<strong>North</strong> America rema<strong>in</strong>s an important partner, emphasizes Jeannot Krecké,M<strong>in</strong>ister for Economic AffairsA privileged relationshipby Ronny WolffChallenges and opportunitiesfor Trade and Investment promotionStay ahead of changesby François Knaff *The diversification policy of the 1960s and 1970sattracted many <strong>American</strong> companies, emphasizes M<strong>in</strong>isterfor Economic Affairs Jeannot Krecké. <strong>Luxembourg</strong> mustcont<strong>in</strong>ue rema<strong>in</strong><strong>in</strong>g attractiveThe relationship between the USA and<strong>Luxembourg</strong> cont<strong>in</strong>ues to be good,emphasizes M<strong>in</strong>ister for Economic AffairsJeannot Krecké. Nevertheless, <strong>Luxembourg</strong>must endeavor to cont<strong>in</strong>ue be<strong>in</strong>g attractivefor these companies. But Canada also haspotential. The M<strong>in</strong>ister plans <strong>in</strong> the future tovisit this gigantic and little known country,which harbors many resources and alsoma<strong>in</strong>ta<strong>in</strong>s a strong presence <strong>in</strong> theautomotive <strong>in</strong>dustry.What is the relationship with the US?We cont<strong>in</strong>ue to have a privileged relationship with the US,also economically. In the 1960s and 1970s we pursued a policyof diversification, and at the time the US companies werethe first ones want<strong>in</strong>g to avail themselves of the new opportunities<strong>in</strong> <strong>Luxembourg</strong>. I personally have hardly any contactwith the US government. The cooperation proceeds primarilywith the companies. The US government doesn’t want to <strong>in</strong>fluencethe companies or dictate what they have to do. That’sa big difference from the other countries, but it works well.And the relationship with Canada?We’ve been neglect<strong>in</strong>g Canada a little, spend<strong>in</strong>g more timedeal<strong>in</strong>g with the USA. I’ve been <strong>in</strong> Montreal and Toronto; it’s avery <strong>in</strong>terest<strong>in</strong>g terra<strong>in</strong>, but a small country like <strong>Luxembourg</strong>can’t cover everyth<strong>in</strong>g. I plan to devote more time to Canada<strong>in</strong> the immediate future, but it’s a very big country, and I’llhave to concentrate on two or three cities. The country mustnot be underestimated, with its very many opportunities, andit will rema<strong>in</strong> successful, also because of those resources,which we no longer have <strong>in</strong> Europe.Are we on these countries’ radar?We’re probably better known there than <strong>in</strong> other countries.The big groups know <strong>Luxembourg</strong>, but the smaller the operation,the less the companies know about <strong>Luxembourg</strong>. Theconsult<strong>in</strong>g firms work<strong>in</strong>g for these companies have had <strong>Luxembourg</strong>on their radar for a long time now and are enter<strong>in</strong>g<strong>in</strong>to discussions with us.Why is the US of <strong>in</strong>terest to <strong>Luxembourg</strong>companies?Despite everyth<strong>in</strong>g, the USA rema<strong>in</strong>s the greatest economicpower <strong>in</strong> the world. It’s still the case that noth<strong>in</strong>g happenswithout US support. And when America coughs, the rest ofthe world also coughs, especially Europe. The USA is home tothe big companies, but there are also many small companiesthat are extremely active and <strong>in</strong>novative. So it rema<strong>in</strong>s a very<strong>in</strong>terest<strong>in</strong>g target area for <strong>Luxembourg</strong>.Which <strong>Luxembourg</strong> companies are alreadyoperat<strong>in</strong>g <strong>in</strong> <strong>North</strong> America? Which ones wantto <strong>in</strong> the future?We’re not so widely deployed <strong>in</strong> the USA. Particularly thevery large companies like Cargolux and ArcelorMittal are veryactive there. Smaller companies have a hard time gett<strong>in</strong>g afoothold. Many companies <strong>in</strong> the automotive sector supplyparts to US car makers. But there isn’t a big rush to set upoperations <strong>in</strong> the US.Are there new companies dar<strong>in</strong>g to make theleap to <strong>Luxembourg</strong>?In California activities have greatly <strong>in</strong>tensified. It was a bitquieter <strong>in</strong> the past, but the <strong>in</strong>terest <strong>in</strong> <strong>Luxembourg</strong> has revivedon the West coast. Recently it’s been relatively smallcompanies that have come <strong>in</strong>to question.What role is played by the representativeoffices?The representative offices <strong>in</strong> New York and San Franciscoregularly provide me with <strong>in</strong>formation when companies wantto relocate <strong>in</strong> Europe. If a company fits our framework, we tryto persuade it to come to <strong>Luxembourg</strong>. The Consul Generalsof <strong>Luxembourg</strong> and Directors of the <strong>Luxembourg</strong> “Trade andInvestment Office” François Knaff (New York) and GeorgesSchmit (San Francisco) contact the companies and present<strong>Luxembourg</strong> as a location. It’s then analyzed what is doableand what is not. If there’s an <strong>in</strong>terest, I try to visit the company<strong>in</strong> the next economic mission.Can you tell us more about the economicmissions to the US?I go at least twice a year to the US <strong>in</strong> order to visit the East orWest coast. In October I’ll be there aga<strong>in</strong>, when the <strong>Bus<strong>in</strong>ess</strong>Award will be conferred <strong>in</strong> New York. This year the honor willgo to Husky; two years ago it was Delphi. I’ll also be mak<strong>in</strong>gcontact with companies at this event.Do US companies also say why they’vechosen <strong>Luxembourg</strong>?For companies operat<strong>in</strong>g <strong>in</strong> e-commerce, for example, our lowvalue-added tax was the start<strong>in</strong>g po<strong>in</strong>t. That’s no longer thecase. Today, these companies come to <strong>Luxembourg</strong> becausewe have superb <strong>in</strong>frastructures and can offer them <strong>in</strong>terest<strong>in</strong>gopportunities. Our central location <strong>in</strong> Europe is also important,so we must keep an eye on our connections to the otherEuropean economic centers. We’ve endeavored to expand ourcommunication networks, and quite successfully, too. Theavailable data center and the read<strong>in</strong>ess of Enovos <strong>in</strong> mattersof energy supply must also not be underestimated. So wehave a few th<strong>in</strong>gs to offer. In addition, each company want<strong>in</strong>gto come to <strong>Luxembourg</strong> is assigned a contact person <strong>in</strong> theM<strong>in</strong>istry who attends to its concerns.Would those large companies which havealready been here for years aga<strong>in</strong> choose<strong>Luxembourg</strong> today?We’ve never discussed this with the companies. But we mustcont<strong>in</strong>ue rema<strong>in</strong><strong>in</strong>g attractive. The other countries aren’tsleep<strong>in</strong>g. We have strong competition from the Netherlands,Ireland and Switzerland. Especially the Netherlands, with itsgood position<strong>in</strong>g <strong>in</strong> logistics, is always on the short list of foreigncompanies.What is be<strong>in</strong>g done to strengthen therelationship between <strong>Luxembourg</strong> and<strong>North</strong> America?<strong>Luxembourg</strong> has a good reputation <strong>in</strong> America. While we suffereda small blow related to problems <strong>in</strong> the bank<strong>in</strong>g world,hav<strong>in</strong>g always been under pressure from the G8, I hope thatour good relationship with the US will persist.Do <strong>American</strong>s really perceive Europe as the“old world”?They perceive Europe above all as a world that is not verydynamic. The growth prospects here are also not of great <strong>in</strong>terest.One senses among the companies that while Europerema<strong>in</strong>s a target region, it’s no longer their first choice. Itseems to me that many companies are redef<strong>in</strong><strong>in</strong>g their priorities<strong>in</strong> order to work more with Southeast Asia, and that’salarm<strong>in</strong>g.CA constant challenge for a Trade andInvestment office is to rema<strong>in</strong> current with,and also to stay ahead of changes <strong>in</strong> the hostcountry’s economic landscape. This is evenmore so the case when the local economy isdriven not just by market forces, but also bycreative th<strong>in</strong>k<strong>in</strong>g and acceleration <strong>in</strong>technological <strong>in</strong>novation.Our country has kept pace through a portfolio of offer<strong>in</strong>gsthat arise to meet, and even anticipate, thedemands of new types of bus<strong>in</strong>esses. Three currentexamples of <strong>in</strong>novative technologies demonstrate the strategicadvantages that the <strong>Luxembourg</strong> Trade and InvestmentOffices can deploy on behalf of <strong>American</strong> companies:Cloud Comput<strong>in</strong>g – The move by technology providers tomigrate software applications and data from the desktopto a server environment has spawned a host of new companies,and fostered <strong>in</strong>novation by traditional leaders, <strong>in</strong>clud<strong>in</strong>gGoogle, Microsoft, Amazon, Oracle and IBM. Virtualiz<strong>in</strong>gcomputer hardware and mov<strong>in</strong>g office and database applications“to the cloud” plays <strong>in</strong>to the hands of a countrylike <strong>Luxembourg</strong>, which provides a secure data center environmentfor everyth<strong>in</strong>g from f<strong>in</strong>ancial <strong>in</strong>formation to multimedia.In fact, <strong>Luxembourg</strong> is early to provid<strong>in</strong>g a home forcloud-based bus<strong>in</strong>esses: a found<strong>in</strong>g member of Eurocloud, itwas home to the first European cloud comput<strong>in</strong>g conference.Cloud comput<strong>in</strong>g complements and <strong>in</strong> many cases facilitates,e-commerce, where aga<strong>in</strong> <strong>Luxembourg</strong> has strong offer<strong>in</strong>gs <strong>in</strong>both <strong>in</strong>frastructure and regulatory framework.Life sciences – Biotechnology has emerged as a significant<strong>in</strong>dustry sector with<strong>in</strong> the United States dur<strong>in</strong>g the past 20years. It has <strong>in</strong>cubated several large scientific-<strong>in</strong>dustrial companies,but more significantly, thousands of smaller biotechcompanies and their unique service providers [equipmentmanufacturers; bio<strong>in</strong>formatic software developers, etc.] havearisen as part of an embedded <strong>in</strong>dustry base. Because of theunique position<strong>in</strong>g that <strong>Luxembourg</strong> has developed as a centerof excellence <strong>in</strong> personalized medic<strong>in</strong>e, <strong>in</strong>clud<strong>in</strong>g a biobank,<strong>in</strong>cubator, and affiliations and relationships with scientific<strong>in</strong>stitutes worldwide, our country is strongly positionedto support biotech companies as a platform for scientificdevelopment and European expansion.F<strong>in</strong>ancial Services – While the world struggled to rega<strong>in</strong> itsequilibrium follow<strong>in</strong>g the meltdown of several Western f<strong>in</strong>ancial<strong>in</strong>stitutions, and the drastic measures <strong>in</strong>stituted topreserve the <strong>American</strong> economy and those of other nations,<strong>Luxembourg</strong>, while not entirely unscathed, rema<strong>in</strong>ed a seatof f<strong>in</strong>ancial stability, and ultimately even sound <strong>in</strong>novation.Funds and f<strong>in</strong>ancial service companies have cont<strong>in</strong>ued tolook to <strong>Luxembourg</strong> as a safe, secure, legitimate venue fortheir product and service offer<strong>in</strong>gs, where both the quality ofthe support <strong>in</strong>frastructure, and the stable regulatory environmentprovide necessary advantages for clients. Even <strong>in</strong> themidst of f<strong>in</strong>ancial uncerta<strong>in</strong>ty, <strong>Luxembourg</strong> has cont<strong>in</strong>ued to<strong>in</strong>novate, with a forward-look<strong>in</strong>g regulatory orientation thatenables domiciled funds to take advantage of the benefits ofthe new UCITS IV directive.The U.S. still ma<strong>in</strong>ta<strong>in</strong>s a fairly robust <strong>in</strong>dustrial base, which<strong>Luxembourg</strong> has, and certa<strong>in</strong>ly will cont<strong>in</strong>ue to, support witha talented workforce and a world-class logistics capability.Our Trade and Investment professionals can thus credibly addressthe needs of the ever-grow<strong>in</strong>g “knowledge economy,”where media, f<strong>in</strong>ance, communications and science converge,now and <strong>in</strong> the future.www.<strong>in</strong>vest<strong>in</strong>luxembourg.us* François Knaff is Consul general of <strong>Luxembourg</strong> <strong>in</strong> New York14 15
Cargolux and Boe<strong>in</strong>g Make Industrial HistoryA Cargo Jumbo Jet for<strong>Luxembourg</strong>by Andreas HolpertIntense negotiations about the proposedAlternative Investment Fund Managers (AIFM)Directive are currently under way to reachconsensus between the EU’s legislative<strong>in</strong>stitutions.16<strong>Luxembourg</strong> as a favored domicile for funds - an opportunityfor US-based managers and offshore fundsLaunch of the AlternativeInvestment Fund Manager DirectiveThe f<strong>in</strong>alization of the Directive is expected to take place<strong>in</strong> the com<strong>in</strong>g weeks and the Directive should come <strong>in</strong>toeffect <strong>in</strong> 2012.The Directive is aimed at establish<strong>in</strong>g a harmonized frameworkfor regulat<strong>in</strong>g alternative <strong>in</strong>vestment funds (AIFs) suchas hedge funds, real estate and private equity funds that arenot registered as Undertak<strong>in</strong>gs for Collective Investment <strong>in</strong>Transferable Securities (UCITS).The Directive has a broad scope and applies to EU and non-EUAIFMs, AIFs, service providers to these funds and their <strong>in</strong>vestors.One of the most controversial areas of the Directive relatesto the third country provision, namely the access of non-EUfunds to the European market. The EU Parliament favors an EUpassport with the ultimate face out of national private placementregimes, whereas the EU Council believes a passport isimpracticable and that private practices should be reta<strong>in</strong>ed<strong>in</strong>def<strong>in</strong>itely.Non-EU AIFMs have to consider whether and under what conditionsthey may be able to access European <strong>in</strong>vestors withoffshore funds <strong>in</strong> the future. For <strong>in</strong>stance, US managers couldseek relocation <strong>in</strong> the EU <strong>in</strong> order to benefit from the EU passportfor the distribution of their funds. At the same time, theymay choose to repatriate their funds from offshore jurisdictionssuch as Cayman Islands and the British Virg<strong>in</strong> Islands toonshore European jurisdictions.by Georges Bock et Bastien Vois<strong>in</strong>*<strong>Luxembourg</strong>, as the world’s second largest <strong>in</strong>vestment fundcenter after the US, is l<strong>in</strong>ed up to be the dest<strong>in</strong>ation of choice<strong>in</strong> Europe for the switch from offshore to onshore vehicles.Additionally, as the market leader <strong>in</strong> Europe for UCITS, <strong>Luxembourg</strong>is ideally placed to accommodate the new trend amongmanagers to offer AIF strategies via UCITS vehicles due to theconcerns over the implications of the AIFM Directive. Amongthe frontrunners to this trend, Apex Fund Services, the <strong>in</strong>dependentand lead<strong>in</strong>g global fund adm<strong>in</strong>istration bus<strong>in</strong>essheadquartered <strong>in</strong> Bermuda, opened an office <strong>in</strong> <strong>Luxembourg</strong> <strong>in</strong>August while New York based and world’s third largest hedgefund, Paulson & Co, is plann<strong>in</strong>g to set up a UCITS fund <strong>in</strong> <strong>Luxembourg</strong>later this year.Accord<strong>in</strong>g to a survey conducted by KPMG earlier this year,half of the managers <strong>in</strong>terviewed confirmed that they arewait<strong>in</strong>g for the f<strong>in</strong>al outcome of the negotiations before def<strong>in</strong>itelycommitt<strong>in</strong>g to the location of their funds and their managementbus<strong>in</strong>esses.On October 4th, the Belgian Presidency of the EU Council publisheda draft compromise of the Directive propos<strong>in</strong>g a dualapproach solution to third country rules <strong>in</strong> an attempt to satisfycompet<strong>in</strong>g EU Parliament and Council proposals.<strong>Luxembourg</strong> has always been opened to the world economyand has cont<strong>in</strong>uously played his role as a gate to Europe fornon-EU players. With its actual regulatory framework forUCITS, specialized <strong>in</strong> INVESTMENT FUNDS (SIF) as well as itsventure capital funds. The countries provide already todaya solid <strong>in</strong>frastructure to operate <strong>in</strong>vestment funds platformsaim<strong>in</strong>g at <strong>in</strong>ternational products distribution. The <strong>Luxembourg</strong>government will do all necessary effort to ensure thatEurope is not end<strong>in</strong>g up <strong>in</strong> a fortress.* Georges Bock, Head of Tax KPMG <strong>Luxembourg</strong>. Bastien Vois<strong>in</strong>, <strong>Luxembourg</strong>Center of Excellence (KPMG New York)BGL BNP PARIBAS S.A. (50, avenue JF Kennedy, L-2951 <strong>Luxembourg</strong>, R.C.S. <strong>Luxembourg</strong> : B 6481) October 2010 Market<strong>in</strong>g CommunicationThe long-term partnership between US aircraft manufacturerBoe<strong>in</strong>g and <strong>Luxembourg</strong> cargo airl<strong>in</strong>e Cargoluxis an excellent example of the close ties between theGrand Duchy and the United States. The partnership certa<strong>in</strong>lygoes far beyond a typical economic relationship. Together, thetwo companies have made <strong>in</strong>dustrial history.Back <strong>in</strong> 1993, the US group delivered the first Boe<strong>in</strong>g 747F. Atthat time, Cargolux was the first official operator of the cargojumbo jet. Orig<strong>in</strong>ally, Air France was supposed to acquire thefirst one.In 2011, history will repeat itself. This time, the <strong>Luxembourg</strong>iancargo airl<strong>in</strong>e is the official ‘launch customer’ for thesuccessor model to the 747F. Next summer – two years earlierthan announced – the first Boe<strong>in</strong>g type 747-8F aircraft isscheduled to land at <strong>Luxembourg</strong>’s F<strong>in</strong>del airport.Yet the partnership with this US aircraft group extends furtherback than 1993. In December of 1977, Cargolux announced itsfirst order for a Boe<strong>in</strong>g 747-200 freighter. The LX-DCV arrived<strong>in</strong> <strong>Luxembourg</strong> on February 1st, 1979 and was christened the‘City of <strong>Luxembourg</strong>’ on February 2nd, 1979 by Mayor ColletteFlesch before the presence of Grand Duke Jean. On February5th, 1979, the aircraft set off on its maiden voyage forCargolux, dest<strong>in</strong>ation Hong Kong. At the time, it was thelargest aircraft ever registered <strong>in</strong> <strong>Luxembourg</strong>, and the firstB747 freighter <strong>in</strong> service <strong>in</strong> a European all-cargo airl<strong>in</strong>e. Upto the present day, Cargolux has operated more than thirty747-200 type aircraft. In anticipation of the delivery ofthe new cargo jumbo jet next year, the fleet will be reducedby one aircraft a month over January, February, and March.<strong>Bus<strong>in</strong>ess</strong> owners& entrepreneursBuild value withBGL BNP ParibasADVICE SUPPORT FINANCING INSURANCEIF YOU’VE GOT PROJECTS IN THE PIPELINE, TALK TO US FIRSTCall now: (+352) 42 42-20 08 or entreprises@bgl.luCargolux started off with one CL-44 that it acquired fromIcelandic airl<strong>in</strong>e, Loftleidir Icelandic. Only 39 of these Canadianaircraft were ever built, four of which were extended by4.5 meters immediately follow<strong>in</strong>g delivery. The extendedversions could transport greater volumes at the same load.Of the 39 models built, Cargolux operated the four extendedmodels and two standard models. Cargolux’s first CL-44 wasregistered <strong>in</strong> Iceland as TF-LLJ.Cargolux fitted out the CL-44s with <strong>in</strong>ternal cargoequipment that was highly advanced at thetime, <strong>in</strong>clud<strong>in</strong>g special equipment for transport<strong>in</strong>gall k<strong>in</strong>ds of animals. In 1973, Cargolux ascended <strong>in</strong>to thejet age with the <strong>in</strong>troduction of its first DC-8 (type DC-8-61).The DC-8-61 was jo<strong>in</strong>ed by a DC-8-55 <strong>in</strong> 1974, soon to be followedby the DC-8-63 aircraft. Whereas the extended versionof the CL-44 had a maximum vehicle payload of 27 metrictons, the DC-8 could now transport loads of up to 47 metrictons.www.bgl.lu
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