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EU and US share the largest trade and investment relationship


Statistics in focus 1/2015; Authors: Gilberto Gambini, Radoslav Istatkov and Riina Kerner
ISSN:2314-9647  Catalogue number:KS-SF-15-001-EN-N

This article focuses on recent trends in European Union (EU) trade with the United States in goods, services and foreign direct investment (FDI). The EU–United States (US) economic relationship accounts for a big share of global trade in goods and in services. They are each other’s main trading partners in goods and services, and together they have the largest bilateral trade relationship in the world. Either the EU or the United States is the largest trade and investment partner for almost all other countries in the global economy. The two economies also provide each other with their most important sources of foreign direct investment.

Figure 1: Share of EU-28 and US exports in world exports, total products, 2003–12
(%)
Source: Eurostat (ext_lt_introle)
Figure 2: Total trade in goods with the US, EU-28, 2003–13
(billion EUR)
Source: Eurostat (Comext data code: DS-018995)
Figure 3: Trade in goods with the US, by product (SITC level 1), EU-28, 2013
(%)
Source: Eurostat (Comext data code: DS-018995)
Figure 4: Main exports to the US (SITC level 2), EU-28, 2013
(%)
Source: Eurostat (Comext data code: DS-018995)
Figure 5: Main imports from the US (SITC level 2), EU-28, 2013
(%)
Source: Eurostat (Comext data code: DS-018995)
Figure 6: Share of exports to US on total extra-EU-28 exports, by product (SITC level 2), EU-28, 2013
(%)
Source: Eurostat (Comext data code: DS-018995)
Figure 7: Share of imports from the US on total extra-EU-28 imports, by product (SITC level 2), EU-28, 2013
(%)
Source: Eurostat (Comext data code: DS-018995)
Figure 8: Trade in goods with the US, by size class of trader (in terms of number of employees), EU-28, 2011 and 2012
(%)
Source: Eurostat (Comext data code: DS-057390)
Figure 9: Trade in goods with the US, by main economic activity of the trader (NACE classification), EU-28, 2012
(%)
Source: Eurostat (Comext data code: DS-057390)
Figure 10: Total trade in services with the US, EU-28, 2004–12 (¹)
(in billion EUR)
(¹) 2004–09: EU-27; 2010–12: EU-28.
Source: Eurostat (bop_its_det)
Figure 11: Trade in services with the US, by main sector, EU-28, 2013
(%)
Source: Eurostat (bop_its_det)
Figure 12: Foreign direct investment stocks with the US, EU-27, 2004–12
(billion EUR)
Source: Eurostat (bop_fdi_main)
Figure 13: Foreign direct investment flows with the US, EU-27, 2004–12
(million EUR)
Source: Eurostat (bop_fdi_main)

Main statistical findings

EU–US position in world trade

Compared to the major economies in the world, the United States and the EU recorded by far the highest trade values in goods (2012 data). In 2012, the EU-28 recorded EUR 1 798.6 billion worth of exports, the highest value in international trade. China and the United States followed closely and recorded EUR 1 594.6 billion and EUR 1 203.0 billion respectively. The United States has traditionally been a major trading economy but its relative significance has declined in recent years, in particular in exports. In 2007, China overtook the United States and became the second largest exporter of goods behind the EU-28. The United States had a considerable deficit in trade in 2012 (EUR 613.5 billion), the highest deficit among the major economies. The EU-28 recorded the third highest deficit (EUR 115.5 billion), just behind India.[1]; Together, the EU-28 and the United States accounted for close to one third (32.2 %) of global imports of goods and 26.6 % of global exports in 2012 (Figure 1). Between 2003 and 2012 the United States share of total exports fell from 14.2 % to 11.1 %. The share of the United States imports in world imports has fallen substantially since 2003 from 24.2 % to 16.2 % in 2012. Both EU import and exports flows followed the United States’ trend during the above mentioned period. In spite of the decrease in international trade, since 2008 the EU-28 ranks first among importers, but in 2012 the United States topped again with a slightly higher value.

Goods and services are increasingly linked together. Having access to certain services is a prerequisite for the economic performance of many manufacturers of the main goods that are transacted between the EU and the United States. For example, producers and exporters of textiles, cars or computers cannot be competitive without access to efficient banking, insurance, accountancy, telecom or transport systems. The EU-28 is the world’s largest exporter and importer of services, with a trade surplus of EUR 146.7 billion in 2012. The United States shared the same pattern, and had the second highest levels of exports and imports of services (2011 data), and also came second in trade surplus for services, valued at EUR 128.3 billion.[2]

EU–US trade in goods

The United States has traditionally been the EU’s major trading partner but its relative significance has declined in recent years, in particular in exports. Having peaked in 2006, EU trade in goods with the United States declined notably in both imports and exports in 2009 (Figure 2), following the global financial and economic turmoil at the end of 2008. It recovered following again an upward trend up to 2012. However, in 2013 both imports and exports showed a slight decline compared with 2012 values. The trade balance is positive since the beginning of the series (2002) meaning the EU’s exports to the United States are greater than the imports.

In 2013, manufactured goods (all products included in SITC 5–8) accounted for the biggest share of EU exports to the United States (87.1 % - see Figure 3). Manufactured goods made up the majority of EU imports (79.9 %) as well.

Machinery and transport equipment were by far the most traded products among both, the EU export and import flows to the United States (EUR 124.2 million and 74.4 million respectively) made up 43.4 % of total exports and 38.2 % of total imports. Chemicals and related products accounted for 21.6 % of EU exports and 22.3 % of EU imports. Miscellaneous manufactured articles (SITC 8) and manufactured goods classified chiefly by material (SITC 6), followed. In what concerns primary products, mineral fuels, lubricants and related materials (SITC 3) held the highest share of both EU’s import and export flows (6.1 % and 9.7 % respectively). Within the SITC at 2-digit level, road vehicles were the most exported merchandise to the United States. The most popular imports were medical and pharmaceutical products closely followed by power-generating machinery and equipment (Figures 4 and 5).

In 2013, the total share of extra EU-28 exports destined for the United States was 18.5 %. The analysis by product breakdown shows that organic chemicals (36.7 %) and beverages (31.5 %) had the highest United States proportion on extra-EU exports. In the case of six other products (medicinal and pharmaceutical products, power-generating machinery, scientific and controlling instruments, miscellaneous manufactured articles, coins and road vehicles) the share of exports to the United States recorded values between 20 % and 30 %. The United States had also close to a 20 % share of the extra-EU exports for two other chapters: ‘photographic, optical and clock equipment’ and ‘inorganic chemicals’. The total share of extra EU-28 imports from the United States was at 11.6 %, somewhat lower than the exports. Live animals other than animals of division 03 (meaning animals other than fish) accounted for the highest share of imports from the United States recording more than 50 % of total extra EU-28 imports. Power-generating machinery and equipment had a slightly lower share of the EU imports from the United States: 49 % in 2013. Still within the top ten products where the Unites states was the EU’s main partner in terms of imports, chemical materials and products; professional, scientific and controlling instruments and apparatus; medicinal and pharmaceutical products and other transport equipment all accounted for shares higher than one third of total EU imports (see Figures 6 and 7).

Main characteristics of traders

Figures 8 and 9 show trade in goods data with the United States in 2011 and 2012, broken down by two characteristics of the trader, namely its enterprise size (in terms of number of employees) and its main economic activity according to the Statistical classification of economic activities in the European Community (NACE).

Trade by size class of the traders is one of the most important statistical indicators on trade by enterprise characteristics (TEC). In 2012, the contribution of small and medium sized enterprises (SMEs) to imports was larger than to exports (see Figure 8). SMEs (which have less than 250 employees) originated 28 % of the trade value in exports to the United States and imported from the United States 38 % of all the total extra-EU imports. Figures for 2011 were similar. Small enterprises (0–49 employees) were responsible for almost 12 % of the value of exports, while the share of medium-sized enterprises (50–249 employees) was established at around 16 %. Large enterprises stood for more than the half of trade value for both, 68 % of the export value and 54 % of the import value.

Focusing on enterprise activities, industry and trade sectors (NACE sections B–E and G) account for the majority of EU trade with the United States compared to other sectors, both in terms of trade value and number of enterprises (see Figure 9). In 2012 the industry sector (B–E) contributed significantly more than the trade sector (G) to total trade value. For imports, trade was rather equally distributed between the industry sector (48 %) and other sectors including the trade sector (52 %, of which 30 % trade and 22 % other), while exports were principally driven by the industry sector, which accounted for almost two-thirds (63 %) of the total trade.

The number of establishments involved in trade with the United States was unequally distributed across the various sectors: while trade represented a share of 41 % of importers from the United States, industry accounted only for 26 %. On the other hand, the number of enterprises involved in exports was higher for industry (48 %) than for trade (31 %). Other sectors had a share of 21 %.

EU-US trade in services

A relatively high share of the EU-28’s trade in services was with the United States — although exports and imports were broadly in line with each other — resulting in a relatively small surplus. Trade in services also declined notably in both imports and exports in 2009 (EUR 130.2 billion and EUR 128.1 billion respectively). Since then the values recorded an upward trend up to 2012. The values recorded in 2012 were EUR 164.8 billion for exports and EUR 150.9 billion for imports respectively. The trade balance for services had fewer surplus throughout the decade in analysis compared to trade balance in goods. The trade balance in services had been positive since the beginning of the series (2004) until 2008 were it became almost balanced, followed by a EUR 2.1 billion deficit in 2009.

Other business services made up 34.1 %, the majority of EU exports to the United States in 2013. Transportation followed with 18.0 %. Travel and financial services account for 11.0 % and 10.6 % respectively. Royalties and license fees and computer and information services also accounted for proportion higher than 5 %, 8.8 % and 7.2 % respectively. All other services accounted for values lower than 5 %.

Foreign direct investment

The investment between the EU-27 and the United States is the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. Moreover, it influences trade figures positively as it is estimated that a third of the trade between the EU-27 and the United States actually consists of intra-company transfers.

The EU-27 FDI stocks in the United States increased by 55.8 % from 2004 to 2012, while the United States FDI stocks in the EU-27 grew by 50.0 % over that period. Since 2006, the EU has been recording a positive balance vis-à-vis the United States with outward stocks exceeding the inward stocks.

Total EU-27 FDI outflows to the United States increased to EUR 163.4 billion in 2011 and dropped again in 2012, down to EUR 62.9 billion. Inward flows, i.e. the flows from the United States to the EU-27, also decreased in 2012 by more than a half from the previous year, down to EUR 98.8 billion.

Data sources and availability

EU data on international trade comes from Eurostat’s COMEXT database. COMEXT is the Eurostat reference database for international trade. It provides access not only to both recent and historical data from the EU Member States but also to statistics of a significant number of third countries. International trade aggregated and detailed statistics disseminated from Eurostat website are compiled from COMEXT data according to a monthly process.

Data are collected by the competent national authorities of the Member States and compiled according to a harmonised methodology established by EU regulations before transmission to Eurostat. The statistical information is mainly provided by the traders on the basis of Customs (extra-EU) declarations.

EU data are compiled according to community guidelines and may, therefore, differ from national data published by EU Member States. Statistics on extra-EU trade are calculated as the sum of trade of each of the 28 EU Member States with countries outside the EU. In other words, the EU is considered as a single trading entity and trade flows are measured into and out of the area, but not within it.

Definitions

  • Number of enterprises

The number of enterprises consists in a count of the number of enterprises involved in trade during at least a part of the reference period.

  • Number of employees

The number of employees is defined as those persons who work for an employer and who have a contract of employment and receive compensation in the form of wages, salaries, fees, gratuities, piecework pay or remuneration in kind.

  • Classifications

Enterprises are classified according to the Statistical Classification of Economic Activities in the European Community, Rev. 2 (NACE Rev. 2). From the reference year 2008 onwards, the activity sector is broken down by NACE Rev. 2 division (2-digit level) for sections C (Manufacturing) and G (Trade) and by section level for other activities. The size-classes in terms of number of employees are: 0–9, 10–49, 50–249, 250 or more and Unknown. For detailed information, please refer to ‘RAMON’, Eurostat’s Classification Server.

  • Foreign direct investment (FDI) is the category of international investment made by an entity resident in one economy (direct investor) to acquire a lasting interest in an enterprise operating in another economy (direct investment enterprise). The lasting interest is deemed to exist if the direct investor acquires at least 10 % of the voting power of the direct investment enterprise. FDI statistics record separately:

1) Inward FDI (or FDI in the reporting economy), namely investment by foreigners in enterprises resident in the reporting economy.

2) Outward FDI (or FDI abroad), namely investment by residents entities in affiliated enterprises abroad.

Context

The European Union and the United States have the largest bilateral trade relationship and enjoy the most integrated economic relationship in the world. The EU and USA have decided to take their economic relationship to a higher level by agreeing to launch negotiations for a comprehensive trade and investment agreement, the Transatlantic Trade and Investment Partnership (TTIP). Launched in 2013, the current TTIP negotiations between the EU and the United States are designed to increase trade and investment across the Atlantic by reducing and, where possible, eliminating remaining barriers to transatlantic trade and investment, whether they are tariffs on farm or manufactured products, restrictions on foreign service suppliers, or limitations on investment possibilities.

See also

Further Eurostat information

Data visualisation

Publications

Main tables

International trade (t_ext)

Database

International trade data (ext)

Dedicated section

Methodology / Metadata

In the methodology applied for statistics on the trade of goods, extra-EU trade statistics (trade between EU Member States and non-member countries) do not record exchanges involving goods in transit, placed in a customs warehouse or given temporary admission (for trade fairs, temporary exhibitions, tests, etc.). This is known as ‘special trade’. The partner is the country of final destination of the goods for exports and the country of origin for imports.

The balance of payments (BoP) is an important macro-economic indicator used to assess the position of an economy (of credit or debit) towards the external world. Data on International Trade in Services (ITS), a component of BoP current account, are used, alongside with data on Foreign Direct Investment, to monitor the external commercial performance of different economies. Some indicators of EU market integration are also derived from BoP data.  ITS data are collected by national enterprise surveys, International Transaction System (ITRS) and administrative records. The methodological framework followed the Manual on Statistics of International Trade in Services. The balance of payments provides information on the total value of credits (or exports) and debits (or imports) for each BoP item and on the net result or ‘balance’ (credits minus debits) of the transactions with each partner.

The main services categories are:

  • Transport
  • Travel
  • Communication services
  • Construction services.
  • Insurance services.
  • Financial services.
  • Royalties and license fees.
  • Other business services.
  • Personal, cultural and recreational services.
  • Government services n.i.e.
  • Services not allocated.

For more information see the EU-International trade Metadata page and International trade in services, geographical breakdown Metadata page.

  • Product classification

Information on commodities exported and imported is presented according to the Standard international trade classification (SITC).

SITC is a product classification of the United Nations (UN) used for external trade statistics (export and Import values and volumes of goods), allowing for international comparisons of commodities and manufactured goods.

The main categories are:

  • food, drinks and tobacco (Sections 0 and 1 — including live animals);
  • raw materials (Sections 2 and 4);
  • energy products (Section 3);
  • chemicals (Section 5);
  • machinery and transport equipment (Section 7);
  • other manufactured goods (Sections 6 and 8).

A full description is available from Eurostat’s classification server RAMON.

Source data for tables, figures and maps (MS Excel)

External links

European Commission

United Nations

Notes

  1. ↑ Share of the EU in world trade (ext_lt_introle).
  2. ↑ International trade in services — Data for the Eurostat yearbook (bop_its_ybk)


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