United States of America

Originally published: Aug-29-2005

Government

Constitution-based Federal Republic consisting of 50 states, 1 district and 14 dependent areas. Powers are constitutionally divided between 3 branches: the Executive, made up of the president and cabinet; Legislative, a bicameral Congress consisting of the Senate (100 seats) and the House of Representatives (435 seats); Judicial, including the Supreme Court, United States Courts of Appeal, United States District Courts, State and County Courts.

Population

The United States is a multicultural country with an estimated population of 295,734,134 and a growth rate of approximately 0.92%.

Languages spoken (as of 2000 Census): English 82.1%, Spanish 10.7%, other Indo-European 3.8%, Asian and Pacific island 2.7%, other 0.7%

Legal System

Federal court system based on English common law. Each state has its own unique legal system, of which all but one (Louisiana) is based on English common law. Accepts compulsory International Court of Justice jurisdiction with reservations.

The judicial system comprises two basic types of court: district courts, which fall under the federal court system, and circuit or county courts, which fall within the jurisdiction of the state. The vast majority of proceedings are heard by state courts, which apply state and federal law to disputes falling within their jurisdictions.

Federal courts, on the other hand, rule on disputes involving state governments and cases involving interpretations of the constitution or federal treaties. It also rules on claims above $75,000 (USD) between citizens of different American states; between an American citizen and a foreign national or foreign state body; or, in some cases, between plaintiffs and defendants from foreign countries.

A key feature of the American judicial system is the pre-trial "discovery" phase whereby each party may demand evidence and testimonies relating to the dispute from the adversary before the court hears the case.

Economy

Currency: United States Dollar (USD)

Exchange Rates (as of 8/26/2005):

Further exchange rates can be found at OANDA.com

Economic Indicators

(e) estimate (f) forecast

Leading Markets (2004): Canada 23%, Mexico 13.6%, Japan 6.7%, UK 4.4%, China 4.3%

Leading Exports (commodities): agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0%

Leading Suppliers (2004): Canada 17.1%, China 13.7%, Mexico 10.4%, Japan 8.8%, Germany 5.2%

Leading Imports (commodities): agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys)

Top Industries: leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining

General Economic Situation

The United States’ market-oriented economy is the largest and most technically powerful in the world. It is integrated and largely self-contained, with every major industry represented. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment. The onrush of technology has caused the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households.

US firms enjoy greater flexibility than their counterparts in many countries in decisions to expand capital plant, lay off surplus workers, and develop new products. At the same time, they face higher barriers to entry of their export goods.

The US economy showed steady growth throughout 2004, with a rise in GDP and substantial gains in labor productivity. The economy suffered from a sharp increase in energy prices in the second half of 2004 which have carried through the first 8 months of 2005. This, along with higher prices in raw materials, has negatively impacted certain sectors including the airlines and automotive parts industries.

Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.

Business Climate

The long-standing position of the US government is to encourage and maintain open capital markets for the free flow of foreign investment. The US believes that investment from other countries, like all investment, makes its optimum contribution when it responds to market forces. In addition, the prevailing view in the United States is that foreign investment provides substantial benefits through increased employment, introduction of new technologies, lower costs of capital for U.S. firms and strengthening of capital markets. Therefore, with the exceptions of a few import quotas and some strategic industry ownership restrictions, there are no limitations on foreign firms seeking to do business in the US.

Credit and Collections

• Collection Experience: Good-Fair
• Exchange Delays: 2 months
• Preferred Credit Terms: 30 day sight draft
• Minimum Credit Terms: open account

While selling on credit to known and well established US companies is not necessarily a great risk, it is not uncommon for buyers to pay later than the agreed-to terms of sale. And, if a buyer really doesn't want to pay, the laws, along with the expense of litigation, make it relatively easy for him to get away without doing so. Therefore, doing everything possible to protect its interests should be one of the main considerations of any company exporting to the U.S. market.

Risk Assessment

Country Risk Rating: A1. The steady political and economic environment has positive effects on any already good payment record of companies. Very weak default probability.

Sources for further information on doing business in the United States

U.S. Chamber of Commerce: Listing of AmChams around the world, international and trade programs, Trade Toolbox, etc.

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including the United States. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources including: the U.S. Commercial Service, CIA World Factbook, Federation of International Trade Associations, and Economist Country Briefings.

Risk Assessment information: Provided with permission by Coface Country Rating.

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," February 2005.