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Country Commercial Guides FY 2000: Greece Report prepared by U.S. Embassy Athens, released July 1999 Note*

CHAPTER I. EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at Greece's commercial environment using economic, political and market analysis. 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.

The Greek economy is continuing to improve steadily. The government is in its sixth year of an austerity program designed to meet the European Economic and Monetary Union (EMU) convergence criteria. Its announced intention is to continue the austerity program, joining EMU January 1, 2001. The results of the austerity program on the economy have been positive. Inflation continues its downward trend. At the end of 1998, inflation remained steady at 4.7%, but it is expected to fall to 2.5% by the end of 1999. Investment and consumer confidence remain strong and the growth of GDP in 1999 is projected to be 3.2 percent, down slightly from 3.5% in 1998. Unemployment, which stood at 10.1% in 1998, was projected to fall to 9.8% in 1999, however, first indications show an increase to 11%. A chronic current account deficit highlights continuing structural economic problems. The government is trying to address these weaknesses by cutting back the public sector through a program of privatization. This program continues to be limited by fierce opposition by labor unions, and elements of the ruling PASOK (socialist) party.

Services represent the largest and fastest growing sector of the Greek economy. Trade, banking, transportation, communications, health, education, and tourism are the largest service sub-sectors. In manufacturing, the food industry is expanding fast to support new markets in neighboring countries. Other important sectors include footwear and building materials. Greece is a surplus producer of vegetables and fruits. Its largest export items include fresh and processed fruits and vegetables, especially canned peaches and tomato products, olive oil, durum wheat, and tobacco.

Greece is an import-dependent country. In 1998, imports were $28.5 billion while exports were only $10.7 billion.

Traditionally, European countries have been Greece's largest suppliers. In 1998 imports from the United States accounted for 3.3% of the Greek import market, totaling $939 million. With $498 million in U.S. imports of Greek products, the U.S. trade surplus with Greece reached $441 million.

The German, French, Italian, and British presence is very strong in Greece. Companies from these countries miss no opportunity to bid on Greek government tenders or participate in local trade exhibitions.

In addition to duty-free status, EU suppliers enjoy the advantages of proximity to the Greek market, which translates into lower transportation costs and faster service. Despite these advantages, the receptivity to U.S. products and services is quite high. U.S. suppliers who are willing to market persistently and aggressively will find an excellent market for goods and services in many sectors.

Greece has a relatively good record in the implementation of EU directives. Having a uniform set of EU standards and certificates makes it easier for U.S. firms to enter the European and Greek markets. This is particularly true for firms that have developed marketing strategies for approaching the EU single market as a whole.

In general, the Greek commercial environment is favorable toward U.S. products and services. Among the non-agricultural sectors considered to offer "best prospects" for U.S. sales in Greece are: telecommunications services, renewable energy equipment, medical equipment, computers, franchising, defense equipment, building products, and food processing and packaging equipment. Among agricultural products the best prospects are: nursery products, planting seeds, frozen fish, tree nuts, and wood products.

In September 1997, the International Olympic Committee (IOC) announced that Athens would have the honor of hosting the 2004 Summer Olympic Games. Since that decision was announced, an organizing committee has been named and projects have been identified, though few contracts have actually been awarded for Olympics-related projects. Greece will undertake a vast number of major projects in order to successfully host the Games. At least $230 million will be spent on projects directly related to the games, including the construction of eleven new sports facilities, a five-stadium complex, and an Olympic Village. Billions of dollars are being spent on infrastructure improvements that are crucial to the successful staging of the Games. While observers agree that most major contracts for Olympics-related works will go to Greek firms, major sub-contracting or partnership opportunities are developing for American firms. 25 U.S. firms participated in an Olympics Forum that the Commercial Service organized in collaboration with the American Hellenic Chamber of Commerce in June 1999. Other such events for promoting U.S. business interest in relation to the 2004 Olympics will be held later in 1999 and onwards.

The privatization of state-controlled companies may provide additional opportunities for U.S. companies. The government is pressing to "privatize," or at least sell minority stakes in, various state-owned enterprises. A minority stake of the Hellenic Telecommunications Organization (OTE) will be sold, and the partial "privatization" of the Public Power Corporation (PPC), Hellenic Petroleum (formerly the Public Petroleum Corporation), and the two state refineries (ELDA and EKO) are projected. The Hellenic Industrial Bank (ETVA) and a number of other state-owned banks and state organizations are planning the privatization of a number of companies that they control or in which they have an equity interest. Olympic Airways is nearing privatization. Several firms are competing for a contract to manage Olympic Airways.

The proximity to other countries in Southeastern Europe and the traditional trade ties of Greek businessmen with these neighboring countries may offer different types of opportunities. Greece offers a logical gateway to the Balkan countries, where new commercial opportunities are developing from efforts to rebuild the war torn region. Greek relations with Albania and the Former Yugoslav Republic of Macedonia (FYROM) continue to improve, and Greek businesspeople have played a key role in enhancing relations with these two countries. Greek firms also have, to a degree, good ties to Central and Eastern European countries. The Black Sea region also offers potential for American firms working with Greek firms. U.S. firms may wish to target these markets from a base in Greece or to explore three-way arrangements with Greek companies.

At present, there are over 100 U.S. firms with subsidiaries in Greece; hundreds more sell through agents and distributors. Total U.S. investment in Greece is estimated at $2.3 billion (current market value), representing about one-third of all foreign investment in Greece.

Greece also provides good opportunities for U.S. firms with European subsidiaries, which enable them to compete on a more equal footing with EU suppliers. The Greek market has its own peculiarities, particularly when it comes to bids on government tenders. Lack of familiarity with regulations and lack of experience in dealing with the bureaucracy can lead to frustration and delays in contract negotiations. A competent local representative is invaluable in such cases.

Similarly, U.S. firms considering investment should review the relevant regulations with legal, tax and other business experts in order to avoid potential problems. The quasi-governmental Hellenic Center for Investment (ELKE) is able to provide assistance in dealing with Greek government institutions.

The U.S. Embassy in Athens, in implementing its "Strategic Commercial Plan", has formed an Embassy Trade Promotion Coordinating Committee which combines the resources of various agencies within the Embassy and the U.S. Consulate General in Thessaloniki. The key objectives of this committee are to coordinate an effective advocacy on behalf of U.S. firms, to monitor and supply information to U.S. business on commercial opportunities, and to assist U.S. suppliers in increasing their exports of goods and services.

An important part of this effort is the effective use of the newly formed Joint Economic and Commercial Cooperation Commission. The Commission was created in January 1998 by Secretary of Commerce William Daley and Minister of National Economy Yannos Papantoniou during the former's visit to Athens. The purpose of the Commission is to formalize high-level talks between the United States and Greece on commercial and economic matters, with the goal of increasing bilateral trade and investment. The Commission has met twice, in Athens in May 1998 and in Washington in March 1999. The next meeting will be held in Athens during the first half of 2000. Through this forum, substantial progress is being made on a number of bilateral trade and investment issues.

Country Commercial Guides are available on the National Trade Data Bank on CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov, http://1997-2001.state.gov/, and http://www.mac.doc.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRAD(E) or by fax at (202) 482-4473.