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US-Portugal Trade Relations: Building an Alliance with Bilateral Ties
The Beginning of the Alliance

Portugal is an independent nation found in southwestern Europe. Most of its wealth came from the spice trade made by Portuguese navigators in the 15th and 16th centuries. Luxury items which came from India contributed a portion to the said wealth. Its economy relied upon agriculture and fishing. The prime commodities for export to other trading partners are sardines, cork and wine. Industrial development has been emphasized since the 1960s.

One-third of the country's income comes from manufacturing. The said economy contributes to a large portion of the labor force. It concentrated on the metallurgical industry (remains small despite the efforts to enlarge it) as well as iron, steel, textiles and agricultural products. It also focused on production of armaments and general hardware.

Farming, just like in other countries, plays a vital role in the trade relations of Portugal. Two-thirds of agricultural sources come from cereal crops with corn as the principal item. Major cash crops are grapes and olives while livestock includes pig, sheep, cattle, goats, mules and donkeys.

Portugal is known to have a not so favorable balance of trade. The products imported by Portugal from other countries are petroleum, sugar, motor vehicles, cotton, wheat, oil seeds and iron and steel. Exported goods depend upon pulpwood, wines, cork, resin, turpentine and sardines. Bulk of Portugal's imports come from United Kingdom, Germany and the United States while its exports go to the United Kingdom. In the year 1986, Portugal formed part of the European Countries after several years of struggle and mediations. However, it also withdrew itself from the European Free Trade Association.

The trade relations between US and Portugal started long before, most importantly during the Revolutionary War. The strong ties were brought about by the fact that Portuguese communities are found in some of the states of US specifically in Rhode Islands, Hawaii, Massachusetts, New Jersey and California. Major Imports and Exports between US and Portugal

As the United States form part of the top three countries which Portugal exports products from, it is safe to say that the trade relations between these two countries contributed largely at least to both economies. Portugal is planning to expand on footwear and textiles to export to the United States in order to encourage more investment. The latter on the other hand continues to play a significant role in exporting goods to the former with pharmaceutical preparations and computers leading the way.

The data per accumulation of the US Census bureau showed a seven-month total for the period ending July 2008 as follows: US Exports to Portugal - $1.57 billion and Us Imports from Portugal - $1.49 billion. For the year 2006, the following data were extracted as to the goods imported and exported between the two countries:

  • US Exports to Portugal. Of the $1.47 billion total exports of the United States to Portugal, civilian aircraft were found on top of the ranks amounting to a total of $385.14 million or a percentage equivalent of 26.2%. It was joined by semiconductors, civilian aircraft engines, civilian aircraft parts, fish and shellfish, logs and lumber, soybeans, medicinal equipment, organic chemicals, telecommunications equipments, petroleum products and corn. Corn comprised 1.5% of the total amounting to $22 million.
  • US Imports from Portugal. Portugal, on the other hand, exported a total amount of $3.04 billion for the year 2006. Of this total amount, 22.7% goes to petroleum products amounting to $690 million. Joining petroleum products are computer accessories and parts, semiconductors and related devices, apparel and household goods, new and used passenger cars, paper and paper products, wine products and footwear. Footwear gained a percentage of 1.9% which is equivalent to $57.76 million.
Enriching the Trade between the US and Portugal

Trade agreements are considered binding in world trade and other international businesses. They are as important as any other contracts entered into by two nations. For Portugal and US, these agreements come in the form of economic programs which were very beneficial on the part of the former. Some of the important pacts that placed them together are:

  • US Economic and Development Aid. This specific support is being managed by the Agency for International Development (AID). Since 1975, this US economic aid for Portugal took effect which includes refugee assistance, agriculture as well as school and rural education. The needs of the Portuguese community were addressed especially in sectors of health, housing, sanitation, training, cash transfers and loan grants.
  • Economic Support Funds. This was used to support some Housing projects in Portugal. This program helped facilitate the grant of low-income housing loans as well as housing guaranties to the community. It also helped establish professional bridges and institutional linkages between the United States and Portugal.
  • US-Portuguese Defense Cooperation. Under this cooperative agreement, the US Armed Forces conveniently gains access to the Portuguese Air Base. Together with other North Atlantic Treaty Organization members, the US provides security to Portugal. Modern equipment and training were specifically given to the people of Portugal. A US satellite observation station was also established by the US Military forces in the southern part of Portugal.
Some of the valuable agreements on trade may also be seen in other treaties. These treaties strengthened the bond between the United States and Portugal:
  • Internet Guide to International Fisheries Law (IGILF). This agreement between the US and Portugal primarily concerns the optimization and preservation of fish stocks. Fishing may be conducted by nationals and vessels of Portugal provided that they follow the fishery management authority set forth by the US government.
  • Economic Cooperation Agreement. This agreement took effect on September 28, 1948 enhancing the trade relations between Portugal and US. Just like any other economic cooperation agreements, this provided for good commercial alliances between these trading partners. All provision set forth in the agreement were founded for the common good of the population of both nations. Protection from any discrimination, untoward treatment and other offenses were found in its scope as well.
Trade Disputes between US and Portugal

Just like any relationships which are tested by a lot of circumstances, Portugal and US had their share of conflicts. This was mainly because they were importing and exporting products to and from each other and all guidelines set forth by their boundaries have to be followed. The following disparities were seen in the flow of trade between these two nations:

  • On taxation. Double taxation seems to be a problem in international trade. This happens most especially when vested interests are placed ahead of the benefits needed to be given to other nations. Tariffs are levied and subsidies on certain goods and commodities especially agricultural products are seen to cause the problem as well.
  • On guidelines of the European Union. The conflict arising from this issue does not merely occur between US and Portugal but other EU nations as well. In its effort to dominate international trade, EU is a bit firm on its provision of trading among member countries only, thus eliminating possibilities of further trade with the United States. This particular problem is seen as more of domination in global business. This is a struggle between two opposing powers. The dispute is seen to affect the countries squeezed in between.
  • On protection of domestic industries. This is always part of the economic activities of all nations. While one accepts imports from the other, the tendency is that their own companies may be left lagging behind. The issue then goes to the increasing need to protect local producers. With this in mind, exports from other countries are strictly checked in order for the nationals to get their own share of income.
What is in Store for the Future?

The impact of trade disparities may gravely affect two nations who are enhancing global trade. However, these concerns may be put to an end for the benefit of both parties. For US and Portugal, the above-mentioned disputes are part of the game. What is important is to strengthen the bond beyond these pressing situations. Come to think of it, a lot of nations rely upon the United States as their major trading partner.

Needless to say, the effort to enhance the alliance is on top of anything else. This is not because Portugal wants to be independent from the EC but because it believes that US contributed a lot with its losses. They stood up because of the various programs shared by the US government, thus, it is better to stand by the friendship that have worked both ways.

Others may be jealous of the camaraderie which binds these two countries together. Everything else may be put to stray if Portugal and US would be affected by these things. They are neither kids struggling for ownership of small toys nor adults fighting for personal issues. They are more of a responsible set of individuals who looks further to what they could bring to their successors.

US-Portugal Trade References

Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in Portugal.

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Portugal's major industries include tourism, textiles and footwear; wood pulp, paper, and cork; metalworking; oil refining; chemicals; fish canning; and some of the highest quality wine production in the world.

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