Agriculture           150      
Energy             30,708  
Construction          645  
Distribution       14,210  
Transport           1,986  
Financial Services 37,154  
Other              24,211  
 TOTAL            191,896  

(Source: The British Central Statistic Office)


Table 4:  Inward Investment Flows (FDI) by Industry Sector:
              (listed in US$, 1 pound = US$1.6)

                        1991    1992      1993
Total Manufacture      4,826    4,720    4,946  
Agriculture               11       72        3
Energy                 2,114    4,077    1,918
Construction            (62)     (21)       18  
Distribution           2,142      973    1,491  
Transport                 30      938      672
Financial Services       842    2,187    5,232  
Other                  2,334    1,160      477
   TOTAL              13,469   14,106   14,754

(Source: The British Central Statistic Office)



British Investment Overseas:
The level of the UK's direct investment overseas increased by $29.6 
billion during 1993 to reach $264.266 billion.  Direct investment assets 
in the United States accounted for 34.7 percent of the total overseas 
assets; the EU 31.6 percent, at $83.6 billion.

Table 5:  UK Cumulative Outward Direct Investment by Geographical 
Destination:  (in US$ million, 1 pound = US$1.6)

                             1991   1992  1993
USA                         72,587  87,501  91,872
Canada                      10,005  10,826  11,291
EC                          52,843  62,696  83,645
 France                     11,664  12,869  13,421
 Germany                     6,397  6,086    9,450
 Netherlands                13,390  19,168  37,835
EFTA                         6,128   7,045   7,221
Other Western Europe           520     774     826
Australia                   14,491  15,368  16,350
Japan                        2,678   3,197   3,054
South Africa                 3,582   3,698   4,341
Carib & C/S America         18,112  21,462  19,546
Hong Kong                    3,032   4,405   5,747
Singapore                    4,306   5,626   5,923
Bermuda                      7,405   8,611   7,792
  TOTAL                    198,549  234,581  264,266

(Source: The British Central Statistic Office)



Table 6:  UK Outward Direct Investment Flows by Geographical 
Destination:        (in US$ million, 1 pound = US$1.6)

                              1991   1992  1993              
USA                           3,576  2,114  6,960  
Canada:                         509  (171)     16  
EC                            5,974  6,946 10,554  
 France                         778  1,005    934  
 Germany                        248    858  2,222  
 Netherlands                  1,576  2,536  4,829    
EFTA                            229    696  (142)      
Other Western Europe            138    170     86      
Australia                     1,742  1,582  1,014    
Japan                           (8)     21  (125)    
South Africa                    242    115    504  
Carib & C/S America             120  2,309  1,312    
Hong Kong                     (394)   (30)    715  
Singapore                       371    910    845  
Bermuda                       (702)    810    968      
  TOTAL                     14,886  16,171  27,235

(Source: The British Central Statistic Office)

H.  MAJOR FOREIGN INVESTORS

Major foreign investments in the United Kingdom announced during 1994-
95:

-  Fujitsu is investing US$504 million in a new semiconductor         
plant in County Durham.

-  NEC is investing $848 million in an addition to its existing       
semiconductor plant in Scotland.  

-  Toyota has increased to $1.36 billion its investment in a          
vehicle assembly plant in Derbyshire.

-  Samsung Electronics is investing $960 million in a 5-factory       
complex in Northeast England, the biggest Korean investment in     
Europe.  Samsung is also moving its European headquarters from     
Germany to the United Kingdom.

The ten largest subsidiaries of foreign companies within the United 
Kingdom ranked in order of their recorded turnover, are shown below.  

1. Shell                 Netherlands/UK
2. Mitsui                         Japan
3. Sumitomo Corporation (UK)      Japan
4. Unilever              Netherlands/UK
5. Ford Motor Company               USA
6. Gallaher Ltd. (American Brands)  USA
7. Mitsubishi Corp.               Japan
8. Esso (Exxon)  Plc.               USA
9. I.B.M.                           USA
10.Texaco Ltd.                      USA 

(Source: The Times 1000, 1994/95)


I.    OPPORTUNITIES IN NORTHERN IRELAND

The end to violence and terrorism in Northern Ireland in late 1994 has 
presented the United States with the opportunity to assist in building a 
lasting peace founded on economic development and prosperity. 

The dramatically improved business opportunities in Northern Ireland and 
the border counties of the Republic of Ireland present American 
companies with a new commercial potential:  to be in on the ground floor 
of an attractive means of reaching not just the emerging markets in 
Northern Ireland and the border counties, not just the islands of 
Ireland and Britain, but also the entire 15-nation European Union.  
Doing business in Northern Ireland and the border counties will not only 
assist Irish peace and reconciliation, but also will be good for 
American business in Europe.   

As the most important single source of foreign investment for Northern 
Ireland, the United States accounts for a substantial proportion of 
Northern Ireland's manufacturing and tradeable service sectors.  About 
40 U.S. companies are already operating in Northern Ireland.  They have 
accounted for $850 million invested in the past 5 years and provide 
almost 9,000 jobs.  These companies include Dupont, Ford Motor Company, 
United Technologies, Fruit of the Loom, Federal Express, 3M, and 
Seagate.

Membership in the European Union, direct travel and  communications 
links with London and other EU capitals, highly skilled labor and 
extremely competitive wages are attractive inducements for foreign firms 
seeking to invest in Northern Ireland or the border counties.  In 
addition, U.S. investors are qualified to receive various incentives and 
financial supports from the host governments and the EU for 
manufacturing or R&D operations (see below). 

Specific investment opportunities exist in manufacturing in the 
following sectors; automotive components, electronics, computers and 
telecommunications, transportation, medical equipment and textiles.  
Investment opportunities services include: tourism, teleservices, 
vocational training, and franchising. 


Northern Ireland Investment Incentives:

Due to the special difficulties generated by the "troubles", Northern 
Ireland has benefitted from some special incentive programs financed by 
the UK government.  These incentives, administered by Northern Ireland's 
Industrial Development Board can account for up to 50% of capital costs.  
In addition, Northern Ireland has been accorded the Objective 1 priority 
in the allocation of EU reformed structural funds aimed at reducing 
regional imbalances within the EU.  These grants cover such areas as 
industrial and agricultural development, transportation, human resources 
and training, and tourism.  

Overseas investment is vital to economic development in Northern 
Ireland.  In the past 8 years industrial investment has totalled more 
than $2.4 billion in Northern Ireland with 180 overseas companies, 
employing 46,500, operating in the Province.  Included among these are 
40 U.S. companies employing almost 9,000 people, or almost 10% of the 
total manufacturing workforce.  These firms have made the U.S. the 
single most important source of internationally mobile investment for 
Northern Ireland.
  
Capital investment has been heavily subsidized in Northern Ireland for 
over 30 years.  While Northern Ireland has shared the structure of 
financial assistance to industry common to all assisted areas in the UK, 
it also benefits from numerous additional incentives for inward 
investment specific to Northern Ireland.  

Capital:   Businesses that set up internationally mobile projects in 
high unemployment areas can receive up to 50% cash grants for buildings, 
machinery, and equipment.

Revenue:   Businesses can receive employment grants related to the 
number of newly-created jobs when incurring start-up costs.  This 
incentive is designed to provide new projects with inflow of revenue 
during the build-up period.

Other Incentives Include:  
-  Interest relief grants which reduce interest on loans from non-
government sources are available for up to 7 years (3 years at a broadly 
commercial rate followed by 4 years at 3%).  

-  Factory rent grants of up to 100% of rental costs for up to 5 years.

-  Company development program grants of up to 50% of total net training 
and development costs, including wage costs, fees, and travel.

-  Grants to attract top quality management.

-  Product and Process Development grants of up to 50% towards labor and 
material costs, with a maximum total single project grant of 250,000 
British pounds sterling.  Certain consultancy and design costs may also 
be eligible.

-  Marketing Development grants of 40% of approved costs up to a maximum 
of 60,000 pounds per year.  These awards help companies develop a 
strategic approach to market planning and implementation.

-  Strategic Development Planning Grants are available for the 
consultancy costs incurred by companies in analyzing their competitive 
position and preparing a strategic plan.

Tax:   Depreciation allowances on capital expenditures including the 
total value of IDB grant received (up to 45%).  Expenditures can be 
written off at a rate of 25% per year (declining balance) for machinery 
and equipment, and 4% per year (straight line) for buildings.  Also 
available are industrial de-rating incentives of 100% for manufacturing 
plants (i.e. no property taxes).

Finance:   The provision of government loans may be considered in 
certain circumstances.  Such loans will have regard to the total capital 
cost of the project, including working capital, and can include an 
interest-free period.  Adequate security is required.

Share Capital incentives are also available for particular projects.


International Fund for Ireland: 

The International Fund for Ireland works with a range of local public 
and private sector groups on funding community development projects, 
with programs focused on both urban and rural renewal.

The objectives of the Fund are:

-  to promote economic and social advance; and
-  to encourage contact, dialogue and reconciliation between 
nationalists and unionists throughout Ireland.

The U.S. has contributed approximately $20 million per year since 1986 
when the U.S. established a trilateral agreement with the Irish and 
British Governments to support the Fund, a tangible expression of the 
U.S. policy favoring peace and reconciliation through economic progress 
in Northern Ireland.  Other contributors include the European Union, 
Canada, New Zealand and Australia.  The total resources available to the 
Fund to date amount to 250 million British pounds (approx. U.S.$400 
million).  Since its inception, Fund projects have created an estimated 
29,000 permanent jobs and 25,000 person years of temporary employment in 
the most disadvantaged areas in Northern Ireland.


VIII.  TRADE AND PROJECT FINANCING


  BRIEF DESCRIPTION OF BANKING SYSTEM

The banking environment is open and competitive. More than 500 foreign 
banks have a UK presence.  Banks can operate nationally and retail 
banking is dominated by five large, "clearing banks," which tend to be 
relatively conservative.  These and other banks market a full range of 
services, including mutual fund investment vehicles called unit trusts.  
Building Societies (similar to American Savings and Loans) have 
traditionally made the majority of residential real estate loans and 
have attracted long term savers with attractive rates.  Originally small 
regional institutions, these building societies have grown in size 
through mergers and acquisitions and are increasingly able to match the 
banks in their number of branches and range of products and services.  
The distinction between banks and building societies are breaking down 
and some of the larger societies have converted to banking licenses.

The deposit insurance program insures deposits up to 75% of the first 
20,000 pounds.  However, the program will be revised in the near-term to 
comply with the EU deposit insurance directive.  Debit cards are far 
more widely used than credit cards, but all major cards are in use. 

Since the departure of the pound sterling from the ERM in September 
1992, HMG has phased in greater autonomy for the Bank of England in the 
conduct of monetary policy.  However, it still does not have the same 
degree of independence as, for example, the Federal Reserve in the U.S. 
or the Bundesbank in Germany.   


  FOREIGN EXCHANGE CONTROLS AFFECTING TRADING

There are no exchange controls restricting the transfer of funds into 
and out of the United Kingdom.  Since the United Kingdom has a large 
foreign exchange market, there are no restrictions on the amount of 
foreign currency which is available.


  GENERAL FINANCING AVAILABILITY

The United Kingdom provides one of the foremost international financial 
centers.  As befits a market which grew historically in close 
association with the far-flung enterprises of the British Empire, the 
City of London is home to a vast number of banks and other institutions 
with departments specialized in foreign trade.  The London financial 
markets are rightfully seen as transparent and flexible, and the 
institutions, sound.



  HOW TO FINANCE EXPORTS/METHODS OF PAYMENT

Differences in business customs extend clearly into export financing.  
Therefore it is strongly advised that exporters discuss the best methods 
and transaction details with an experienced international banking 
professional.  

There are several basic methods of receiving payment for products sold 
abroad, the choice of which is determined by the degree of trust in the 
buyer's ability to pay.  Once the foreign buyer is established as 
credit-worthy, moderately-sized sales are generally made on an open 
account basis.  Financing alternatives U.S. exporters might consider, in 
order of the most- to the least-secure include: 1) cash in advance, 2) 
letter of credit, 3) documentary drafts for collection, 4) open account, 
and 5) consignment sales.  Being paid in full in a timely manner is 
always a major concern of any exporter, as well as relative commercial 
risk.

Open account is the most attractive but most risky financing method.  It 
entails an in-depth assessment of the customer's credit-worthiness and, 
in some cases, an export insurance policy from a reputable insurer or a 
factoring agreement.  

The latter arrangement calls for the importer to pay a factoring firm 
directly.  The factor in turn will often advance up to 80 percent of the 
invoice value immediately, if requested by the exporter.  The balance, 
minus the factoring charges, is paid when the overseas customer pays.   

The UK factor will provide credit advice on new and existing overseas 
customers and provide bad debt protection.  Export factoring services 
usually are available to businesses of a certain export volume.  The 
charges range between 1.5 and 3 percent of the value of the invoices.

Prepayment financing of up to 80 percent of the invoice will evoke 
another finance charge.  The factoring process enables an exporter to 
take advantage of open account financing, while reducing the attendant 
risks.

Although exporting can be riskier than domestic selling, there are 
methods of reducing risk.  These methods include selecting a safe method 
of payment (for example, irrevocable letter of credit), obtaining credit 
risk insurance, and securing detailed credit information on the 
potential foreign buyer.  It is always advisable to check a buyer's 
credit even if one of these financing methods is used.

The Department of Commerce offers a World Traders' Data Report (WTDR) 
service, which provides U.S. exporters with credit information on 
potential overseas trading partners.  This includes financial data, 
trade references and other information useful in assessing the credit-
worthiness of the overseas contact.  Banks are often able to provide 
credit reports on foreign companies through their foreign branches or 
correspondent banks.  In addition, there are a number of private firms 
that provide international financial credit check services.

The U.S. Export-Import Bank (Eximbank) and Small Business Administration 
(SBA) provide trade finance assistance to U.S. exporters.  Eximbank and 
the SBA work together, using each other's resources to meet the special 
needs of small companies.  Small business exporters can use separately 
the programs of the Eximbank and SBA, or a combined program by the two 
agencies.

Using these resources, smaller U.S. businesses successfully enter 
foreign markets.  The programs enable exporters to advance competitive 
financing terms to the prospective customers and to obtain insurance to 
safeguard against non-payment of export receivables.  The U.S. 
Government operates these programs on a self-sustaining basis and may 
require personal guarantees, or pledges of inventory or receivables, as 
collateral for loans or guarantees.

For the U.S. exporter, the United Kingdom is one of the least daunting 
of foreign markets when it comes to the question of how and when one 
will get paid:

  -The pound sterling is freely convertible, and most U.S. banks will 
readily quote pound rates, both spot and forward. 

  -There are no foreign exchange limits or regulations governing the 
pound.  

  -Common international payment mechanisms such as commercial letters of 
credit (L/C's) are widely used.

  -Credit information on public companies is widely available, both from 
public filings and from commercial credit agencies.  

  -This is a thoroughly "monetized" economy, and there are virtually no 
countertrade requirements (although companies bidding on Ministry of 
Defence procurements may find that "offset" arrangements are standard).

It can be difficult to obtain information on private companies.  While a 
Public Limited Company (plc) must file audited annual statements, 
relatively little is available on firms registered in offshore areas 
such as the Channel Islands or Gibraltar.  Standard sources of credit 
information include Companies House (the national corporate registry), 
commercial credit information agencies, and the World Traders' Data 
Report.

U.S. firms should seriously consider selling to UK customers on the 
basis of an irrevocable letter of credit issued by a prime bank, at 
least until a satisfactory trading record has been established.  During 
the recent recession, UK firms had to "stretch" their accounts payable 
to an average of eighty-five days (compared to average invoice terms of 
thirty days).  Use of L/C's will safeguard U.S. sellers from being 
overly affected by late payment problems.


  TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE

One of the most widely used Eximbank trade finance programs is 
administered by the Foreign Credit Insurance Administration (FCIA) 
Management Company, Inc.  There are particular Eximbank insurance 
programs designed for manufacturers and service companies, and for 
either new exporters or experienced exporters.  These policies cover 
either short or medium-term repayment schedules.

In addition to extending working capital guarantees and providing 
insurance, Eximbank extends and guarantees loans to foreign buyers of 
U.S. exports, including firms located in Western Europe.

The SBA's three main loan guarantee programs for U.S. exporters include 
the Export Revolving Line of Credit (ERLC), the International Trade 
Loan, and the regular 7A loan guarantee program.  The ERLC guarantees 
loans to U.S. firms to help bridge the working capital gap between the 
time inventory and production costs are disbursed and when payment is 
received from the foreign buyer.

SBA guarantees 85 percent of the ERLC, subject to a US$750,000 guarantee 
limit.  The ERLC is granted on the likelihood of a company 
satisfactorily completing its export transaction.  The guarantee covers 
default by the exporter, but does not cover default by a foreign buyer.  
Failure on the buyer's side is expected to be covered by letters of 
credit or export credit insurance.  Small businesses that have worked 
with the SBA can combine its ERLC with Eximbank's Working Capital 
Program to support larger transactions.

Eximbank's Working Capital Guarantee Program offers pre-export financing 
support for purposes similar to the ERLC, including production, 
inventory and marketing, and with no financial limit imposed.  Under the 
SBA/Eximbank Co-Guarantee Program, the two agencies share the risk on 
loans of US$200,000 to US$1 million per borrower.

SBA International Trade Loans (ITLs) are designed to finance up to $1 
million in fixed assets, such as machinery, plus US$250,000 in working 
capital.  Repayment terms extend to seven years.  The SBA's regular 7A 
loan guarantee is also available for exporters to finance plant and 
equipment. These loans also involve long-term repayment schedules.

Information on Eximbank programs can be obtained from the marketing 
department at (202) 566-8860.  Eximbank also has a toll free number --
(800) 424-5201--that provides information on its overall programs.  SBA 
has district offices throughout the country that provide information on 
its financing programs.  The SBA Office of International Trade in 
Washington, D.C. can be reached on (202) 205-7266.

Local Sources:
The UK's Export Credit Guarantee Department (ECDG), which is responsible 
to the Department of Trade and Industry supplies loan guarantees to 
civilian lending institutions for various UK industry exports.  The ECDG 
is located at 2 Exchange Tower, Harbour Exchange Square, London E14 9GS, 
Tel: 011-44-71-512-7000,
Fax: 011-44-71-512-7649.  

Collection Problems:
Even with credit checks and the use of the least risky financing 
methods, exporters can encounter problems with buyers who default on 
payments.  Many small firms in the United Kingdom have experienced 
increased financial problems resulting in late payment and bad debts.

Collecting payment can be both expensive and time consuming, even when 
the exporter has insurance to cover commercial credit risk.  The 
exporter must exhaust all reasonable means of obtaining payment before 
an insurance claim will be honored, and possibly encounter a significant 
delay before the insurance payment is received.

The least expensive solution for a payment problem is to contact the 
customer and negotiate directly.  The exporter is more likely to be able 
to retain valuable export customers in such cases.

When and if attempts to resolve disputes in this manner do fail, and the 
amount in question warrants continued effort, the exporter should 
consult its bank, legal counsel, and other qualified experts.  At this 
stage, arbitration may be a remedy that is both less costly and less 
time-consuming than taking legal action.

The International Chamber of Commerce handles the majority of 
international arbitrations.  This organization is usually an arbitrator 
acceptable to foreign companies since it has no national affiliation.  
For information, U.S. companies should contact the Vice President for 
Arbitration, U.S. Council of the International Chamber of Commerce; 
telephone: (212) 354-4480.  The American Arbitrations Association also 
handles international disputes.  This organization can be contacted in 
the United States at (212) 484-4000 for information on its services.


  PROJECT FINANCING AVAILABLE
    
The vast majority of projects are financed by public and private sector 
lenders at commercial rates.  

As a member of the European Union, the United Kingdom has access to EU-
funded programs which provide a wide range of support in the form of 
grants, loans and co-financing for training, feasibility studies, 
infrastructure projects in the environmental, transportation, energy and 
other key sectors.  EU initiatives  are designed to support projects 
within its Member States and the EU-wide "economic integration" projects 
that cross over borders.  

EU Structural Funds are available to assist economically depressed 
regions that require industrial restructuring and agricultural 
reconversion.  Certain regions of the United Kingdom have benefited from 
these funds with projects co-financed by the national government.  
Tenders for such projects are subject to EU public procurement 
legislation, provided that the tender meets the EU threshold 
requirements.  There are no overt prohibitions against the participation 
of U.S. firms.  From a commercial perspective, these initiatives create 
significant market opportunities for European firms of American 
parentage.
 

  LIST OF BANKS WITH CORRESPONDENT U.S. BANKING ARRANGEMENT

The United Kingdom boasts many varieties of financial institutions, 
including merchant banks, leasing companies, factoring houses, and 
forfeiting specialists.  However, UK buyers seeking trade finance 
normally need not go beyond the commercial banking system.  There are 
hundreds of banks with offices in London, and many have large foreign 
exchange and trade finance departments.  The four main UK "clearing 
banks" (Lloyds Bank, National Westminster Bank, Midland Bank, and 
Barclays Bank) are relative "giants" on the international financial 
scene.  There is also a host of other major UK institutions such as 
Standard Chartered Bank, the Bank of Scotland, and the Royal Bank of 
Scotland, in addition to branches of the leading banks from all over the 
world.  Debt ratings for major UK banks are readily available, and prime 
UK bank L/C's should generally be accepted for confirmation or 
discounting by major U.S. banks.

Conversely, most U.S. banks have correspondent relationships with one or 
more major British banks, and UK correspondents will be able to provide 
a wide variety of services and information on the UK market.  An 
additional source of help is the more than 37 U.S. banks which have 
branches in London.




IX.  BUSINESS TRAVEL


  BUSINESS CUSTOMS

The traditional rigidity of the British social class structure has been 
diminished by social and economic developments over the last two 
decades.  Government grants have permitted universal access to higher 
education and have thus enhanced social mobility.  Increased 
liberalization of the marketplace and the  greater competition induced 
have rewarded enterprise, and a new generation of professionals schooled 
in U.S. management, marketing and finance techniques are increasingly 
taking the helm of British business.       

The significance of being "British" has evolved in recent decades as 
immigration progressively altered the ethnic mix.  Minorities, which now 
constitute over five percent of the population, are growing.  British 
business contacts might well be individuals who are ethnically Indian, 
Pakistani, Arab, African or other descent; they bring a welcome vitality 
to the business culture.   

Business Etiquette:
U.S. exporters should be aware that the relative ease of communication 
with British clients may disguise the fact that there are some 
fundamental cultural differences.  While variances in pace and style 
will be most noticeable, exporters should avoid making quick assumptions 
concerning business relationships  until on-the-ground experience has 
been gained.  As in most overseas markets, there is no substitute for 
sustained personal contact with potential business partners.   

The most important characteristics of British business etiquette are 
punctuality and courtesy.  Prompt acknowledgement of the receipt of 
letters is expected, for example.  Delivery terms, as well as 
appointment schedules, are expected to be maintained.  

Titles, when known, should be used in all correspondence.  For 
expeditious handling of correspondence, airmail or fax should be used.  
It is advisable to address commercial solicitations to the firm, rather 
than individuals.

British company executives will communicate more often by writing 
letters, telexes, and fax messages than do most U.S. executives, who 
tend to rely more on the telephone.  British executives are far less 
likely to seek legal advice and guidance than their U.S. counterparts.  
Only as a last resort will the UK executive consult a solicitor, while 
the American may use an attorney as a business advisor.

"Working" breakfasts are far less common in the United Kingdom than in 
the United States.  Luncheons are more appropriate as a form of business 
meetings.

Developing relationships with UK executives that extend beyond business 
matters into social affairs will take time and is not guaranteed.  Only 
after appropriate familiarization would a UK business executive expect 
to be invited to a dinner or social function in an American's home, or 
invite a U.S. executive to a similar function in his own residence.  
Under such circumstances, the business aspects of the relationship would 
be completely subordinated to the social elements.  Gift giving or 
exchanging is not a normal business custom.

Business Hours:
Business hours in the United Kingdom correspond closely to those in the 
United States.  Banking hours are generally 9:30 a.m. to 3 p.m., Monday 
through Friday, except on Thursday when banks stay open later.  Offices 
are open from 9 a.m. until 5 p.m., while stores are open from 9 a.m. to 
5:30 p.m.  In the vacation months of July and August, many British 
executives are not available except by advance appointment.

Standard and Daylight Savings Time:
The United Kingdom is on Greenwich Mean Time (GMT).  London changes to 
daylight savings time on the last Sunday of March and reverts back to 
standard time on the last Sunday of October.  London is five hours ahead 
of Eastern Standard Time.  Scotland, Wales, and Northern Ireland are on 
the same schedule.


  TRAVEL ADVISORY AND VISAS

Entrance Requirements:
Every U.S. citizen entering the United Kingdom must have a valid 
American passport.  No visas, entry permits, or vaccinations are 
required of U.S. citizens entering the United Kingdom, except for non-
tourist stays of more than three months.  If a longer stay is 
contemplated, visitors should check with the nearest British consulate 
in advance of travel.

Three months after their arrival--unless the immigration officer has 
endorsed their passports upon arrival--U.S. citizens over 16 years of 
age should register with the local British police, except in the 
Metropolitan District of London, where they register at the Aliens 
Registration Office, 10 Lamb's Conduit Street, London WC1.

U.S. citizens planning to visit the United Kingdom may obtain passports 
on application through the clerk of any U.S. federal or state court 
authorized by law to naturalize aliens.  Current regulations governing 
the admission of visitors will be modified soon, and proposed changes 
may restrict the ability of some foreign nationals, including American 
citizens, to reside in the United Kingdom.  The headquarters of the 
State Department's Passport Office is:
  U.S. Department of State
  Passport Services Correspondence Branch
  CA/PPT/PS/PC, Suite 510
  1111 19th Street, NW
  Washington, DC 20522-1705

Americans interested in being employed in the United Kingdom should 
consult the British Consulate in New York to inquire about a work 
permit.  The employment of aliens in the United Kingdom is controlled by 
the Home Office and the Department of Employment.

U.S. citizens wishing to extend the length of stay to obtain employment, 
paid or unpaid, or to set up any business or profession, must obtain 
permission from the Under Secretary, Home Office, Immigration and 
Nationality Department, Princeton House, 371 High Holborn Street, London 
WC1.

Directors and employees of British subsidiaries of U.S. firms have, in 
general, encountered little difficulty in obtaining permission to enter 
and remain in the United Kingdom.  In the case of technical employees, 
it is necessary to establish that British subjects with the necessary 
qualifications are not available.

Work permits are usually readily issued for key personnel.  Bringing 
technical personnel required to set up and operate the plant or business 
generally poses no problem.  

The British Government has modified regulations governing the admission 
of visitors for business purposes and economic immigration to the United 
Kingdom.  The changes, outlined below, limit the ability of some foreign 
nationals, including American citizens, to reside in the United Kingdom.  
  
The categories of employees under the new immigration rules which will 
directly affect the business community are: businessmen and self-
employed persons; retired persons of independent means; investors; and 
(short-term) business visitors.  

According to the modified regulations, persons establishing a new 
business must be investing at least US$300,000 of their own money in the 
company, or, alternatively, they can invest a similar amount in an 
ongoing concern.  In either instance, the person must be occupied full-
time in running the business.  Simple property investment will not 
necessarily suffice to obtain resident status (indefinite leave to 
remain status) in the United Kingdom.

Retired persons of independent means will have to be at least 60 years 
of age, and have control of at least US$375,000 or an annual income of 
at least US$37,500.  Engaging in business or professional activity is 
prohibited.  

The new investor category requires a US$1.5 million investment of which 
three-fourths must be in an active, trading UK registered company (and 
not simply property investment).  

The business visitor category is more sharply defined. Under the new 
regulations, entry may be denied to those who will perform 'productive 
service.'  Thus, a consultant coming to the United Kingdom to do 
research for a UK firm and who will be paid by the firm qualifies as a 
business visitor only if the 'productive' portion of his work (i.e., 
writing the report itself) is done outside the United Kingdom.  Writing 
the final report here would subject the person to the work permit 
regime.  The determination of who may be admitted as a consultant is 
decided on a case by case basis at ports of entry.

The legal profession has been among the most active U.S. professional 
services sector in the United Kingdom.  Its members actively travel in 
and out of the country for short-term business purposes.  Lawyers coming 
to consult on foreign laws currently fall under an exemption to the 
normal work permit rules.  Those travelling for specific short-term 
consultation will normally be admitted as business visitors.  Those 
desiring to practice law or work as salaried employees in private 
practice, commerce, or industry must obtain entry clearance (similar to 
a visa) based on an exemption letter issued by the Law Society of 
England stating that the Society has no objection to the persons 
providing legal services.  Additionally, the lawyer must demonstrate an 
ability to live in the United Kingdom without recourse to public funds.  
There is nothing in the proposed regulations which would alter this 
current exemption from the work permit scheme.

Citizen Services:
The American Citizen Services (ACS) section at the Embassy in London 
provides many services for U.S. citizens, including passport issuance, 
absentee voter registration and notarial services.  The Passport Unit 
supplies travel advisory information on visa requirements, health 
concerns and political violence in countries around the world.  For 
information on these and other issues, Americans should call the Embassy 
on (071)499 9000, or visit at 21-24 Upper Grosvenor Square in Mayfair.  
The Passport Unit is open 9:00-12:00 and 2:00-4:00 Monday through 
Friday, with the exception of Tuesday afternoon.  Notarial services is 
provided 9:00-12:00 Monday through Friday and 2:00-4:00 on Wednesdays.  
The Embassy is closed for all American and British holidays.  

  HOLIDAYS 

The following major holidays are observed by most businesses in the 
United Kingdom:

England and Wales:
Holiday  Day

New Year's Day  January 1
Bank Holiday-Jan  First Monday  
Good Friday  Variable
Easter Monday  Variable
May Day  First Monday
Spring Holiday-May  Last Monday
Summer Bank Holiday-Aug  Last Monday
Christmas Day  December 25
Boxing Day  Variable, first weekday
  after Christmas

Scotland:
Scotland observes the above except Easter Monday, Spring Holiday, and 
Summer Bank Holiday, and the following:

Bank Holiday  First Monday, January
Spring Holiday  First Monday, April
Victoria Day  Third Monday, May
Bank Holiday  First Monday, August
Autumn Holiday  Third Monday, Sep.

Northern Ireland:
In addition to the U.K.-listed holidays, the following are observed:

St. Patrick's Day  March 17
Easter Tuesday  Variable
Orangeman's Day  July 12, 13


  BUSINESS INFRASTRUCTURE

Commercial Language:
Some expressions and words have different meaning than those accepted in 
the United States; therefore, for clarity of meaning in correspondence, 
care should be given to use the appropriate terms.



X.         APPENDICES


APPENDIX A.     COUNTRY DATA  

At its maximum dimensions, the United Kingdom is 600 miles long and 300 
miles wide.  It has a total area of 94,000 square miles, approximately 
the size of the state of Oregon.  With nearly 58 million people and one 
of the world's highest population densities (580 persons per square 
mile), the United Kingdom represents a compact market for U.S. products.

Four out of five inhabitants in England live in urban (and suburban) 
areas. In Scotland and Wales, the number of city dwellers is not as 
high, while in Northern Ireland the numbers of people living in cities 
and rural areas are almost equal.
England's population is 48 million (83 % of the U.K.'s total), 
Scotland's is 5.2 million (9%), Wales's is 3 million (5%), and Northern 
Ireland's is 1.6 million (3%).


Profile

  - POPULATION  - 58.3 million 
  - POPULATION GROWTH RATE -  0.3 Percent
  - RELIGION -  Church of England (official); other 
    Christian denominations; Islam; Jewish
  - GOVERNMENT SYSTEM - Constitutional Monarchy 
  - LANGUAGES - English
  - WORK WEEK - Monday-Friday, 08:30-17:30


APPENDIX B.  DOMESTIC ECONOMY 

Figures expressed in US$ billions except where noted.

                                1994  1995  1996
                                           (est.)
GDP (nominal)                 1,024.1  1,125.9  1,195.0
GDP Real Growth rate (%)          3.8      2.7      2.6
GDP per capita in US$          17,572   19,259   20,382
Government spending as a
 percent of GDP                  41.5     40.8     39.6 
Inflation (%)                     2.5      3.6      3.4
Unemployment (%)                  9.4      8.3      7.9 
Foreign Exchange Reserves        43.9      n/a      n/a
Avg. exchange rate per $1.00     0.65     0.63     0.63
Foreign debt.                     n/a      n/a      n/a  
Debt Service Ratio.               n/a      n/a      n/a

Note: The UK MoD does not receive financial military assistance from the 
U.S. Government. U.S. Government military assistance is rendered through 
the Foreign Military Sales (FMS) process and granting of licenses and 
technology transfer requests for U.S. industry in direct commercial sale 
arrangements. The UK pays for this assistance through its own defense 
budgeting process.


APPENDIX C. TRADE  

Figures expressed in US$ billions except where noted.

                                1994     1995     1996
                                                 (est.)  
 -Total UK Exports             203.0    239.2     263.1
 -Total UK Imports             219.0  252.0  277.0  
 -U.S. Exports to UK            26.8  27.2  29.9
 -U.S. Imports from UK          25.1  26.0  28.6
 -U.S. Share of UK's                   
   imports (%)                  12.2  13.2  13.1


Imports of Agricultural Goods.  
                                  1994  1995  1996
                                              (est.)
 - Total from World              19.60  19.70  19.80
 - Total from U.S.                0.90   0.92   0.95 
 - U.S. share of ag. imports (%)   4.6   4.7    4.8 
 - Agricultural goods trade
     balance with the U.S.     **0.592  **0.600  **0.683

** Excluding fish and wood products.

Trade Flows (with U.S.):  Imports of agricultural products in 1994 
totalled US$19.6 billion (US$0.9 billion) and agricultural exports, 
US$10.0 billion (US$0.3 billion).



Trade Balance with 3 leading partners (Tariff section 0 only - food & 
live animals): 1994
($millions)
  Country  Imports  Exports  Balance
  EU        11,997  7,280  (4,717)
  U.S.         883    291    (592)
  Canada       218    140     (78)

Principal U.S. agricultural exports to UK - 1994
($000's)
  Item                 Value    
  Fruits & Vegetables  318,658
  Nuts                 121,648
  Corn Gluten Feed     115,093
  Soybeans              58,794
  Wine & Beer           44,749

Principal U.S. imports from UK - 1994
($000's)
  Item                    Value
  Sugar Confectionery    72,570
  Cocoa & Products       45,717
  Cheese                 29,592
  
Agriculture and Food:
o  accounts for 14 percent of UK's GDP (agriculture 1.4%)
o  employs 9 percent of the UK's workforce (agriculture 2.1%)
o  livestock and livestock products are responsible for 62% of total 
agricultural  output; cereals for 16%; other crops for 7% and 
horticulture 13%
o  food accounts for 11 percent of total consumer expenditure
o  alcohol and tobacco accounts for a further 9 percent of total 
consumer spending
o  the UK is 56 percent self-sufficient in food - 73 percent self-
sufficient in temperate products 



APPENDIX D.       INVESTMENT STATISTICS
Investment (US$ billions, except as noted, at US$1.60 per British pound)
                                 1992  1993
  Tot. foreign dir. investment  183.0  191.9
  U.S. direct investment         73.6  77.7
  U.S. direct investment (pct.)  40.2  40.5

  Principal foreign investors:  U.S., Germany, France
(Sources:   UK Central Statistical Office)
    

APPENDIX E.           U.S. AND U.K. CONTACTS

COUNTRY GOVERNMENT AGENCIES
British Overseas Trade Board
Department of Trade & Industry
Kingsgate House
66-74 Victoria Street
London SW1E 6SN
  Tel: 011-44-171-215-5000

Invest in Britain Bureau 
Department of Trade and Industry
London House
19 Old Court Place
London W8 4PF
  Tel: 011-44-171-215-2501
  Fax: 011-44-171-215-8451

 -Invest in Britain Bureau USA.
  Atlanta        Tel:  (404) 524-8823
   Boston        Tel:  (617) 248-9555
  Chicago        Tel:  (312) 346-1810
  Cleveland      Tel:  (216) 621-7674
  Dallas         Tel:  (214) 637-3600
  Houston        Tel:  (713) 659-6275
  Los Angeles    Tel:  (310) 477-3322
  New York       Tel:  (212) 745-0495
  Seattle        Tel:  (206) 622-9255
  Wash'ton D.C.  Tel:  (202) 462-1340

Embassy of Great Britain
3100 Massachusetts Avenue
Washington, D.C. 20008, USA
  Tel: (202) 462-1340
  Fax: (202) 898 4255

The European Union
Office of European Affairs (Washington D.C.)
  Tel: (202) 482-2905 - Duty rates, tariffs on U.S. exports,
    or (202) 482-5823 - European market issues.

Department of Trade and Industry
123 Victoria Street
London SW1H 0NN
  Tel:011-44-71-215-5000
- General Enquiries

Consumer Affairs Division 1A
Department of Trade and Industry
10-18 Victoria Street
London SW1H ONN
  Tel: 011-44-171-215-3258
- Packaging and Labelling Requirements

Her Majesty's Board of Customs and Excise 
Tel: 011-44-171-620-1313
  Fax: 011-44-171-865-4944
- Customs and Rules/Regulations for the U.K.

Her Majesty's Stationary Office
Holborn Bookshop
49 Holborn
London WC1V 6HB
  Tel: 011-44-171-873-0011
The equivalent of the U.S. Government Printing Office. 
Kraus-Thompson Publishers (HMSO's U.S. representative) 
  Tel: (914) 762-2200

Central Office of Information
Hercules Road
London SE1 7DU  
  Tel: 011-44-171-928-2345

Central Statistical Office
Great George Street
London SW1P 3AQ
  Tel: 011-44-171-270-3000

Department of Employment
Caxton House
12 Tothill Street
London SW1H 9NA
  Tel: 011-44-171-273-3000
- Work Permits, Consular Matters 

Department of the Environment
2 Marsham Street
London SW1P 3EB
  Tel: 011-44-171-276-0900 or 276-3000
- Environmental Regulations

Department of Health
Richmond House
79 Whitehall
London SW1
  Tel: 011-44-180-066-5544
- Medicinal Licences and Regulations

Patent and Trademarks Office
Hazlitt House
45 Southhampton Buildings
London WC2A 1AR
  Tel: 011-44-171-438-4726
- UK Patents

Bank of England
Treadneedle Street
London EC2V 8DQ
Tel: 011-44-171-601-4444
- Central Bank

Securities and Investments Board
2 Bunhill Row
London EC1Y 8SR
Tel: 011-44-171-638-1240
- Securities industry regulator. 

The House of Commons
Houses of Parliament
London SW1A 0AA
  Tel: 011-44-171-219-3000

COUNTRY TRADE ASSOCIATIONS/CHAMBERS OF COMMERCE

As a large, sophisticated economy, the UK has a wide range of trade 
associations too numerous to mention here.  Some notable, multi-sectoral 
business associations are listed below:

American Chamber of Commerce in the U.K.
75 Brook Street
London W1Y 2EB, U.K.
  Tel: 011-44-171-493-0381

Association of British Chambers of Commerce
9 Tufton Street
London SW1P 3QB  
  Tel: 011-44-171-222-1555

British American Chamber of Commerce 
8 Staple Inn, Holborn
London WC1V 7QH
  Tel: 011-44-171-404-6400
  Fax: 011-44-171-404-6828

International Chamber of Commerce
14-15 Belgrave Square
London SW1X 8PS
  Tel: 011-44-171-823-2811

British Standards Institution
Linford Wood
Milton Keynes
Buckinghamshire MK14 6LE
  Tel:011-44-190-822-0022
- Technical Help to Exporters

Confederation of British Industry
Centre Point
103 New Oxford Street
London WC1A 1DU
  Tel: 011-44-171-379-7400


COUNTRY MARKET RESEARCH FIRMS

There are a large number of service providers in the UK.  A directory of 
these is available upon request from US&FCS at the London Embassy.


COUNTRY COMMERCIAL BANKS

The 4 major "high-street" banks, full service and retail bankers, are 
Barclay's, National Westminster, Lloyds and Midland.  However, as 
perhaps the world's premier financial center, London is host to 
virtually every major bank, and an exceptionally large  number of 
financial services firms.
   
U.S. EMBASSY TRADE PERSONNEL
American Embassy
24/31 Grosvenor Square
London, WIA 1AE England
Tel:  011-44-171-499-9000
Fax:  011-44-171-491-4022

Address for U.S. mail:
  American Embassy (London)
  PSC 801
  Box 27 (for Economic Section) or
  Box 33 (for Commercial Section) or
  Box 48 (for Agriculture) or
  Box 54 (for Defense)  
  FPO AE 09498-4033

  Economic Minister
    Tel: 011-44-171-408-8011
    Fax: 011-44-171-409-1637 

  Commercial Service
    Tel: 011-44-171-408-8019
    Fax: 011-44-171-408-8020

  The Office of Agricultural Affairs
    Tel: 011-44-171-408-8063
    Fax: 011-44-171-409-2019

  Office of General Economic Policy
    Tel: 011-44-171-408-8036
    Fax: 011-44-171-409-1637

  Office of Defense Cooperation
    Tel: 011-44-171-629-8028
    Fax: 011-44-171-629-3482

  US Travel and Tourism Administration
    Tel: 011-44-171-495-4336
    Fax: 011-44-171-495-4377

  International Marketing Center (IMC)
    Tel: 011-44-171-409-2927
    Fax: 011-44-171-495-2944

The European Bank For Reconstruction & Development
U.S. Representative's Office
Tel: 011-44-171-338-6569
Fax: 011-44-171-338-6487

The International Marketing Center (IMC) in the Embassy in London offers 
marketing support for U.S. companies.  Space is available for 
exhibitions, private meetings and luncheons.  

The Commercial Service staff of London Embassy provides a wide range of 
services for U.S. business.  Four American commercial officers and seven 
trade specialists, who monitor key industry sectors, are available for 
consultations by appointment and can provide valuable inside 
information, arrange for market research, and arrange appointments with 
prime contacts in both the private and public sectors.  They will also 
provide names of potential UK agents and distributors, responsible 
joint-venture candidates, and prospective UK customers.  The first step 
for a U.S. company which would like assistance from the commercial staff 
of the London embassy should be to contact the nearest District Office 
of the Commerce Department in the United States.  The District Office 
staff is in the best position to assess the needs of U.S. firms, to 
provide export counseling when necessary, and to work jointly with the 
London Embassy staff to provide the most relevant and responsive 
service.

The U.S. Travel and Tourism Administration staff of the London Embassy 
are available to assist new-to-market U.S. tourism providers in 
establishing a presence in the UK market.  They offer counseling and a 
variety of materials, including names of key media, tour operators, 
market representatives in-country, and guides to the UK market. 


WASHINGTON-BASED USG COUNTRY CONTACTS

U.S. Department of Commerce
 UK Country Desk Officer:
 Robert McLaughlin
 Washington, D.C. 20230
   Tel: (202) 482-3748
   Fax: (202) 482-2897
 Multilateral Development Bank Office
 Brenda Ebeling - Director
   Tel: (202) 482 3399
   Fax: (202) 482 5179 

 US&FCS Regional Director (Europe):
 George Knowles
   Tel: (202) 482-1599
   Fax: (202) 482-3159
 Bureau of Export Administration
  Tel: (202) 482-8547
 
State Department 
U.K. Desk
  Tel: (202) 647-8027
- Political relations

Agriculture Department - exporting foods
Foreign Agriculture Service
European Area Officer
  Tel: (202) 720-2144

Treasury Department 
U.K. Desk  
  Tel: (202) 622-0166
- Financial matters

American National Standards Institute
  Tel: (212) 642-4900
  Fax: (212) 302-1286
- Information on UK standards

National Institute for Standards and Technology (Washington D.C.)
  Tel: (301) 975-3058

U.S.-BASED MULTIPLIERS RELEVANT FOR COUNTRY

British American Chamber of Commerce in the U.S.
275 Madison Ave.
New York, NY 10016
  Tel: (212) 661-4060   Fax: (212) 661-4074


APPENDIX F.         MARKET RESEARCH

 - LIST OF AVAILABLE AND UPCOMING DOC/ISAS AND IMIS
The following market research reports produced in 1994/5, as well as all 
those from prior years, are available from the U.S. Dept. of Commerce 
through its District Offices, or via the National Trade Data Bank.  

Industry Subsector Analyses: 

  Title                                           Date
  Office Furniture                                12/94
  Civil Engineering Services                      11/94
  Shower & Shower Accessories                      5/95
  Childrenswear                                    6/95
  Virtual Private Networks                         6/95
  Waste Management Technologies                    7/95
  Builders' Carpentry & Joinery                    7/95
  Selling to the Telecommunications Operating   
  Companies in the U.K.                            7/95
  Medical Devices                                  7/95
  Airport Construction/Infrastructure              8/95
  Menswear                                         8/95
  Multimedia Software                              8/95
  Remediation (Environmental) Technologies         8/95
  Electrical Generating Equipment: Turbines        8/95
  Airport & Ground Support Equipment               9/95
  Biopharmaceuticals                               9/95
  Sportswear                                       9/95
  Healthcare in the UK                             9/95
  Unix Softwear                                    9/95
  Recycling Equipment                              9/95


LIST OF USDA/FAS/COMMODITY REPORTS AND MARKET BRIEFS
Information on the UK Agricultural/Food Market can be obtained from the 
Office of Agricultural Affairs, of the Embassy in London, which has also 
prepared the following Market Briefs:
  Tree Nuts
  Deciduous Fruits
  Popcorn
  Pet Foods
  Beer
USA Exporter Guide to legislation on the Marketing and Sale of packaged 
Foodstuffs in the European Union.  Also available are Commodity and 
Marketing Reports for the UK covering Dairy, Horticultural & Tropical 
Products, Livestock, Poultry, Grains, Oilseeds, Tobacco and Wood 
Products. (see above for addresses and telephone numbers).



APPENDIX G.    TRADE EVENT SCHEDULE 

Event:    NEPCON
Location: NEC, Birmingham
Sector:   Electronic Components
Date:     March 19-21, 96

Event:    Network 96
Location: NEC, Birmingham
Sector:   Computer Network
Date:     June 23-25, 1996

Event:    Environmental Technology Show 96
Location: NEC, Birmingham
Sector:   Pollution Control
Date:     April 16-18, 1996

Event:    Offshore Europe '95
Location: Aberdeen Exhibition and Conference Centre
Sector:   Oil and Gas Equipment
Date:     September 5-8, 1995

Event:    Pow Wow Europe
Location: CNIT, Paris, France
Sector:   Tourism
Date:     September 20-22, 1995
  
Event:    Interbuild 95
Location: NEC, Birmingham
Sector:   Construction Trades
Date:     November 19-21, 1995

Event:    World Travel Mart
Location: Earl's Court, London
Sector:   Tourism
Date:     November 13-16, 1995

Event:    Destinations '96
Location: National Hall, Olympia, London 
Sector:   Tourism
Date:     February, 1996

Event:    British Ski Show 1995   
Location: National Exhibition Centre, Birmingham
Sector:   Tourism/Sporting Goods
Date:     October 12-15, 1995

Event:    UK Discover America Road Show
Location: Mobile to London, Manchester, Birmingham, Glasgow
Sector:   Tourism
Date:     October 16-19, 1995

Event:    Daily Mail International Ski Show
Location: Olympia, London
Sector:   Tourism/Sporting Goods
Date:     October 28-November 5, 1995

Event:    Farnborough Air Show '94
Location: Farnborough, Hampshire, U.K.
Sector:   Aircraft and Aircraft Components
Date:     September 2-8, 1996

Event:    Telecommunications Managers Association Conference: 
Location: Metropole Hotel, Brighton. 
Sector:   Telecommunications
Date:     November 27-29, 1995

Event:    Electrotech
Location: NEC, Birmingham
Sector:   Electrics
Date:     June 10-14, 1996


Information on the key food and beverage trade shows scheduled in the UK 
are available from the AgExport Services Division, USDA/Foreign 
Agricultural Service at the Embassy in London (see above for address).
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