El Salvador at a glance

Capital: San Salvador
Population: 7,185,218 (July 2009 est.)
Government Type: Republic
GDP: $20.4 billion
Imports: $9.75 billion f.o.b.
Exports: $4.55 billion f.o.b.

Although the smallest country in Central America, El Salvador has the third largest economy. Modest growth is expected to slow even further in 2009 due to the global slowdown and to El Salvador’s dependence on exports to the US and remittances from the US. El Salvador leads the region in remittances per capita with inflows equivalent to nearly all export income.

The country is a democratic republic governed by a president and an 84-member unicameral Legislative Assembly. The president is elected by absolute majority vote and serves for a 5-year term. Members of the assembly are elected based on the number of votes that their parties obtain in each department and serve for 3-year terms. The country has an independent judiciary and Supreme Court.

Almost 90% of El Salvador’s population is of mixed Indian and Spanish extraction. About 1% is indigenous; very few Indians have retained their customs and traditions. The country’s people are largely Roman Catholic and Protestant. Spanish is the language spoken by virtually all inhabitants. The capital city of San Salvador has about 1.6 million people. An estimated 37.3% of El Salvador’s population lives in rural areas.

El Salvador is located on the Pacific’s earthquake-prone Ring of Fire and at latitudes plagued by hurricanes. An October 1986 earthquake killed 1,400 and seriously damaged the nation’s infrastructure. In 1998, Hurricane Mitch killed 10,000 in the region. Major earthquakes in January and February of 2001 took another 1,000 lives and left thousands more homeless and jobless. El Salvador’s largest volcano, Santa Ana, erupted in October 2005, spewing sulfuric gas, ash, and rock on surrounding communities and coffee plantations, killing two people and permanently displacing 5,000. Also in October 2005, Hurricane Stan unleashed heavy rains that caused flooding throughout El Salvador. In all, the flooding caused 67 deaths and more than 50,000 people were evacuated at some point during the crisis.

U.S.-El Salvador Relations

U.S.-Salvadoran relations remain close and strong. U.S. policy toward El Salvador promotes the strengthening of El Salvador’s democratic institutions, rule of law, judicial reform, national reconciliation and reconstruction, and economic opportunity and growth. El Salvador was a committed member of the coalition of nations fighting against terrorism and sent eleven rotations of troops to Iraq to support Operation Iraqi Freedom from 2003 through 2008.

The U.S. and Salvadoran governments cooperate closely to combat narcotics trafficking and organized crime. El Salvador hosts the International Law Enforcement Academy, which provides training to police, prosecutors, and other officials from throughout Latin America. El Salvador’s air force installation near Comalapa Airport houses a monitoring facility that surveils narco-trafficking routes in the eastern Pacific. The U.S. Federal Bureau of Investigation (FBI) and El Salvador’s National Civilian Police jointly operate the Transnational Anti-Gang unit, which addresses the growing problem of street gangs in both countries. In January 2009, the United States and El Salvador signed letters of agreement committing both countries to work jointly under the Merida Initiative to fight crime and drug trafficking.

U.S. ties to El Salvador are dynamic and growing. More than 19,000 American citizens live and work full-time in El Salvador. Most are private businesspersons and their families, but a small number of American citizen retirees have been drawn to El Salvador by favorable tax conditions. The U.S. Embassy’s consular section provides a full range of citizenship services to this community.

Foreign Relations

El Salvador is a member of the United Nations and several of its specialized agencies, the Organization of American States (OAS), the Central American Common Market (CACM), the Central American Parliament, and the Central American Integration System (SICA). It actively participates in the Central American Security Commission (CASC), which seeks to promote regional arms control. From 2002 to 2003, El Salvador was chair of the OAS anti-terrorism coordinating body, CICTE. El Salvador also is a member of the World Trade Organization and is pursuing regional free trade agreements. An active participant in the Summit of the Americas process, El Salvador chairs a working group on market access under the Free Trade Area of the Americas initiative. El Salvador has joined its six Central American neighbors in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSA, to promote sustainable economic development in the region.

El Salvador enjoys normal diplomatic and trade relations with all of its neighboring countries including Honduras, with which it has previously had territorial disputes. While the two nations continue to disagree over the status of their maritime borders in the Gulf of Fonseca, they have agreed to settle their land-border disputes with the International Court of Justice (ICJ). In September 1992, the court awarded most of the territory in question to Honduras. In January 1998, Honduras and El Salvador signed a border demarcation treaty to implement the terms of the ICJ decree, although delays continue due to technical difficulties.

Economy

The Salvadoran economy continues to benefit from a commitment to free markets and careful fiscal management. The economy has been growing at a steady and moderate pace since the signing of peace accords that ended its civil war in 1992, and poverty was cut from 66% in 1991 to 34.6% in 2007. Much of the improvement in El Salvador’s economy is a result of the privatization of the banking system, telecommunications, public pensions, electrical distribution, and some electrical generation; reduction of import duties; elimination of price controls; and improved enforcement of intellectual property rights. Capping those reforms, on January 1, 2001, the U.S. dollar became legal tender in El Salvador. The economy is now fully dollarized.

The Salvadoran Government has maintained fiscal discipline during post-war reconstruction and reconstruction following earthquakes in 2001 and hurricanes in 1998 and 2005. Taxes levied by the government include a value-added tax (VAT) of 13%, income tax of 20%, excise taxes on alcohol and cigarettes, and import duties. The VAT accounted for about 52.2% of total tax revenues in 2007. El Salvador’s public external debt in November 2008 was about $5.6 billion, 27.4% of GDP.

Years of civil war, fought largely in the rural areas, had a devastating impact on agricultural production in El Salvador, but the sector has experienced significant recovery, buoyed in part by higher world prices for coffee and sugarcane and increased diversification into horticultural crops. Seeking to develop new growth sectors and employment opportunities, El Salvador created new export industries through fiscal incentives for free trade zones. The largest beneficiary has been the textile and apparel (maquila) sector, which directly provides approximately 70,000 jobs. Services, including retail and financial, have also shown strong employment growth, with about 48.7% of the total labor force now employed in the sector.

Remittances from Salvadorans working in the United States are an important source of income for many families in El Salvador. In 2008, the Central Bank estimated that remittances totaled $3.8 billion. UNDP surveys show that an estimated 22.3% of families receive remittances.

Under its export-led growth strategy, El Salvador has pursued economic integration with its Central American neighbors and negotiated trade agreements with the Dominican Republic, Chile, Mexico, Panama, Taiwan, Colombia, and the United States. Central American countries began negotiating an Association Agreement with the European Union in 2007. Trade agreements with CARICOM and Canada are also under negotiation, and agreements with Israel and Peru are being considered. Exports in 2008 grew 14.2%, while imports grew 12%. As in previous years, the large trade deficit was offset by family remittances.

The U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), implemented between El Salvador and the United States on March 1, 2006, provides El Salvador preferential access to U.S. markets. Textiles and apparel, shoes, and processed foods are among the sectors that benefit. In addition to trade benefits, CAFTA-DR also provides trade capacity building, particularly in the environment and labor areas, and a framework for additional reforms on issues such as intellectual property rights, dispute resolution, and customs that will improve El Salvador’s investment climate. For sensitive sectors such as agriculture, the agreement includes generous phase-in periods to allow Salvadoran producers an opportunity to become more competitive.

U.S. support for privatization of the electrical and telecommunications markets markedly expanded opportunities for U.S. investment in the country. More than 300 U.S. companies have established a permanent commercial presence in El Salvador or work through representative offices in the country. On November 29, 2006, the Government of El Salvador and the Millennium Challenge Corporation (MCC) signed a 5-year, $461 million anti-poverty Compact to stimulate economic growth and reduce poverty in the country’s northern region. The grant seeks to improve the lives of approximately 850,000 Salvadorans through investments in education, public services, enterprise development, and transportation infrastructure. The Compact entered into force in September 2007, and it is expected that incomes in the region will increase by 20% over the 5-year term of the Compact, and by 30% within 10 years of the start of the Compact.

Best Export Opportunities

El Salvador offers a strong market for U.S. products by promoting an open trade and investment environment. Tariffs are relatively low because of CAFTA-DR, and there are very few import restrictions. Consumer goods are always in demand, and the people of El Salvador appreciate the high quality of U.S. products.  Among the products from the United States that will find a market in El Salvador are automotive parts and security equipment.

For further information on export opportunities in El Salvador, visit the Best Export Opportunities section of the Official Export Guide’s El Salvadore Country Profile.

Intellectual Property Protection

An overall strategy to protect intellectual property rights (IPR) is very important when doing business in El Salvador. Intellectual property is primarily a private right, and the U.S. government generally cannot enforce rights for private individuals. It is the responsibility of the rights holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. In 2005, El Salvador revised several laws to comply with CAFTA-DR’s provisions on intellectual property rights (IPR). The Intellectual Property Promotion and Protection Law (1993, revised in 2005), the Law of Trademarks and Other Distinctive Signs (2002, revised in 2005), and the Penal Code establish the legal framework to protect IPR.

It is also recommended that small and medium-size companies understand the importance of working together with trade associations and organizations to support efforts to protect IPR and stop counterfeiting.

More detailed information on intellectual property rights can be found in the Trade Data section of the Official Export Guide’s El Salvador country profile.

Transportation

U.S. airlines with international flights to El Salvador include American Airlines, Continental, and Delta. United operates through a code-share with TACA. The Central American airline TACA has direct flights to and from the main cities in the United States. Most hotels offer airport shuttle services for their guests, at rates ranging between $15-$20 per one-way trip. Visitors commonly drive rental cars, and a U.S. driver’s license is valid for 60 days. Taxicab services normally provided within the perimeter of deluxe hotels are reliable. Public transit bus service is not recommended.

Major highways and thoroughfares are among the best in Central America, but road conditions throughout El Salvador are not up to U.S. standards. Mini-buses, buses, and taxis are often poorly maintained. Drivers are often not trained and generally do not adhere to traffic rules and regulations. The U.S. Embassy recommends that its personnel avoid using mini-buses and buses and use only taxis that are radio-dispatched or those stationed in front of major hotels. Robberies and violent crimes on buses are commonplace.

Map of El Salvador

Ghana at a glance

Capital: Accra
Population: 23,832,495
Government Type: Constitutional monarchy
GDP: $15.2 billion
Imports: $9.816 billion f.o.b.
Exports: $5.439 billion f.o.b.

Ghana’s population is concentrated along the coast and in the principal cities of Accra and Kumasi. Most Ghanaians descended from migrating tribes that likely came down the Volta River valley at the beginning of the 13th century. Ethnically, Ghana is divided into small groups speaking more than 50 languages and dialects. Among the more important linguistic groups are the Akans, which include the Fantis along the coast and the Ashantis in the forest region north of the coast; the Guans, on the plains of the Volta River; the Ga- and Ewe-speaking peoples of the south and southeast; and the Moshi-Dagomba-speaking tribes of the northern and upper regions. English, the official and commercial language, is taught in all the schools.

U.S.-Ghana Relations

The United States has enjoyed good relations with Ghana at an unofficial, personal level since Ghana’s independence. Thousands of Ghanaians have been educated in the United States. Close relations are maintained between educational and scientific institutions, and cultural links, particularly between Ghanaians and African-Americans, are strong.

The United States is among Ghana’s principal trading partners. The Office of the President of Ghana worked closely with the U.S. Embassy in Accra to establish an American Chamber of Commerce to continue to develop closer economic ties in the private sector. Major U.S. companies operating in the country include Newmont, ADM, Kosmos Energy, Anadarko, DHL, FedEx, UPS, KPMG, ACS, CMS Energy, Coca Cola, S.C. Johnson, Ralston Purina, Star-Kist, A.H. Robins, Sterling, Pfizer, IBM, 3M, Motorola, Stewart & Stevenson, PriceWaterhouseCoopers, and National Cash Register (NCR).

The discovery of major oil reserves in deep water in the Gulf of Guinea has led numerous American petroleum exploration firms to enter the Ghanaian market, and many other firms involved in oil and gas auxiliary services express an interest in starting operations in the country. Mining companies and agri-businesses from the United States have increased their investments in Ghana recently. Political stability, overall sound economic management, a low crime rate, competitive wages, and an educated, English-speaking workforce have increased Ghana’s potential to serve as a West African hub for American businesses.

U.S. development assistance to Ghana in fiscal year 2007 was implemented by USAID, the African Development Foundation, the Millennium Challenge Corporation, and others. Such assistance totaled more than $55.1 million that year, with programs in small farmer competitiveness, health (including HIV/AIDS and maternal child health), education, and democracy/governance. Ghana was the first country in the world to accept Peace Corps volunteers, and the program remains one of the largest. Currently, there are more than 150 volunteers in Ghana. Almost half work in education, and the others in agro-forestry, small business development, health education, water sanitation, and youth development. Ghana’s $547 million compact with the Millennium Challenge Corporation is the most recent achievement in the U.S.-Ghanaian development partnership.

Foreign Relations

Ghana is active in the United Nations and many of its specialized agencies, as well as the World Trade Organization, the Nonaligned Movement, the African Union (AU), and the Economic Community of West African States (ECOWAS). Generally, Ghana follows the consensus of the Nonaligned Movement and the AU on economic and political issues that do not directly affect its own interests. Ghana has played an increasingly active role in sub-regional affairs, including prominent roles in ECOWAS and the African Union.

Ghana is a critically important peacekeeping partner; it is the largest African nation contributor to multinational peacekeeping operations (PKO) and the 6th-largest among all peacekeeping contributing nations. Currently Ghana has 3,267 peacekeepers deployed to UN peacekeeping operations. It has large contingents deployed in the Democratic Republic of the Congo (DRC), the Darfur region of Sudan, Lebanon, Liberia, and Côte d’Ivoire, with smaller contingents deployed in Chad, Western Sahara, Kosovo, southern Sudan, and Georgia. Ghana contributes military and police personnel to UN peacekeeping operations outside of Africa, including nearly 900 troops to the UN Interim Force in Lebanon. The United States provides military support to Ghana through a variety of programs, including the International Military Education and Training (IMET) program and the African Contingency Operations Training and Assistance (ACOTA) program.

Economy

By West African standards, Ghana has a relatively diverse and rich natural resource base. Minerals — principally gold, diamonds, manganese ore, and bauxite — are produced and exported. In 2007, a major oil discovery off the coast of Ghana led to greater multinational interest in entering the Ghanaian market. Timber and marine resources are important but declining resources.

Agriculture remains a mainstay of the economy, accounting for more than 30% of GDP and approximately 55% of formal employment. Cash crops consist primarily of cocoa and cocoa products, timber products, coconuts and other palm products, shea nuts, and coffee.

Ghana’s industrial base is relatively advanced compared to many other African countries. Industries include textiles, apparel, steel (using scrap), tires, oil refining, flour milling, beverages, tobacco, simple consumer goods, and car, truck, and bus assembly. Industry, including mining, manufacturing, construction, and electricity, accounts for approximately 30% of GDP.

Ghana’s post-independence economic story has been a difficult one, but over the last 20 years, stability and growth have increasingly taken hold. Real GDP growth has averaged 4% since the mid-1980s and was approximately 5% over the past decade.

Best Export Opportunities

Ghana’s low-competition market, political stability, and welcoming business climate make it ideal for exporters looking for opportunities. Currently, Ghana is the 5th-largest export market for the United States in sub-Saharan Africa.

Since signing the 5-year, $547 million anti-poverty compact with the United States’ Millennium Challenge Corporation in 2006, the country has taken strides to modernize its infrastructure. This has led to high demand for U.S. manufactured automobiles, motor vehicle parts, machinery, electrical power systems, and construction and earth-moving equipment to allow for transportation and agricultural improvements.

There are also increasing opportunities for a broad range of consumer goods, apparel, and agricultural and food products. Though Ghana maintains a strong agricultural system, its local supply cannot meet demands for meat, meat products, poultry, rice, wheat, and various prepared foods, like sauces, soups, juices, and pastes.

For further information on these and other export opportunities, please visit the Best Export Opportunities section of the Official Export Guide’s Ghana Country Profile.

Banking & Foreign Investment

Ghana’s formal banking sector comprises the central Bank of Ghana, nine commercial banks, three development banks, five merchant banks, and more than 100 rural unit banks. Until recently, the sector was dominated by state-owned institutions and showed few signs of competition. Within the last 5 years, however, two state-owned banks have been privatized under the government’s Divesture Implementation Program.

Attraction of foreign investment has been a main feature of Ghana’s economic recovery program, which began in 1993. In recent years, the government has embarked on several missions abroad to promote investment in the emerging economy. Ghana has also established laws that encourage foreign investment, most notably the Ghana Investment Promotion Center (GIPC) Act. Established in 1994, the law governs investment in all sectors of the economy except minerals and mining, oil and gas, and the country’s free zones.

More detailed information can be found in the Trade Finance and Investment sections of the Official Export Guide’s Ghana country profile.

Transportation

Ghana has nearly 25,000 miles of public roads (25% of which are paved), one international airport in Accra, and three other domestic airports. There are two main ports, Tema and Sekondi-Takoradi. A triangular, 592-mile rail system links Kumasi, Takoradi, and Accra and Tema, but currently only the Kumasi-Accra line is operational.

International flights to Accra are currently offered by more than 17 international airlines. Delta Airlines provides direct flights to New York. Other airlines that fly into Accra include British Airways, KLM, Swissair, Alitalia, Lufthansa, and Ghana International Airlines. Flights within Ghana are available from Accra to Kumasi and Tamale through domestic airlines Antrak Air and City Link.

Despite the major expansion and improvement in the road network in Accra, traffic at peak hours is often congested. Some roads on the outskirts are relatively narrow and poorly maintained, with rather daunting open gutters. Driving after dark outside of Accra or other major cities is not recommended due to the lack of adequate street lighting, the number of disabled vehicles blocking the roadside, the presence of animals and pedestrians, and the proportion of local drivers who do not habitually make use of their headlights.

Map of Ghana

Malaysia at a glance

Capital: Kuala Lumpur
Population: 25,715,819
Government Type: Constitutional monarchy
GDP: $397.5 billion
Imports: $156.2 billion f.o.b.
Exports: $195.7 billion f.o.b.

Malaysia’s multi-racial society contains many ethnic groups, with Malays comprising a majority of just over 50%. By constitutional definition, all Malays are Muslim. About a quarter of the population is ethnic Chinese, a group which historically played an important role in trade and business. Malaysians of Indian descent comprise about 7% of the population and include Hindus, Muslims, Buddhists, and Christians. Non-Malay indigenous groups make up approximately 11% of the population.

Population density is highest in peninsular Malaysia, home to some 20 million of the country’s 27 million inhabitants. The remaining 7 million live on the Malaysian portion of the island of Borneo, in the large but less densely-populated states of Sabah and Sarawak. More than half of Sarawak’s residents and about two-thirds of Sabah’s are from indigenous groups.

U.S. - Malaysian Relations

The United States and Malaysia share a diverse and expanding partnership. Economic ties are robust. The United States is Malaysia’s largest trading partner, and Malaysia is the 16th-largest trading partner of the United States. Annual two-way trade amounts to $44 billion. The United States and Malaysia launched negotiations for a bilateral free trade agreement (FTA) in June 2006, but an agreement has not yet been concluded.

The United States is the largest foreign investor in Malaysia on a cumulative basis. American companies are particularly active in the energy, electronics, and manufacturing sectors. The U.S. direct investment position in Malaysia for 2007 was $15.7 billion.

The United States and Malaysia cooperate closely on security matters, including counter-terrorism, maritime domain awareness, and regional stability. The relationship between the military forces of the two nations is also strong, with numerous exchanges, training, joint exercises, and visits. The United States and Malaysia signed a Mutual Legal Assistance Treaty (MLAT) in July 2006 during the visit to Kuala Lumpur by Secretary of State Condoleezza Rice.

Foreign Relations

Regional cooperation is a cornerstone of Malaysia’s foreign policy. It was a founding member of the Association of Southeast Asian Nations (ASEAN) and served as the group’s chair most recently in 2005–2006. It hosted the ASEAN Summit and East Asia Summit in December 2005, as well as the ASEAN Ministerial and the ASEAN Regional Forum in July 2006.

Malaysia is an active member of the Asia Pacific Economic Cooperation (APEC) forum, the Organization of the Islamic Conference (OIC), the Non-Aligned Movement (NAM), and the United Nations. It was chair of the OIC until March 2008 and has also chaired the NAM.

Malaysia is a frequent contributor to UN and other peacekeeping and stabilization missions, including recent deployments to Lebanon, East Timor, the Philippines, Indonesia, Pakistan, Sierra Leone, and Kosovo.

Economy

Since it became independent, Malaysia’s economic record has been one of Asia’s best. Real gross domestic product (GDP) grew by an average of 6.5% per year from 1957 to 2005. Performance peaked in the early 1980s through the mid-1990s, as the economy experienced sustained rapid growth, averaging almost 8% annually. High levels of foreign and domestic investment played a significant role as the economy diversified and modernized. Once heavily dependent on primary products such as rubber and tin, Malaysia today is a middle-income country with a multi-sector economy based on services and manufacturing. Malaysia is one of the world’s largest exporters of semiconductor devices, electrical goods, and information and communication technology (ICT) products.

The government continues to actively manage the economy.  Malaysia’s New Economic Policy (NEP), first established in 1971, was a 10-year plan that sought to rectify a situation whereby ethnic Malays and indigenous peoples (”bumiputera”), who comprised nearly 60% of the population, held less than 3% of the nation’s wealth. Policy makers implemented a complex network of racial preferences intended to promote the acquisition of economic assets by bumiputera. In 1981, when the racial preferences were set to expire, the government extended the NEP for another 10 years, stating that its goals had not been achieved. The policies again were extended in 1991 and in 2001.

The Malaysian economy went into sharp recession in 1997-1998 during the Asian financial crisis, which affected countries throughout the region, including South Korea, Indonesia, and Thailand. Malaysia’s GDP decreased by more than 7% in 1998. Malaysia narrowly avoided a return to recession in 2001 when its economy was negatively affected by the bursting of the dot-com bubble (which hurt the ICT sector) and slow growth or recession in many of its important export markets.

In July 2005, the government removed the 7-year-old peg linking the ringgit’s value to the U.S. dollar at an exchange rate of RM 3.8/US$1.00. The dollar peg was replaced by a managed float against an undisclosed basket of currencies. The new exchange rate policy was designed to keep the ringgit more broadly stable and to avoid uncertain currency swings that could harm exports.

The Malaysian financial system has exhibited noteworthy resilience to the 2008 global financial crisis. Malaysian banks are well capitalized and have no measurable exposure to the U.S. sub-prime market. The central bank maintains high levels of foreign exchange reserves and a conservative regulatory environment, having prohibited some of the riskier assets in vogue elsewhere. However, decreasing demand in the United States and elsewhere is taking a toll on Malaysian exports, resulting in slower economic growth going forward.

Best Export Opportunities

Malaysia has become a high-tech competitive nation, where services and manufacturing now account for 86% of the country’s GDP. The National Association of Manufacturers reports that Malaysia is the 10th largest export market for U.S. manufactured goods.

There are increasing opportunities in the telecommunications market. In its efforts to become an industrialized nation by year 2020 and realizing the importance of broadband as the backbone of a knowledge economy, the Malaysian government is targeting 50% household penetration by 2010 using a mixture of fixed, mobile, and satellite technologies. This will include a 10-year high-speed broadband project worth US$3.2 billion, to commence in 2009. The push for broadband penetration and the network expansion of 3G and WiMAX players will create a large demand for telecommunication products and solutions. Infrastructure spending by telecommunication companies is expected to be more than US$1.14 billion (RM4 billion) per annum for 2009 to 2010.

For further information on these and other export opportunities, please visit the Best Export Opportunities section of the Official Export Guide’s Malaysia Country Profile.

Banking & Foreign Investment

The government took a number of measures to strengthen Malaysia’s banking system following the regional financial crisis in the late 1990s. The banking system remains the largest financial intermediary in the country, with total assets standing at US$364 billion (RM 1.2 trillion), as of December 2007. The Central Bank licenses and regulates businesses such as commercial banking, investment banking, Islamic banking, and money brokering.

The Government of Malaysia encourages foreign direct investment by providing a number of incentives, particularly in export-oriented high-tech industries and “back office” service operations. Inflows of FDI to Malaysia increased by 38.9% from US$6.4 billion in 2006 to US$8.4 llion in 2007, according to the UN Conference on Trade and Development (UNCTAD).

More detailed information can be found in the Trade Finance and Investment sections of the Official Export Guide’s Malaysia country profile.

Transportation

Malaysia’s central location in the Asia-Pacific region makes it an excellent gateway to Asia and the ASEAN markets. Air cargo facilities are well developed at the five international airports — the Kuala Lumpur International Airport (KLIA), Penang International Airport and Langkawi International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak. Kuala Lumpur International Airport (KLIA) is the nation’s largest, located 50 kilometers south of Kuala Lumpur. Cargo import and export procedures are fully automated at KLIA.

Kuala Lumpur is served by a number of international airlines, though no U.S. airlines fly to Malaysia directly. Additional international connections are available via Singapore, from which there is a joint Malaysian Airlines/Singapore Airlines air shuttle service. Direct flights to Singapore are available from the United States, Europe, the Middle East, and Asia. Within Malaysia, the national airline — Malaysian Airlines (MAS) — provides frequent service to all major cities, as does low-cost competitor Air Asia.

Peninsular Malaysia’s network of well-maintained highways link major growth centers to seaports and airports throughout the peninsula and provide an efficient means of transportation for goods. To complement these highways, a Kuala Lumpur-Bangkok rail service known as the ASEAN Rail Express (ARX) has been initiated. The long-term aim is to expand it to become the Trans-Asia Rail Link, which will include Singapore, Vietnam, Cambodia, Laos and Myanmar before ending up in Kunming, China. Local transportation rates can be found on the Malaysian Industrial Development Authority’s Web site.

Map of Malaysia

Free photos courtesy of bigfoto.com.

Spain at a glance

Capital: Madrid
Population: 40,491,052
Government Type: Parliamentary Monarchy

GDP: $1.378 trillion
Imports: $292.8 billion f.o.b.
Exports: $444.9 billion f.o.b.

Spain’s population is mostly made up of distinct ethnic groups, including Basques, Catalans, and Galicians. The country’s population density, lower than that of most European countries, is roughly equivalent to New England’s. In recent years, following a longstanding pattern in the rest of Europe, rural populations are moving to cities. Urban areas are also experiencing a significant increase in immigrant populations, chiefly from North Africa, South America, and Eastern Europe.

Spain has no official religion. The constitution of 1978 disestablished the Roman Catholic Church as the official state religion, while still recognizing the role it plays in Spanish society. More than 90% of the population is at least nominally Catholic. Among the remaining population, there are about 1.2 million evangelical Christians and other Protestants, 1 million Muslims, and 48,000 Jews.

The 1978 constitution established Spain as a parliamentary monarchy, with the prime minister responsible to the bicameral Cortes (Congress of Deputies and Senate) elected every 4 years. The 1978 constitution also authorized the creation of regional autonomous governments. By 1985, 17 regions covering all of peninsular Spain, the Canaries, and the Balearic Islands had negotiated autonomy statutes with the central government. The central government continues to devolve powers to the regional governments, which will eventually have full responsibility for health care and education, as well as other  programs.

U.S. - Spanish Relations

Spain and the United States have a long history of official relations and are closely associated in many fields. In addition to U.S. and Spanish cooperation in NATO, defense and security relations between the two countries are regulated by a 1989 Agreement on Defense Cooperation, revised in 2003. Under this agreement, Spain authorized the United States to use certain facilities at Spanish military installations.

The two countries also cooperate in several other important areas. The U.S. National Aeronautics and Space Administration (NASA) and the Spanish National Institute for Aerospace Technology (INTA) jointly operate the Madrid Deep Space Communications Complex in support of Earth orbital and solar system exploration missions. The Madrid Complex is one of the three largest tracking and data acquisition complexes comprising NASA’s Deep Space Network.

An agreement on cultural and educational cooperation was signed on June 7, 1989. A new element, support by both the public and private sectors, gave a different dimension to the programs carried out by the joint committee for cultural and educational cooperation. These joint committee activities complement the bi-national Fulbright program for graduate students, postdoctoral researchers, and visiting professors, which is among the largest in the world. Besides assisting in these exchange endeavors, the U.S. Embassy also conducts a program of educational, professional, and cultural exchanges, as well as hosting high-level official visits between officials from Spain and the United States. Spain and the United States are strong allies in the fight against terrorism.

Foreign Relations

After the return of democracy following the death of General Franco in 1975, Spain’s foreign policy priorities were to break out of the diplomatic isolation of the Franco years and expand diplomatic relations, enter the European Community, and define security relations with the West.

As a member of NATO since 1982, Spain has established itself as a major participant in multilateral international security activities. Spain’s EU membership represents an important part of its foreign policy. Even on many international issues beyond Western Europe, Spain prefers to coordinate its efforts with its EU partners through the European political cooperation mechanism. With the normalization of diplomatic relations with Israel and Albania in 1986, Spain virtually completed the process of universalizing its diplomatic relations. The only country with which it now does not have diplomatic relations is North Korea.

Spain has maintained its special identification with Latin America. Its policy emphasizes the concept of Hispanidad, a mixture of linguistic, religious, ethnic, cultural, and historical ties binding Spanish-speaking America to Spain. Spain has been an effective example of transition from authoritarianism to democracy, and visits by Spain’s king and prime ministers to the region highlight that success. Spain maintains economic and technical cooperation programs and cultural exchanges with Latin America, both bilaterally and within the EU.

Spain also continues to focus attention on North Africa, especially on Morocco, a source of much of Spain’s large influx of legal and illegal immigrants over the past 10 years. This concern is dictated by geographic proximity and long historical contacts and more recently by immigration trends, as well as by the two Spanish enclave cities of Ceuta and Melilla on the northern coast of Africa. While Spain’s departure from its former colony of Western Sahara ended direct Spanish participation in Morocco, it maintains an interest in the peaceful resolution of the conflict brought about there by decolonization. These issues were highlighted by a crisis in 2002, when Spanish forces evicted a small contingent of Moroccans from a tiny islet off Morocco’s coast following that nation’s attempt to assert sovereignty over the island. Meanwhile, Spain has gradually begun to broaden its contacts with sub-Saharan Africa. It has a particular interest in its former colony of Equatorial Guinea, where it maintains a large aid program.

In relations with the Arab world, Spain has sought to promote European-Mediterranean dialogue. Spain strongly supported the EU’s “Barcelona Process” to expand dialogue and trade between Europe and the nations of North Africa and the Middle East, including Israel. Barcelona will serve as the headquarters of the new Union for the Mediterranean proposed by French President Nicolas Sarkozy in 2007.

Spain has been successful in managing its relations with its two European neighbors, France and Portugal. The accession of Spain and Portugal to the EU has helped ease some of their periodic trade frictions by putting these into an EU context. Franco-Spanish bilateral cooperation is enhanced by joint action against Basque ETA terrorism. Ties with the United Kingdom are generally good, although the question of Gibraltar remains a sensitive issue.

Economy

Spain’s accession to the European Community — now the European Union (EU) — in January 1986 required the country to open its economy to trade and investment, modernize its industrial base, improve infrastructure, and revise economic legislation to conform to EU guidelines. These measures helped the economy grow rapidly over the next 2 decades. Unemployment fell from 23% in 1986 to 8% in mid-2007, and the public debt-to-GDP ratio fell significantly.

The adoption of the euro in 2002 greatly reduced interest rates, spurring a housing boom that further fueled growth. The strong euro also encouraged Spanish firms to invest in the United States. Several Spanish firms have significant U.S. investments in banking, insurance, wind and solar power, biofuels, and road construction, as well as other sectors. The end of the housing boom in 2007 and the international financial crisis led to a rapid deceleration during 2008. Housing sales and construction declined dramatically, and the unemployment rate stood at 11.3% in the third quarter of 2008, the second-highest level in the European Union. By the end of November 2008, nearly 3 million Spaniards were unemployed, and some banks predict that the unemployment rate could average 14% in 2009.

The economy receded in the third quarter of 2008, and it is expected to continue into 2009 with less than 1% growth. Inflation, after peaking at 5.3% in July, had fallen below 3% as of November 2008 because of the decline in oil prices and reduced domestic spending. In part because of cautious regulation by the central bank, Spanish banks have been less affected by the international financial crisis than banks in many European countries. The Zapatero government took a series of measures in late 2008 to support the financial sector and announced €11 billion of additional spending, much of it for municipal government public works, in an effort to provide employment and encourage economic activity. This spending and declining revenues are leading to budget deficits, but surpluses in the years 2004–2007 have given the government some room to maneuver.

Best Export Opportunities

Spain has been one of the EU’s best economic performers for the past several years. It has always been a good export market for U.S. goods which have traditionally included aircraft and associated equipment, medical equipment, software, water resources equipment and telecommunications equipment. With the current economic crisis, automotive customization is seeing an upsurge in the Spanish market. Consumers are looking to improve their current vehicles instead of purchasing new. U.S. auto repair and servicing equipment has a very good reputation in Spain and, with 1/3 of the autos in the country over 10 years old, this sector should remain strong for U.S. export opportunities.

Other sectors offering good prospects include security equipment and transportation. Several agricultural products, such as tree nuts and pulses, have seen steady growth in the Spanish market. For detailed information, please see the Best Export Opportunities in the Spain Country Profile of the Official Export Guide. Although U.S. products are well respected for their high level of technology and quality, firms often fall short of their competitors in terms of flexibility on financing, adaptation of product design to local market needs, and assistance with marketing and after-sales service. Despite the effort of establishing distribution channels, export-ready U.S. firms are urged to explore opportunities in Spain.

Banking & Foreign Investment

The domestic Spanish banking system is regarded as healthy, with four institutions (banks and savings banks) dominating the market. Spanish regulators have recently focused attention on these banks’ exposure to financial instruments based on U.S. subprime loans and have required provisions against this exposure. The Spanish financial system’s exposure to such instruments thus is relatively low.

The banking system is regulated by the Directorate General of Treasury and Financial Policy in the Ministry of Economy and Finance; the Directorate General of Trade and Investments in the Ministry of Industry, Tourism and Trade; and the Bank of Spain.

The Bank of Spain is the central issuing bank and acts as a banker to the government and banking system, supervises operations of other banks and credit institutions, maintains a centralized information system, and regulates exchange controls and foreign exchange markets. The Bank of Spain is fully integrated in the European Central Bank System. The European Central Bank has had complete responsibility over monetary and exchange policy since January 1999.

There have been no significant changes in Spain’s regulations for investment and foreign exchange under either the Socialist Party (PSOE) government that took office in March 2004 and was re-elected in March 2008. Spanish law permits foreign investment of up to 100% of equity, and capital movements are completely liberalized.

Subscribers may find more information on Spanish banking and investment  in the Trade Finance and Investment sections of the Official Export Guide’s Spain Country Profile.

Transportation

Frequent direct air service is available to major U.S. cities from Madrid and Barcelona. Airports in both Madrid and Barcelona have good public transportation service to downtown. All major cities have metered taxis, and extra charges must be posted in the vehicle. Travelers are advised to use only clearly identified cabs and to ensure that taxi drivers always switch on the meter. A green light on the roof indicates that the taxi is available. Public transportation in large cities is generally excellent. Rail service is comfortable and reliable, but it varies in quality and speed. Intercity buses are usually comfortable and inexpensive. U.S. citizens are encouraged to obtain International Driving Permits if they plan to drive in Spain.

Rail transport is a key objective in the 2005–2020 Strategic Infrastructure and Transport Plan, accounting for almost 50% of the planned €248 billion (US$ 342 billion) in investments. It is expected that by 2020 all Spanish cities will have direct access to the high-speed train network and 90% of the population will be within 50 kilometers of one of its stations.

Map of Spain

Panama at a glance

Capital: Panama City
Population: 3,309,679
Government Type: Constitutional democracy

GDP: $39.33 billion
Imports: $15.18 billion f.o.b.
Exports: $10.37 billion f.o.b.

Panamanians’ culture, customs, and language are predominantly Caribbean Spanish. The majority of the population is ethnically mestizo or mixed Spanish, indigenous, Chinese, and West Indian. Spanish is the official and dominant language; English is a common second language spoken by West Indians and by many businesspeople and professionals. More than half the population lives in the Panama City-Colon metropolitan corridor.

Panama was part of the Spanish empire for 300 years (1538-1821). From the outset, Panamanian identity was based on a sense of “geographic destiny,” and Panamanian fortunes fluctuated with the geopolitical importance of the Isthmus. The colonial experience also spawned Panamanian nationalism as well as a complex and highly stratified society, the source of internal conflicts that ran counter to the unifying force of nationalism.

Panama is a representative democracy with three branches of government: executive and legislative branches elected by direct vote for 5-year terms, and an independently appointed judiciary. The executive branch includes a president and two vice presidents. The legislative branch comprises a 78-member unicameral National Assembly. The Constitution was changed in 2004, however, and beginning with national elections in 2009, the executive branch will have only one vice president, and the membership of the National Assembly will be capped at 74. The judicial branch is organized under a nine-member Supreme Court (each judge is appointed for a 10-year term) and includes all tribunals and municipal courts. An autonomous Electoral Tribunal supervises voter registration, the election process, and the activities of political parties. Anyone over the age of 18 may vote.

U.S. - Panamanian Relations

The United States cooperates with the Panamanian Government in promoting economic, political, security, and social development through U.S. and international agencies. Cultural ties between the two countries are strong, and many Panamanians come to the United States for higher education and advanced training. In 2007, the United States and Panama partnered to launch a regional health worker training center. The center provides training to community healthcare workers in Panama and throughout Central America. About 25,000 American citizens reside in Panama, many retirees from the Panama Canal Commission and individuals who hold dual nationality. There is also a rapidly growing enclave of American retirees in the Chiriqui Province in western Panama.

Panama continues to fight against the illegal narcotics and arms trade. The country’s proximity to major cocaine-producing nations and its role as a commercial and financial crossroads make it a country of special importance in this regard. The Panamanian Government has concluded agreements with the U.S. on maritime law enforcement, counter-terrorism, counter-narcotics, and stolen vehicles. In March 2007 the U.S. Coast Guard in cooperation with the Government of Panama seized over 38,000 lbs. of cocaine off the coast of Panama, the largest drug seizure in the eastern Pacific.

In the economic investment arena, the Panamanian Government has been successful in the enforcement of intellectual property rights and has concluded a Bilateral Investment Treaty Amendment with the United States and an agreement with the Overseas Private Investment Corporation. Although money laundering remains a problem, Panama passed significant reforms in 2000 intended to strengthen its cooperation against international financial crimes.

The United States and Panama signed a Trade Promotion Agreement (TPA) in June 2007. Panama ratified the agreement in July 2007; it still requires approval by the U.S. Congress to enter into force.

The Panama Canal Treaties

The 1977 Panama Canal Treaties entered into force on October 1, 1979. They replaced the 1903 Hay/Bunau-Varilla Treaty between the United States and Panama (modified in 1936 and 1955), and all other U.S.-Panama agreements concerning the Panama Canal, which were in force on that date. The treaties comprised a basic treaty governing the operation and defense of the Canal from October 1, 1979, to December 31, 1999 (Panama Canal Treaty), and a treaty guaranteeing the permanent neutrality of the Canal (Neutrality Treaty).

The Canal Zone and its government ceased to exist when the treaties entered into force and Panama assumed jurisdiction over Canal Zone territories and functions, a process that was finalized on December 31, 1999.

Foreign Relations

Panama is a member of the UN General Assembly and most major UN agencies and started its fourth term as a member of the UN Security Council in January 2007. It maintains membership in several international financial institutions, including the World Bank, the Inter-American Development Bank, and the International Monetary Fund. Panama is a member of the Organization of American States and was a founding member of the Rio Group. Although it was suspended from the Latin American Economic System — known informally both as the Group of Eight and the Rio Group — in 1988 due to its internal political system at the time, Panama was readmitted in 1994 as an acknowledgment of its democratic credentials. Panama is a member of the Central American Parliament as well as the Central American Integration System (SICA). Panama joined its six Central American neighbors at the 1994 Summit of the Americas in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSA, to promote sustainable economic development in the region.

Economy

Panama’s economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, tourism, and medical and healthcare.

In October 2006, Panamanians voted in favor of a $5.25 billion Canal expansion project to construct a third set of locks, a project that is expected to take eight to ten years to complete. The Government of Panama expects this effort to provide 7,000–9,000 direct new jobs during the peak construction period of 2009–2011 and to set the tone economically for years to come. The expansion is expected to be financed through a combination of increased tolls and debt.

GDP growth in 2007 was 11.2%, surpassing most private and government projections and the robust growth seen in 2006 and 2005, which was 8.1% and 6.9%, respectively. Growth has been fueled by the construction sector, transportation, port and Panama Canal-related activities, and tourism. Though Panama has the highest GDP per capita in Central America, about 38% of its population remains impoverished.

Panama has bilateral free trade agreements with Chile, El Salvador, Taiwan, Singapore, Honduras, and Costa Rica. Panama is exploring free trade negotiations with Mexico and other Latin American countries. Upon its entry into force, the U.S.-Panama Trade Promotion Agreement (TPA) is expected promote economic opportunity by eliminating tariffs and other barriers to trade of goods and services.

Best Export Opportunities

The United States is Panama’s most important trading partner, and U.S. products are regarded as high quality. U.S. suppliers will find opportunities in construction supplies, security equipment, and shipbuilding. For further information on these and other export opportunities, please visit the Best Export Opportunities section of the Official Export Guide’s Panama Country Profile.

Banking & Foreign Investment

Foreign and Panamanian banks compete on equal terms. Banks are organized into two groups, the Panamanian Banking Association (Panamanian and foreign banks) and the Association of Panamanian Banks (Panamanian banks). Banks are licensed and regulated by the Banking Supervisory Authority. Panama’s banking system does not have a deposit insurance scheme.

Panama actively promotes foreign direct investment, especially in the Colon Free Zone. The Panamanian government has pursued financing from international financial institutions for a number of infrastructure and social sector investment projects. Information on banking and investment in Panama is available to subscribers in the Trade Finance and Investment sections of the Official Export Guide’s Panama Country Profile.

Transportation

Panama has excellent transportation facilities. Three major U.S. airlines serve the country, as do airlines from other countries. COPA, the Panamanian airline, has a regional hub at the Tocumen International Airport, connecting Panama with major cities in the United States and Latin America.

Buses and taxis are readily available in urban areas. Taxi fares are low and usually range from $1 to $5 depending on the trip’s length. Transportation from Tocumen International Airport into Panama City can be made by a special taxi service, with prices between $20 and $30 depending on the size of the taxis. Taxis may be shared with other passengers. Car rentals are available. There is no bus service at the airport.

Major car rental companies operate in Panama and offer excellent services. There is train service from Panama City to Colon, on the Atlantic side, operated by Kansas City Southern. This is primarily a container transportation facility, but it also takes passengers.

Map of Panama

Morocco at a glance

Capital: Rabat
Population: 34,343,220
Government Type: Constitutional Monarchy 

GDP: $125 billion
Imports: $28.5 billion f.o.b.
Exports: $12.75 billion f.o.b.

Moroccans are predominantly Sunni Muslims of Arab, Berber, or mixed Arab-Berber ancestry. There is also a Jewish community of approximately 5,000, and a largely expatriate Christian population of 5,000, who enjoy religious freedom and full civil rights. Morocco is also home to a 300-500-person Baha’i community. which in recent years has been able to worship free from government interference.

Arabic is Morocco’s official language, but French is widely taught and serves as the primary language of commerce and government. Moroccan colloquial Arabic is a combination of Arabic, Berber, and French dialects. Along with Arabic, about 10 million Moroccans, predominantly in rural areas, also speak one of the three Moroccan Berber dialects (Tarifit, Tashelhit, and Tamazight). Spanish is also used in the northern part of the country. English is rapidly becoming the foreign language of choice among educated youth and is offered in all public schools from the fourth year on.

Most people live west of the Atlas Mountains, a range that insulates the country from the Sahara Desert. Casablanca is the center of commerce and industry and the leading port; Rabat is the seat of government; Tangier is the gateway to Spain and also a major port; “Arab” Fes is the cultural and religious center; and “Berber” Marrakech is a major tourist center.

Education in Morocco is free and compulsory through primary school (age 15). Nevertheless, many children — particularly girls in rural areas — do not attend school. The country’s literacy rate reveals sharp gaps in education, both in terms of gender and location; while country-wide literacy rates are estimated at 39% among women and 64% among men, the female literacy rate in rural areas is only 10%.

Morocco is divided into 16 administrative regions (further broken into provinces and prefectures); the regions are administered by Walis (governors) appointed by the king. The Moroccan constitution provides for a monarchy with a parliament and an independent judiciary. Ultimate authority rests with the king.

In November 2002, King Mohammed VI formed a government, appointing then-Interior Minister Driss Jettou as Prime Minister. Cabinet-level positions were drawn from most major parties in the coalition. Following the elections, King Mohammed VI highlighted several goals toward which the new government should work: expanded employment opportunities, economic development, meaningful education, and increased housing availability. To meet the King’s objectives, the Jettou government embarked on a series of initiatives and reforms, which Jettou laid out in his early days as prime minister. Jettou emphasized that modernization and revitalization of the country’s infrastructure (roads, trains, communications, water, etc.) and national economy (support for Moroccan businesses, preparations for competition, modernization of modes of production, etc.) were necessary to further development progress in Morocco.

Parliamentary elections were held in September 2007. Abbas El Fassi was designated to form a new government.

U.S. - Moroccan Relations

Morocco was the first country to seek diplomatic relations with the Government of the United States in 1777, and it remains one of the nation’s oldest and closest allies in the region. Formal U.S. relations with Morocco date from 1787, when the two nations negotiated a Treaty of Peace and Friendship. Renegotiated in 1836, the treaty is still in force, constituting the longest unbroken treaty relationship in U.S. history.

U.S.-Moroccan relations have remained strong through cooperation and sustained high-level dialogue. As a stable, democratizing, and liberalizing Arab Muslim nation, Morocco is important for U.S. interests in the Middle East. Accordingly, U.S. policy toward Morocco seeks sustained and strong engagement, and identifies priorities for reform, conflict resolution, counterterrorism cooperation, and public outreach

The U.S. Agency for International Development (USAID) and its predecessor agencies have managed an assistance program in Morocco since 1953, for a cumulative amount exceeding $2 billion. The Peace Corps has been active in Morocco for more than 40 years, with the first group of 53 volunteers arriving in the country in 1963. Since that time, nearly 4,000 volunteers have served in Morocco, and they have served in a variety of fields, including lab technology, urban development, commercial development, education, rural water supply, small business development, beekeeping, and English training.

In January 2006, a bilateral free trade agreement (FTA) between the United States and Morocco went into effect. The U.S.-Morocco FTA eliminated tariffs on 95% of bilateral trade in consumer and industrial products, with all remaining tariffs to be eliminated within 9 years. The FTA provides new trade and investment opportunities for both countries and encourages economic reforms and liberalization already underway.

Foreign Relations

Morocco is a moderate Arab state that maintains close relations with Europe and the United States. It is a member of the UN and belongs to the Arab League, the Arab Maghreb Union (UMA), the Organization of the Islamic Conference (OIC), and the Non-Aligned Movement. King Mohammed VI is the chairman of the OIC’s Al-Quds Jerusalem Committee. Although not a member of the African Union (formerly the Organization of African Unity — OAU), Morocco remains involved in African diplomacy. It contributes consistently to UN peacekeeping efforts on the continent.

Morocco was the first Arab state to condemn Iraq’s invasion of Kuwait in 1990, and it sent troops to help defend Saudi Arabia. Morocco maintains close relations with Saudi Arabia and the Persian Gulf states, which have provided the country with substantial amounts of financial assistance. Morocco has supported efforts to stabilize Iraq following the downfall of Saddam Hussein. Morocco was also among the first Arab and Islamic states to denounce the September 11, 2001, terrorist attacks in the United States and declare solidarity with the American people in the war against terror. Morocco has seen its own terrorism at home as well.

The major issue in Morocco’s foreign relations is its claim to Western Sahara. As a result of Algeria’s continued support for the Polisario Front in the dispute over Western Sahara, relations between Morocco and Algeria have remained strained over the past several decades, although they have full diplomatic relations and there is periodic high-level contact between the two countries.

For more than 30 years, Morocco and the independence-seeking Popular Front of the Liberation of Saguia al Hamra and Rio de Oro (Polisario Front) have vied for control of Western Sahara, a former Spanish territory. Morocco’s claim to sovereignty in the territory is based largely on a historical argument of traditional loyalty of the Sahrawi tribal leaders to the Moroccan sultan as spiritual leader and ruler. The Polisario claims to represent the aspirations of the Western Saharan inhabitants for independence. Algeria claims none of the territory for itself but maintains that Sahrawis should determine the territory’s future status.

Economy

Macroeconomic stability, coupled with low inflation and relatively slow economic growth, has characterized the Moroccan economy over the past several years. The government continues to pursue reform, liberalization, and modernization aimed at stimulating growth and creating jobs. Employment, however, remains overly dependent on the agriculture sector, which is extremely vulnerable to inconsistent rainfall. Morocco’s primary economic challenge is to accelerate growth in order to reduce high levels of unemployment and underemployment. While overall unemployment stands at 7.7%, this figure masks significantly higher urban unemployment, as high as 33% among urban youths.

Through a foreign exchange rate anchor and well-managed monetary policy, Morocco has held inflation rates to industrial-country levels over the past decade. Despite criticism among exporters that the dirham has become badly overvalued, the country maintains a current account surplus, and foreign exchange reserves are strong. The combination of strong foreign exchange reserves and active external debt management gives Morocco ample capacity to service its debt.

Economic growth has been hampered by an over-reliance on the agriculture sector. Agriculture production is extremely susceptible to rainfall levels and ranges from 15% to 20% of GDP. Given that almost 40% of Morocco’s population depends directly on agriculture, droughts have a severe negative effect on the economy.

The current government is continuing a series of structural reforms begun in recent years. The most promising reforms have been in the labor market and financial sectors, and privatization has accelerated the sale of Global System for Mobile Communications (GSM) licenses in recent years. Morocco also has liberalized rules for oil and gas exploration and has granted concessions for many public services in major cities. The tender process in Morocco is becoming increasingly transparent. Many believe, however, that the process of economic reform must be accelerated in order to reduce urban unemployment.

Best Export Opportunities

The U.S.-Morocco Free Trade Agreement (FTA) entered its fourth year this month, and the cuts in customs duties for many U.S. products have become significant. Morocco offers U.S. exporters opportunities in many market sectors, including airport ground equipment, auto supplies, and food processing equipment. Other sectors that show growth in Morocco are water treatment and  power generation.  Opportunities  for exporters in the safety and security sector will also be found in the new Tanger-Med Port located on the Straits of Gibraltar. Further information can be found in the Best Export Opportunities section of the Official Export Guide’s Morocco Country Profile.

Foreign Investment

Foreign investment is encouraged by the Moroccan government. Free trade agreements with the United States, the European Union, the North African states, Jordan, and Turkey, as well as reform of the financial sector, have contributed to the record investment flows Morocco has secured in recent years. For more detailed information on investing , please consult the Official Export Guide’s Investment section for Morocco.

Transportation

Morocco is making the development of its communication and transportation networks a top priority. Morocco’s infrastructure for the distribution of goods and services is good and will continue to improve as the government nears completion on several projects. Morocco’s road network is among the best in Africa. Most parts of the country are readily accessible by well-surfaced roads. Most agricultural and manufactured goods move by road.

Mohammed V Airport is the largest airport in Morocco. It offers 50 flights per day to the United States, Europe, the Middle East and Africa. The railway network handles passenger service and the freight service of phosphates, fertilizers, chemical products and other minerals. The port of Casablanca, the second largest in Africa, handles 40% of all goods imported and/or exported. Morocco’s shipping costs are high in comparison to its Mediterranean competitors. There is frequent ferry service to and from Spain, France, and Italy for tourists. The FTA with the United States should encourage Moroccan companies to ship directly to the United States, an activity that will certainly increase with the completion of the Tanger-Med port that is run by the Moroccan Government’s Tanger Mediterranean Special Agency.

Map of Morocco

South Korea at a glance

Capital: Seoul
Population: 48,379,392 (July 2008 est.)
Government Type: Republic

GDP: $1.206 trillion
Imports: $349.6 billion f.o.b.
Exports: $379 billion f.o.b.

South Korea’s population is one of the most ethnically and linguistically homogeneous in the world. Except for a small Chinese community (about 20,000), virtually all Koreans share a common cultural and linguistic heritage. With 48.38 million people, the Republic of Korea (commonly known as “South Korea”) has one of the world’s highest population densities. Major population centers are located in the northwest and southeast, and in the plains south of the Seoul-Incheon area.

Half of the population actively practices religion. Among this group, Christianity (49%) and Buddhism (47%) are South Korea’s two dominant religions. Though only 3% identify themselves as Confucianists, South Korean society remains highly imbued with Confucian values and beliefs. The remaining 1% of the population practice Shamanism (traditional spirit worship) and Chondogyo (”Heavenly Way”), a traditional religion.

South Korea is a republic with powers nominally shared among the presidency, the legislature, and the judiciary, but traditionally dominated by the president. The president is chief of state and is elected for a single term of 5 years. The 299 members of the unicameral National Assembly are elected to 4-year terms; elections for the assembly were held on April 9, 2008. South Korea’s judicial system comprises a Supreme Court, appellate courts, and a Constitutional Court. The judiciary is independent under the constitution. The country has nine provinces and seven administratively separate cities–the capital of Seoul, along with Busan, Daegu, Daejeon, Gwangju, Incheon and Ulsan. Political parties include the Grand National Party (GNP), Democratic Party (DP), Liberal Forward Party (LFP), Creative Korea Party (CKP), and Democratic Labor Party (DLP). Suffrage is universal at age 19 (lowered from 20 in 2005).

U.S. - South Korean Relations

The United States believes that the question of peace and security on the Korean Peninsula is a matter for the Korean people to decide. Under the 1953 U.S.-Republic of Korea Mutual Defense Treaty, the United States agreed to help South Korea defend itself against external aggression. Since that time in support of this commitment, the United States has maintained military personnel in South Korea, including the Army’s Second Infantry Division and several Air Force tactical squadrons. To coordinate operations between these units and the South Korean armed forces, a Combined Forces Command (CFC) was established. Several aspects of the security relationship are changing as the United States moves from a leading to a supporting role. In 2004, agreement was reached on the return of the Yongsan base in Seoul — as well as a number of other U.S. bases — to South Korea and the eventual relocation of all U.S. forces to south of the Han River. U.S. troops are being redeployed from South Korea, as well.

As South Korea’s economy has developed, trade and investment ties have become an increasingly important aspect of the relationship between the two counties. South Korea is the United States’ seventh-largest trading partner (ranking ahead of larger economies such as France, India, and Italy), and there are significant flows of manufactured goods, agricultural products, services, and technology between the two countries. Major American firms have long been major investors in South Korea, while South Korea’s leading firms have begun to make significant investments in the United States. The implementation of structural reforms contained in the International Monetary Fund’s 1998 program for South Korea improved access to the country’s market and improved trade relations between the United States and South Korea.

The United States and South Korea launched negotiations on the U.S.-Korea Free Trade Agreement (KORUS FTA) on February 2, 2006. The KORUS FTA was signed on June 30, 2007, and is currently awaiting ratification in the U.S. Congress and the Korean National Assembly. The KORUS FTA is a comprehensive FTA that eliminates virtually all barriers to trade and investment between the two countries. Tariffs on 95% of trade between the two countries will be eliminated within 3 years of implementation, with virtually all the remaining tariffs being removed within 10 years of implementation; the FTA also contains chapters that address non-tariff measures in investment, intellectual property, services, competition policy, and other areas. The KORUS FTA is the largest free trade agreement South Korea has ever signed, and it would be the largest free trade agreement for the United States since the North American Free Trade Agreement (NAFTA) in 1992.

Economy

The Republic of Korea’s economic growth over the past several decades has been spectacular. Per capita GNP, only $100 in 1963, is now $25,000. South Korea is now the 13th-largest economy in the world.

In the early 1960s, the government of Park Chung Hee instituted sweeping economic policy changes emphasizing exports and labor-intensive light industries, leading to rapid debt-financed industrial expansion. The government carried out a currency reform, strengthened financial institutions, and introduced flexible economic planning. In the 1970s Korea began directing fiscal and financial policies toward promoting heavy and chemical industries, consumer electronics, and automobiles. Manufacturing continued to grow rapidly in the 1980s and early 1990s.

In recent years, South Korea’s economy has moved away from the centrally planned, government-directed investment model toward a more market-oriented one. The nation bounced back from the 1997–98 Asian financial crises with some International Monetary Fund assistance, but based largely on extensive financial reforms that restored stability to markets. These economic reforms, pushed by President Kim Dae-jung, helped South Korea return to growth, with growth rates of 10% in 1999 and 9%in 2000. The slowing global economy and falling exports slowed growth to 3.3% in 2001, prompting consumer stimulus measures that led to 7.0% growth in 2002. Consumer over-shopping and rising household debt, along with external factors, slowed growth to near 3% again in 2003. Economic performance in 2004 improved to 4.6% due to an increase in exports, and remained at or above 4% in 2005, 2006, and 2007.

Economists are concerned that South Korea’s economic growth potential has fallen because of a rapidly aging population and structural problems that are becoming increasingly apparent. Foremost among these structural concerns are the rigidity of South Korea’s labor regulations, the need for more constructive relations between management and workers, the country’s underdeveloped financial markets, and a general lack of regulatory transparency. South Korean policy makers are increasingly worried about diversion of corporate investment to China and other lower wage countries, and by South Korea’s falling foreign direct investment.

Best Export Opportunities

U.S. exporters will find a very good market for agricultural products in South Korea since local agricultural output currently does not meet the demand of the processing industry. Other markets offering opportunities for importers are automotive parts and accessories, broadcasting equipment, and computer software, to name a few. For further information, please visit the Best Export Opportunities section of the Official Export Guide’s South Korea country profile.

Foreign Investment

Most senior policy makers of the South Korean government have a positive attitude toward foreign direct investment, making the country more attractive to outside investors. The country is still hampered by excessive regulations and a need for better protection of intellectual property rights. More detailed information on investing in South Korea is available in the Official Export Guide Country Profile of South Korea.

Transportation

Flying time for direct flights from the United States to South Korea ranges from 12 to 16 hours, depending on the point of departure. Flights with connections can take as long as 18 hours, door to door. Incheon International Airport is the primary gateway for international travel to and from South Korea. The airport is one of the most modern in East Asia. Incheon Airport is currently only accessible by car or bus, bit construction of the Incheon International Airport Railroad (A’REX) is nearly complete. Airport buses and taxis are widely available.

Seoul’s public transportation system is very well organized. With nine subway lines and city buses that serve the entire city, as well as a multitude of taxis, traffic is the only major obstacle to movement. The seemingly endless rush-hour traffic can be a major hindrance, so early preparation, as well as patience, is required. Fortunately, buses take less travel time than taxis because of a bus-only lane traffic system. The Seoul Metropolitan Government maintains an English language interactive bus map that allows passengers to obtain bus route and schedule information based on point of origin and destination.

Public transportation is recommended for travel in South Korea. KTX provides high-speed transportation to major cities throughout South Korea. There are also intercity urban railway networks connecting Seoul to the rest of the country.

Map of South Korea

Free photos courtesy of bigfoto.com.

Turkey at a glance

Capital: Ankara
Population: 71,892,808 (July 2008 est.)
Government Type: Republican Parliamentary Democracy

GDP: $853.9 billion
Imports: $162 billion f.o.b.
Exports: $115.3 billion f.o.b.

Modern Turkey encompasses  cosmopolitan centers, farming villages,  wastelands,  Aegean coastlines, and steep mountain regions. More than 70% of Turkey’s population lives in urban areas that juxtapose Western lifestyles with more traditional ways of life.

The Turkish state has been officially secular since 1924. Approximately 99% of the population is Muslim. Most Turkish Muslims follow the Sunni traditions of Islam, although a significant number follow Alevi and Shiite traditions. Questions regarding role of religion in society and government, the role of linguistic and ethnic identity, and the public’s expectation to live securely dominate public discourse. Turkish citizens who assert a Kurdish identity constitute an ethnic and linguistic group that is estimated at approximately 12 million in number.

The presidency’s powers are not precisely defined in practice, and the president’s influence depends on his personality and political weight. The president and the Council of Ministers led by the prime minister share executive powers. The current president, who has broad powers of appointment and supervision, was elected by Parliament in August 2007 for a seven-year term. Pursuant to a constitutional amendment package approved by voters in an October 2007 referendum, the president is directly elected by the voters for a term of 5 years and can serve for a maximum of two terms. The prime minister administers the government. The prime minister and the Council of Ministers are responsible to Parliament. The 550-member Parliament carries out legislative functions.

The judiciary is declared to be independent, but the need for judicial reform and confirmation of its independence are subjects of open debate. Internationally recognized human rights, including freedom of thought, expression, assembly, and travel, are officially in the Constitution but have at times been narrowly interpreted, can be limited in times of emergency, and cannot be used to violate what the Constitution and the courts consider the integrity of the state.

U.S. - Turkish Relations

U.S.-Turkish friendship dates to the late 18th century. As part of the cooperative effort to further Turkish economic and military self-reliance, the United States has loaned and granted Turkey more than $12.5 billion in economic aid and more than $14 billion in military assistance. U.S.-Turkish relations focus on areas such as strategic energy cooperation, trade and investment, security ties, regional stability, the global war on terrorism, and human rights progress. For several years, the United States and Turkey have had a Trade and Investment Framework Agreement and an Economic Partnership Commission.

EU Accession

Turkey’s principal ongoing economic challenge is providing for the needs of a fast-growing population. Raising living standards to those prevalent in Europe will require a high GDP growth rate and a well-functioning market economy. This will entail continued structural reforms that encourage both domestic and foreign investment.  As an aspirant to membership in the European Union, Turkey aims to adopt the EU’s basic system of national law and regulation (the acquis communautaire) by 2014. While implementing some elements of the acquis will be costly and difficult (for example in the areas of environmental protection and agriculture), its adoption will make a significant contribution to modernizing the economy.

Economy

Turkey is a large, middle-income country with relatively few natural resources. Its economy is currently in transition from one relying on agriculture and heavy industry to a more diversified one with an increasingly large and globalized services sector. Coming out of a tradition of a state-directed economy that was relatively closed to the outside world, Prime Minister and then President Turgut Ozal began to open up the economy in the 1980s, leading to the signing of a Customs Union with the European Union in 1995. In the 1990s, Turkey’s economy suffered from a series of coalition governments with weak economic policies, leading to high-inflation boom-and-bust cycles that culminated in a severe banking and economic crisis in 2001.

Turkey’s economy has recovered strongly from the 2001 recession thanks to good monetary and fiscal policies and structural economic reforms made with the support of the International Monetary Fund and the World Bank. The independence of the Central Bank has been firmly established, a floating exchange rate system has been put in place, and the government’s overall budget deficit has been substantially reduced. In addition, there have been reforms in the financial, energy, and telecommunications sectors that have included the privatization of several large state-owned institutions.

Turkey’s economy grew an average of 6.0% per year from 2002 through 2007 — one of the highest sustained rates of growth in the world. It is expected to grow about 5.5% in 2008. Inflation and interest rates have fallen significantly, the currency has stabilized, government debt has declined to more supportable levels, and business and consumer confidence have returned. At the same time, booming economic growth has contributed to a growing current account deficit. Though Turkey’s vulnerabilities have been greatly reduced, the economy could still face problems in the event there is a sudden change in investor sentiment. Continued implementation of reforms, including a tight fiscal policy and securing independent Central Bank monetary policies, is essential to sustain growth and stability.

Best Export Opportunities

U.S. exporters have excellent prospects in the Turkish energy market. Electricity and gas distribution, power generation and renewable energies (wind and hydro) will all be in demand. In addition, there may be opportunities in the nuclear sector, telecommunications equipment, security equipment, and the automotive aftermarket. More information on prospects in the Turkish market can be found in the Best Export Opportunities Section of the Turkey country profile.

Foreign Investment

After years of low levels of foreign direct investment, in January–November 2007, Turkey succeeded in attracting $16.6 billion in foreign direct investment; it is expected to attract a similar level in 2008. A series of large privatizations, the stability fostered by the start of Turkey’s EU accession negotiations, strong growth, and structural changes in the banking, retail, and telecommunications sectors have all contributed to the rise in foreign investment. Turkey has taken steps to improve its investment climate through administrative streamlining, an end to foreign investment screening, and strengthened intellectual property legislation. However, a number of disputes involving foreign investors in Turkey and certain policies, such as high taxation and continuing gaps in the intellectual property regime, inhibit investment. Turkey has a number of bilateral investment and tax treaties, including with the United States, which guarantee free repatriation of capital in convertible currencies and eliminate double taxation. Information on investment and intellectual property rights can be found in the Official Export Guide country profile of Turkey.

Transportation

The national flag carrier, Turkish Airlines (THY), together with its subsidiaries, dominates air passenger service and flies non-stop daily to most major European, Middle Eastern, and Asian cities and U.S. gateways, including Tokyo, London, Frankfurt, Paris, New York, and Chicago. Major European airlines also have frequent non-stop flights to Turkey. Delta Airlines serves Istanbul direct from its New York Kennedy hub. THY is joining the Star Alliance in 2008. United Airlines and Lufthansa offer code-share service with Lufthansa serving Istanbul, Izmir and Ankara from its Star Alliance Frankfurt and Munich hubs. Though Turkish Airlines dominates domestic air travel within Turkey, the government has liberalized domestic air service, and new airlines are also serving the domestic market. Rail transportation is also available between most of the major cities. Comprehensive networks of long distance buses, which are inexpensive, operate between the major cities. Car rental is relatively expensive. Public transportation is available in the cities, but businesspeople are advised to use taxis.

Map of Turkey

Chile at a glance

Capital: Santiago
Population: 16,454,143 (July 2008 est.)
Government Type: Republic

GDP: $231.1 billion
Imports: $43.99 billion f.o.b.
Exports: $67.64 billion f.o.b.

About 85% of Chile’s population lives in urban areas, with 40% living in greater Santiago. Most have Spanish ancestry. A small yet influential number of Irish and English immigrants came to Chile during the colonial period. German immigration began in 1848 and lasted for 90 years; the southern provinces of Valdivia, Llanquihue, and Osorno show a strong German influence. Other significant immigrant groups are the Italian, Croatian, Basque, and Palestinian. About 800,000 Native Americans, mostly of the Mapuche tribe, reside in the south-central area. The Aymara and Diaguita groups can be found mainly in Chile’s northern desert valleys.

Chile’s president serves a term of 4 years. President Michelle Bachelet and the new members of Congress took office in  2006. Chile has a bicameral Congress, which meets in the port city of Valparaiso, about 84 miles west of the capital. Deputies are elected every 4 years, and senators serve 8 year terms. The judiciary is independent and includes a court of appeal, a system of military courts, a constitutional tribunal, and a supreme court.

The northern Chilean desert contains great mineral wealth, principally copper. The relatively small central area dominates the country in terms of population and agricultural resources. This area also is the cultural and political center from which Chile expanded in the late 19th century, when it incorporated its northern and southern regions. Southern Chile is rich in forests and grazing lands and features a string of volcanoes and lakes. The Andes Mountains are located on the eastern border.

U.S. - Chile Relations

Relations between the United States and Chile are better now than at  any other time in history. The U.S. Government applauded the rebirth of democratic practices in Chile in the late 1980s and early 1990s and sees the maintenance of a vibrant democracy and a healthy and sustainable economy as among  the most important U.S. interests in Chile. Besides the landmark 2003 U.S.-Chile FTA, the two governments consult frequently on issues of mutual concern, including the areas of multilateral diplomacy, security, culture, and science.

Economy

Chile has pursued generally sound economic policies for nearly 30 years. The government’s role in the economy is mostly limited to regulation, although the state continues to operate copper giant CODELCO and a few other enterprises (there is one state-run bank). The country is strongly committed to free trade and has welcomed large amounts of foreign investment. Chile has signed free trade agreements (FTAs) with a whole network of countries. Over the last several years, Chile has signed FTAs with Brunei, China, the European Union, Japan, New Zealand, Singapore, and South Korea.

Unemployment in Chile dipped to 7.8% at the end of 2007, due largely to the fact that fewer Chileans were entering the workforce rather than to a substantial and sustained creation of new jobs. The decrease in unemployment can also be attributed to a limited increase in jobs caused by foreign direct investment. Most international observers place some of the blame for Chile’s consistently high unemployment rate on complicated and restrictive labor laws. Wages have risen faster than inflation as a result of higher productivity, boosting national living standards. Chile’s independent Central Bank pursues an inflation target of between 2% and 4%. In 2007, however, inflation inched towards 8%. The Chilean peso’s rapid appreciation against the U.S. dollar in recent years has helped dampen inflation. Most wage settlements and loans are indexed, reducing inflation’s volatility.

After a decade of impressive growth rates, Chile began to experience a moderate economic downturn in 1999. The economy remained sluggish until 2003, when it began to show clear signs of recovery, achieving 3.3% real GDP growth. The Chilean economy finished 2004 with growth of 6.1%. Real GDP growth reached 6.3% in 2005, decreased to 4.0% in 2006, and rose once again to 5.2% in 2007. Higher energy prices as well as lagging consumer demand were drags on the economy in 2006. Greater government spending and favorable external conditions (including record copper prices for much of 2006) were not enough to offset these drags.

Best Export Opportunities

The U.S.-Chile FTA and a more competitive U.S. dollar offer advantages for U.S. exporters. Among the agricultural products in demand are corn, wheat, pet food, soy, pork products, and snack foods. As Chile is in the Southern Hemisphere, off-season produce shipments are an option. The country’s market for computers has shown positive growth for the last 3 years, with opportunities in both hardware and software. From medical and mining equipment to pollution control and food processing equipment, the Chilean market has much to offer U.S. exporters. For more details on exporting prospects, check the Country Trade Sourcebook article on Chile.

Foreign Investment

Total foreign direct investment (FDI) was only $3.4 billion in 2006, up 52% from a poor performance in 2005. However, 80% of FDI continues to go to only four sectors: electricity, gas, water, and mining. Much of the jump in FDI in 2006 resulted from acquisitions and mergers, and it did little to create new employment in Chile. The Chilean government has formed a Council on Innovation and Competition, which is tasked with identifying new sectors and industries to promote. It is hoped that this effort, combined with some tax reforms to encourage domestic and foreign investment in research and development, will bring in additional FDI to new parts of the economy. As of 2006, Chile invested only 0.6% of its annual GDP in research and development (R&D). Even then, two-thirds of that was government spending. The fact that domestic and foreign companies spend almost nothing on R&D does not bode well for the government’s efforts to develop innovative, knowledge-based sectors. More information on conditions in Chile can be found in the investment section of the Chile country profile.

Transportation

Chile is well connected via air service to the United States and countries throughout Latin America. American Airlines has non-stop service between Santiago and both Miami and Dallas, and Delta Airlines has non-stop service to Atlanta. Chile’s main airline, LAN, partners with American Airlines in the OneWorld Alliance and offers non-stop service to Miami and direct service to Los Angeles via Lima, Peru. The primary point of entry is the Santiago International Airport. Domestic air service is well developed. Flights between Santiago and most cities in Chile are fairly frequent.

The train system is less developed, but there is a good central train line that runs between Santiago and Temuco. Primary roads in Chile are good. The main highways are concessioned toll roads and are in good condition. Secondary roads, especially outside of Santiago, are sometimesin lesser repair. Gravel and dirt roads are common in rural areas.

Map of Chile

Nigeria at a glance

Capital: Abuja
Population: 138,283,240
Government Type: Federal Republic

GDP: $292.7 billion (2007 estimate)
Imports: $38.83 billion f.o.b. (2007 estimate)
Exports: $62.42 billion f.o.b. (2007 estimate)

The most populous country in Africa, Nigeria accounts for over half of West Africa’s population. Although less than 25% of Nigerians are urban dwellers, at least 24 cities have populations of more than 100,000. The variety of customs, languages, and traditions among the 250 ethnic groups gives the country a rich diversity. The dominant ethnic group in the northern two-thirds of the country is the Hausa-Fulani, most of whom are Muslim. Other major ethnic groups of the north are the Nupe, Tiv, and Kanuri. The Yoruba people are predominant in the southwest. About half of the Yorubas are Christian and half Muslim. The predominantly Catholic Igbo are the largest ethnic group in the southeast, with the Efik, Ibibio, and Ijaw comprising a substantial segment of the population in that area. Persons of different language backgrounds most commonly communicate in English, although knowledge of two or more Nigerian languages is widespread. Hausa, Yoruba, Igbo, Fulani, and Kanuri are the most widely used Nigerian languages.

Nigeria had had 16 years of military rule when a new constitution was adopted in 1999, and a peaceful transition to civilian government was completed. The government continues to face the daunting task of reforming a petroleum-based economy, whose revenues have been squandered through corruption and mismanagement, and establishing democracy as an institution. In addition, Nigeria continues to experience longstanding ethnic and religious tensions. Although both the 2003 and 2007 presidential elections were marred by significant irregularities and violence, Nigeria is currently experiencing its longest period of civilian rule since independence.

U.S. - Nigerian Relations

With the nullification of Nigeria’s June 12, 1993, presidential election, and in light of human rights abuses, the United States imposed numerous sanctions on Nigeria. After a period of increasingly strained relations, the death of General Abacha in June 1998 and his replacement by General Abubakar opened a new phase of improved  relations. The bilateral relationship has continued to improve, and cooperation on many important foreign policy goals, such as regional peacekeeping, has been excellent. An estimated one million Nigerians and Nigerian Americans live, study, and work in the United States, while over 25,000 Americans live and work in Nigeria.

The United States is helping Nigeria make efforts to develop inclusive, transparent, and effective institutions of democratic governance. U.S. assistance aims to help make elected officials accountable to constituents through free and fair elections, and also support democratic local government and decentralization and improve fiscal administration by maximizing revenue collection in credible audits. The U.S. Agency for International Development (USAID) has a program in Nigeria that supports economic growth and agricultural development by encouraging policy improvements and by providing technical assistance, training, and technologies to farmers and entrepreneurs.

Economy

Nigeria is the United States’ largest trading partner in sub-Saharan Africa, largely due to the high level of petroleum imports from Nigeria. Nigeria provides 11% of U.S. oil imports — nearly 46% of its daily oil production. Nigeria is the fifth-largest exporter of oil to the United States. Total two-way trade was valued at $35 billion in 2007, a 17% increase over 2006. Led by machinery, wheat, and motor vehicles, U.S. goods exports to Nigeria in 2007 were up 25% from 2006, and U.S. imports were up 17%. U.S. imports were predominantly oil. However, rubber products, cocoa, gum arabic, cashews, coffee, and ginger constituted over $70 million of U.S. imports from Nigeria in 2007. Nigeria is currently the 50th-largest export market for U.S. goods and the 14th-largest exporter of goods to the United States.

In April 2008, the United States and Nigeria met under the existing Trade and Investment Framework Agreement (TIFA) to advance the ongoing work program and to discuss improvements in Nigerian trade policies and market access. Among the topics discussed were cooperation in the World Trade Organization (WTO), market access, export diversification, commercial issues, trade capacity building and technical assistance, infrastructure, and investment issues.

Nigeria made progress toward establishing a market-based economy in 2006. It privatized Nigeria Telecommunications and its mobile subsidiary as well as the only government-owned petrochemical company. The government also sold its interest in eight oil service companies. Nigeria continued implementation of the Economic Community of West African States (ECOWAS) Common External Tariff. Nigeria’s implementation of non-tariff barriers has been arbitrary and uneven and continues to violate WTO prohibitions against trade bans. However, the government removed some textile items from its list of prohibited imports in 2006. Enforcement of criminal penalties against intellectual property rights (IPR) violations is weak, and firms that are successfully countering IPR piracy have generally done so through civil court cases. The government has recently created an intellectual property commission.

Nigeria is still experiencing major problems with corruption. A recent article (available online; subscription required) in the Journal of Commerce (also published by Commonwealth Business Media), on a U.S. Justice Department probe of a logistics group’s dealings in Nigeria, notes the prevalence of corruption and bribery in the country’s business practices.

More information on Nigerian intellectual property rights and the transparency of the regulatory system can be found in the Trade Data section of the Nigeria Country Profile.

Agriculture

Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, and the lack of basic infrastructure. Still, the sector accounts for over 41% of GDP and two-thirds of employment. Agriculture provides a big chunk of non-oil growth, which in 2006 reached 9%. Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts), rubber, or palm oil. Cocoa production, mostly from obsolete varieties and overage trees, is stagnant at around 180,000 tons annually; 25 years ago it was 300,000 tons. An even more dramatic decline in groundnut and palm oil production also has taken place. Although Nigeria was once the biggest poultry producer in Africa, corporate poultry output has been slashed from 40 million birds annually to about 18 million. Import constraints limit the availability of many agricultural and food processing inputs for poultry and other sectors. Fisheries are poorly managed. Most critical for the country’s future, Nigeria’s land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.

Oil

The oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2002 Nigeria’s per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria’s non-oil sectors, the economy continues to witness massive growth of “informal sector” economic activities, estimated by some to be as high as 75% of the total economy.

Nigeria’s proven oil reserves are estimated to be 36 billion barrels; natural gas reserves are well over 100 trillion cubic feet. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and in 2006 its crude oil production averaged around two million barrels per day. Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta oil-producing region continue to plague Nigeria’s oil sector. Efforts are underway to reverse these troubles. In the absence of coherent government programs, the major multinational oil companies have launched their own community development programs. The Niger Delta Development Commission (NDDC) was created to help catalyze economic and social development in the region, but it is widely perceived to be ineffective and opaque. Oil accounts for 90% of Nigeria’s exports and over 80% of government revenue.

Oil field equipment will offer opportunities to U.S. suppliers. More information on this and other likely export market sectors can be found in the Best Export Opportunities section of the Nigerian Country Profile.

Foreign Investment

Although Nigeria must grapple with its decaying infrastructure and a poor regulatory environment, the country possesses many positive attributes for carefully targeted investment and will likely expand as both a regional and international market player. Profitable niche markets outside the energy sector, such as specialized telecommunication providers, have developed under the government’s reform program. There is a growing consensus that foreign investment is essential to realizing Nigeria’s vast potential. Companies interested in long-term investment and joint ventures, especially those that use locally available raw materials, will find opportunities in the large national market. However, to improve prospects for success, potential investors must educate themselves extensively on local conditions and business practices, establish a local presence, and choose their partners carefully.

Transportation

Congested airport facilities in Lagos often lead to long delays, and airline reservations may not be honored due to overbooking, especially on domestic flights. Domestic airline schedules are reasonably reliable, but lack of aviation fuel can cause delays or result in cancellation of flights. Travelers on international flights should arrive at the airport at least 2 hours before scheduled departure. Air accidents in recent years have increased concern  about maintenance standards on domestic airlines.

Taxi service is available in Lagos and most other urban areas, but cabs are not recommended, as they are generally old, often unreliable, and can be unsafe. If taxis are used, fares should be negotiated in advance, particularly to and from airports. Cars with drivers are also available for hire through hotels and car rental agents, and use of those services is a highly recommended alternative to taxis.

Map of Nigeria