OPPORTUNITIESThe creation of a sing

OPPORTUNITIES
The creation of a single market through regional economic integration offers significant opportunities because markets that were formerly protected from foreign competition are increasingly open. For example, in Europe before 1992 the large French and Italian markets were among the most protected.These markets are now much more open to foreign competition in the form of both exports and directinvestment. Nonetheless, to fully exploit such opportunities, it may pay non-EU firms to set up EUsubsidiaries. Many major U.S. firms have long had subsidiaries in Europe. Those that do not would beadvised to consider establishing them now, lest they run the risk of being shut out of the EU by nontarif barriers.Additional opportunities arise from the inherent lower costs of doing business in a single market—asopposed to 27 national markets in the case of the EU or 3 national markets in the case of NAFTA. Freemovement of goods across borders, harmonized product standards, and simplified tax regimes make it possible for firms based in the EU and the NAFTA countries to realize potentially significant costeconomies by centralizing production in those EU and NAFTA locations where the mix of factor costsand skills is optimal. Rather than producing a product in each of the 27 EU countries or the 3 NAFTAcountries, a firm may be able to serve the whole EU or North American market from a single location.This location must be chosen carefully, of course, with an eye on local factor costs and skills.For example, in response to the changes created by the EU after 1992, the St. Paul–based 3M Companyconsolidated its European manufacturing and distribution facilities to take advantage of economies oscale. Thus, a plant in Great Britain now produces 3M’s printing products and a German factory itsreflective traffic control materials for all of the EU. In each case, 3M chose a location for centralized production after carefully considering the likely production costs in alternative locations within the EU.The ultimate goal of 3M is to dispense with all national distinctions, directing R&D, manufacturing,distribution, and marketing for each product group from an EU headquarters.

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CƠ HỘIThe creation of a single market through regional economic integration offers significant opportunities because markets that were formerly protected from foreign competition are increasingly open. For example, in Europe before 1992 the large French and Italian markets were among the most protected.These markets are now much more open to foreign competition in the form of both exports and directinvestment. Nonetheless, to fully exploit such opportunities, it may pay non-EU firms to set up EUsubsidiaries. Many major U.S. firms have long had subsidiaries in Europe. Those that do not would beadvised to consider establishing them now, lest they run the risk of being shut out of the EU by nontarif barriers.Additional opportunities arise from the inherent lower costs of doing business in a single market—asopposed to 27 national markets in the case of the EU or 3 national markets in the case of NAFTA. Freemovement of goods across borders, harmonized product standards, and simplified tax regimes make it possible for firms based in the EU and the NAFTA countries to realize potentially significant costeconomies by centralizing production in those EU and NAFTA locations where the mix of factor costsand skills is optimal. Rather than producing a product in each of the 27 EU countries or the 3 NAFTAcountries, a firm may be able to serve the whole EU or North American market from a single location.This location must be chosen carefully, of course, with an eye on local factor costs and skills.For example, in response to the changes created by the EU after 1992, the St. Paul–based 3M Companyconsolidated its European manufacturing and distribution facilities to take advantage of economies oscale. Thus, a plant in Great Britain now produces 3M’s printing products and a German factory itsreflective traffic control materials for all of the EU. In each case, 3M chose a location for centralized production after carefully considering the likely production costs in alternative locations within the EU.The ultimate goal of 3M is to dispense with all national distinctions, directing R&D, manufacturing,distribution, and marketing for each product group from an EU headquarters.