The European Union and the United States have the largest bilateral trade relationship in the world. The size and importance of these trade ties make the EU and the US the key players in the global trading system.
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No other economic relationship in the world is as integrated as the transatlantic economy. The EU and the US economies account together for about half the entire world GDP. The transatlantic relationship also defines the shape of the global economy as a whole as either the EU or the US is also the largest trade and investment partner for almost all other countries in the global economy.
Trade in goods
- EU good exports to the US in 2009: 204.4 billion
- EU goods imports from the US in 2009: 159.8 billion
Trade in services
- EU services exports to the US 2009: 119.4 billion
- EU services imports from the US in 2009: 127.0 billion
Foreign Direct Investment
- EU investment flows to the US in 2008: 121.4 billion
- US investment flows to the EU in 2008: 50.5 billion
EU-US economic cooperation
The EU and the US enjoy the most integrated economic relationship in the world, illustrated by unrivalled levels of mutual investment stocks, reaching over 2.1 trillion. Total US investment in the EU is three times higher than in all of Asia and EU investment in the US is around eight times the amount of EU investment in India and China together. Investments are thus the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. This can also be illustrated with approximately 14 millions linked to the transatlantic economy. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.
Non-Tariff Measures in EU-US Trade and Investment
The transatlantic relationship has an enormous potential which is far from being fully exploited. Given the low average tariffs (under 3%), the key to unlocking this potential lies in the tackling of non-tariff barriers. These consist mainly of customs procedures and behind the border regulatory restrictions. They come from diverging regulatory systems (standards definitions notably), but also other non-tariff measures, such as those related to certain aspects of security or consumer protection.
In 2009, a study was carried out for the European Commission identified the most important Non-Tariff Measures (NTMs) that affect trade between the EU and the US, and estimated their economic impact. The main findings of the study were that the removal of half of the NTMs and regulatory divergences would translate in an increase in GDP of 163 billion until 2018 on both sides of the Atlantic.
Transatlantic Economic Council (TEC)
The TEC was set up in 2007 to guide and stimulate the work on transatlantic economic convergence.
The Framework for Advancing Transatlantic Economic Integration between the USA and the EU
The TEC brings together those Members of the European Commission and US Cabinet Members who carry the political responsibility for closer economic ties. The progress achieved through the many dialogues and other cooperation activities is traditionally reviewed by the TEC at its annual meetings. New goals for achieving the purposes of the Framework for Advancing Transatlantic Economic integration are also usually fixed at TEC meetings. The next meeting of the TEC is scheduled for 17 December 2010 in Washington DC.
After relatively disappointing results of the initial approach, the new co-chairs of the TEC, Commissioner De Gucht, and US Deputy National Security Adviser for international economic affairs, Michael Froman, agreed in early 2010 to reposition the work of the TEC. It was agreed to focus the regulatory work of the TEC on economically relevant issues of mutual interest, to identify a number of issues where EU-US cooperation could produce achievable results in a reasonable time horizon and to engage in a strategic discuss on selected global economic issues. The rationale of the TEC is clear: to ensure transatlantic convergence by preventing barriers and by creating new opportunities for business and thus contributing to the overall political priorities of generating growth and jobs.
The EU-US Summit of 20 November 2010 in Lisbon underlined the important role of the TEC and tasked the TEC “to develop a transatlantic agenda to stimulate growth and create jobs in key emerging sectors and technologies”. The TEC was also asked “to identify ways to improve transatlantic consultation before regulators and agencies develop regulation in economically promising new technologies and sectors, to share best practices, and to develop joint principles with the aim of promoting maximum compatibility of regulations and the freest possible transatlantic flow of ideas, products, and services”.
The EU-US Summit Joint Statement (Lisbon, 20 November 2010)
The Joint Statement of the EU-US TEC meeting of 17 December 2010
See documents related to the EU-US TEC meeting of 17 December
The TEC is currently the only EU-US high level forum in which economic issues can be discussed in a coherent and coordinated manner. It brings together the wide range of ongoing economic cooperation activities and provides for a platform to give political guidance and direction of this work. At the same time, the TEC provides for a political forum for discussing strategic global economic questions. Overall, the so far untapped potential of the TEC is considerable: it can serve as an important strategic and economic tool in the creation of a transatlantic market place. The TEC is one of the most important projects in transatlantic relations.
Three “advisory” groups have been set to help guiding the work of the TEC: the Transatlantic Legislators’ Dialogue , the Transatlantic Consumer Dialogue and the TransAtlantic Business Dialogue . In addition, the civil society at large is consulted on the TEC objectives and debriefed after its annual meetings. The reports of TEC meetings are available to the public.
Trade Disputes
Inevitably for two economies of such size with such a high volume of trade, the EU and the US encounter a number of trade disputes which are handled through the dispute settlement mechanism of the WTO.
Although they tend to grab headlines, disputes currently only impact some 2% of EU-US trade.
Source: European Commission
