Archive:Business economy - external trade
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- Data from January 2009, most recent data: Further Eurostat information, Main tables and Database
This article belongs to a set of statistical articles which analyse the structure, development and characteristics of the various economic activities in the European Union (EU). The present article is part of the business economy overview, and covers external trade of the business economy.
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Main statistical findings
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External trade data (see Figure 1) shows that after having stagnated at the start of the decade – during the previous economic slowdown – there was growth in the level of EU-27 imports and exports through to 2007 as economies strengthened. The EU-27 trade balance (the value of exports minus imports) for industrial goods became a progressively larger deficit through to 2006, reflecting to some degree buoyant demand, changes in exchange rates, and the relative price of imports (in particular, higher prices of oil and gas imports). The widening trade deficit for industrial goods reached EUR 169.3 billion by 2006, before falling slightly in 2007 to EUR 167.9 billion.
Trade partners
The most important destination for EU-27 industrial exports in 2007 was the United States which accounted for a little more than a fifth (21.2 %) of the total – see Figure 2. The proportion of exports that were destined for the United States fell gradually in recent years, while a similar pattern was observed for the second largest market for EU-27 exports of industrial goods, namely Switzerland, which accounted for a 7.3 % share of total exports in 2007. The declining share of EU-27 exports to established, industrialised trading partners was offset by the growing importance of trade with the Russian Federation and China, whose combined market share rose to 12.9 % by 2007.
The relatively slow change in the structure of EU-27 exports by partner was in contrast to more rapid developments as regards the origin of EU-27 imports. The relative importance of the United States has diminished considerably in recent years, as imports from America accounted for 12.2 % of the total in 2007 (approximately half their share of a decade before). There was also a considerable reduction in the relative share of imports from Japan, declining to 5.8 % of EU-27 imports in 2007. In contrast, the share of EU-27 imports that originated from China and the Russian Federation increased rapidly to reach 17.1 % and 8.9 % respectively by 2007.
Trade by product
Table 1 shows information relating to EU-27 external trade flows in 2007, broken down according to the aggregates used for the structural business statistics industrial articles. These figures provide evidence of why concerns are often raised with respect to the EU’s dependence on external supplies of energy: one third of all EU-27 imports concerned mining and quarrying products (22.1 %) or processed fuel products and chemicals (13.3 %). Electrical machinery and optical equipment products were the only other article aggregate to report a double-digit share of EU-27 industrial imports in 2007, accounting for slightly more than a fifth (20.1 %) of the total.
With relatively low levels of exports of mining and quarrying products, the EU-27 recorded by far its largest trade deficit for these products (EUR 273.8 billion in 2007). The magnitude of the deficit for mining and quarrying products was more than four times as high as the second largest deficit – that registered for electrical machinery and optical goods (EUR 67.8 billion).
Many EU exporters face competition from producers in emerging economies, resulting in some EU producers trying to shift their output to higher value, specialist products. The majority of the EU-27’s exports tend to be concentrated among medium-high technology products. Table 1 shows that there were four groups of products that together accounted for 70.5 % of EU-27 exports in 2007: processed fuel products and chemicals; electrical machinery and optical equipment; machinery and equipment; and transport equipment. Three of these groupings reported the highest EU-27 trade surpluses in 2007: namely, machinery and equipment (EUR 108.5 billion), transport equipment (EUR 81.2 billion) and processed fuel products and chemicals (EUR 57.8 billion).
Figure 3 presents information on the changing composition of industrial exports and imports for the EU-27. These relative shares reflect, to some degree, differences in prices between 2002 and 2007, as revealed by the growing share of EU-27 imports accounted for by mining and quarrying products, metals and metal products, and processed fuel products and chemicals. Increased prices of raw material imports may well be passed on by EU manufacturers, as the relative importance of downstream exports, such as metal products and processed fuel products and chemicals rose, their relative share of EU-27 industrial exports increasing by 4.7 percentage points between 2002 and 2007.
On the other hand, falling prices were also evident for products such as textiles, clothing, leather and footwear, and hence, despite considerable volume increases in imports, the overall share of these products in total EU-27 imports fell in value terms. In a similar vein, technology gains may result in falling prices for some products, such as electrical machinery and optical equipment – for example, a plasma or LCD television is considerably cheaper today than it was five years ago. As such, despite the volume of trade in these goods increasing, their share of total imports and exports in value terms fell too.
Trade by Member State
While external trade statistics relating to the EU-27 are presented by treating the EU as a single trading entity, and cover only trade flows between the EU and non-member countries, the external trade data reported for each of the Member States concerns both trade flows with non-member countries (extra-EU trade) and that with other Member States (hereafter referred to as intra-EU trade).
Germany recorded by far the largest trade surplus in industrial goods (EUR 178.7 billion) in 2007; with exports covering imports by 125.2 % (see Table 2). Much of the German trade surplus in industrial goods reflected the export performance of machinery and equipment and transport equipment, areas in which German manufacturers are particularly specialised. Ireland was the only Member State to report a cover ratio above that registered in Germany, as exports covered imports by 149.9 % in 2007, largely as a result of a relatively large trade surplus for basic chemicals and pharmaceuticals.
Spain and the United Kingdom recorded the largest trade deficits for industrial goods in 2007 (EUR 102.1 billion and EUR 121.6 billion), although Greece and Cyprus had by far the lowest cover ratios (28.2 % and 11.9 % respectively). It is important to remember that the data presented only refer to the external trade of industrial goods and countries such as Spain, Greece and Cyprus (tourism) or the United Kingdom (financial and business services) may have considerable net exports from various services.
Relative export and import specialisation ratios reflect, to some degree, the importance and size of domestic output in relation to international and domestic demand. These specialisation ratios are defined in terms of the share of a country's exports (or imports) of a certain product in its total exports (or imports). The ratio for each country is then divided by the same ratio for the sum of the EU Member States and expressed as a percentage; as such, any values over 100 % represent country-product pairings where the economy in question is relatively specialised in exporting (or importing).
Given most of the large Member States produce, export and import a wide range of products, it is more likely that specialisation ratios are high in relatively small countries or countries whose industrial activities are concentrated among relatively few activities – see Table 3. The main exception to this rule is the export of machinery and equipment (where Italy and Germany were the most specialised producers and exporters) and transport equipment products (where Spain and Germany were among the most specialised exporters). Although not always the case, there was often a relationship between countries specialised in producing and exporting certain products, for example, exports of textiles, clothing, leather and footwear products from Romania, Bulgaria and Portugal, or exports of wood and paper products from Finland, Latvia and Estonia.
Data sources and availability
The main part of the analysis in this article is derived from the COMEXT database for external trade.
Context
External trade statistics presented in the structural business statistics articles relate to the classification of products by activity (CPA). More specifically, the data included refer to CPA Sections C to E, covering imports and exports of industrial products.
The world economy is increasingly inter-related, with foreign-controlled enterprises and globalisation making the distinction between domestic and non-domestic production less clear. The successive removal of trade barriers (particularly those under the auspices of the World Trade Organization) has also led to a notable increase in world trade, which has expanded to cover services. However, the recent economic slowdown has seen concerns rise over the possibility that some countries will adopt protectionist policies (barriers to trade and capital flows) in an attempt to cushion themselves from the impact of the economic slowdown.
There have been rapid changes in trade patterns in recent years, associated with emerging economies such as China and India accounting for a growing share of world trade, in particular in areas that are price-sensitive. There have also been structural changes in the origin of EU imports, for example, the growth in energy imports originating from the Russian Federation (an important global supplier of energy), as indigenous EU supplies dwindle.
Further Eurostat information
Publications
- European Business: Facts and figures - 2009 edition