Trade Background: Europe and the European Union
The EU market represents 447.5 million people, and has a total GDP of $15.6 trillion, as of 2019. The United States has 328 million people and a Gross Domestic Product of $21.43 trillion according to the World Bank, as of 2019. The European Union (EU) consists of 27 countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.
Total bilateral trade between the European Union and United States was over $1 trillion in 2020, with goods trade accounting for $755.76 billion, the United States exported $290.76 billion worth of goods to EU member nations, a decrease from $336 billion in 2019. In 2018, 48 out of 50 U.S. States exporter more to Europe than to China. Top U.S. exports to the EU were chemicals, transportation equipment, computer/electronic products, and oil and gas. Imports into the US from the EU decreased to $465.1 billion in 2020 from $514 billion the year before. Top imports from the EU to the U.S. were chemicals, transportation equipment, non-electrical machinery, and computer and electronic products.
The U.S. and EU transatlantic economy support 16 million jobs, accounts for one third of world GDP, and 30% of world trade. 4.7 million jobs in the U.S. are directly supported by European companies in the U.S. (AmCham Europe Report). 14.8 million EU tourists traveled to the U.S. in 2015. The top five service exports from the US to the EU are: business services including Telecom, travel including passenger fares, royalties and licensing fees, financial services including insurance, and transport. The top five agricultural exports from the US to the EU are: tree nuts, soy beans, wine and beer, prepared food, and oils. The U.S. and EU are each other’s primary source and destination for foreign direct investment (FDI). The U.S. invested $3.6 trillion in the EU in 2018, representing 61% of total U.S. investment abroad, and the EU invested $3 trillion in the U.S., representing 68% of total FDI in the U.S.(AmCham Europe Report).
New Report: The Transatlantic Economy 2021: Annual Survey of Jobs, Trade and Investment between the U.S. and Europe
AmCham Denmark, March 24, 2021
Joint Communication To The European Parliament, The European Council and The Council: A New EU-US Agenda for Global Change
European Commission, December 2, 2020
The guiding principles of a new transatlantic agenda
- The transatlantic partnership should work to advance global common goods,
providing a solid base for stronger multilateral action and institutions. It will support all
like-minded partners to join.
- The EU and the US should pursue common interests and leverage our collective
strength to deliver results on our strategic priorities.
- We should always look for solutions that respect our common values of fairness,
openness and competition – including where there are bilateral differences
Working together on technology, trade and standards
- The EU and the US must work closely together on solving bilateral trade irritants
through negotiated solutions and lead WTO reform efforts.
- Establish a new EU-US Trade and Technology Council to help, facilitate trade, develop compatible standards and promote innovation.
- The EU and the US should open a transatlantic dialogue on the responsibility of online platforms and Big Tech – starting by working together to find global solutions for fair taxation and market distortions in the digital economy.
- Develop a common transatlantic approach to protecting critical technologies in light of global economic and security concerns – starting by discussions on 5G.
- Work on an AI Agreement and intensify cooperation to facilitate free data flow with trust.
- Renew cooperation on regulation and standards, starting by re-engaging on conformity assessment negotiations and aligning positions in international bodies.
“The Transatlantic Economy 2020,” confirms that the United States and Europe share the most integrated and economic partnership globally. Today, the relationship is being tested by the recent impact of the Coronavirus on supply chains and demand, persistent trade disputes, and uncertainty about the contours of the UK’s future economic relationship with the EU. No place in the world has attracted more U.S. foreign direct investment than Europe, and Europe remains by far the largest source of foreign investment into the U.S. Moreover, the digital revolution is dramatically reshaping what can be traded and delivered electronically, leading to record levels of services exports in both directions. The transatlantic economy:
- supports more than 16 million jobs on both sides of the Atlantic,
- generates more than $5.6 trillion in commercial sales a year,
- accounts for half of total global personal consumption
The Transatlantic Economy 2019
U.S. Chamber, March 20, 2019
EU-Canada Comprehensive Economic and Trade Agreement (CETA)
European Commission, 2017
CETA in Your Town
European Commission, 2017
President Jean-Claude Juncker’s State of the Union Address 2017
European Commission, September 13, 2017
Photo Release: Czech Republic Signs California-Led Under 2 MOU Climate Agreement
Governor’s Office April 4, 2016
Germany and the Euro Zone Balance of Power: Transatlantic Trade to the Rescue? AICGS, June 24, 2013
A New Trade Relationship with Europe? The Ripon Forum, Summer 2012
Transatlantic Economy Remains Pivotal
The Transatlantic Economy 2012, a new report by Johns Hopkins University (SAIS), the European American Business Council and the American Chamber of Commerce in the EU, details how despite the recession, the US and Europe remain each other’s most important markets. No other commercial artery in the world is as integrated. The US and Europe are each other’s primary source and destination for foreign direct investment.The entire Transatlantic Economy report is available here.
October 2011, the European Commission published a policy on corporate social responsibility (CSR). By taking steps to better meet their social responsibility, enterprises can help themselves and help society as a whole. The European Commission’s strategy on CSR aims to create conditions favorable to sustainable growth and employment generation in the medium and long term.
In November, 2011, several business organizations sent a letter to EU Commissioner for and U.S. Deputy National Security Advisor for International Economic Affairs welcoming the reinvigoration of the U.S.-EU Investment Dialogue and urging support for strong principles on the treatment of foreign investment by third countries. The letter states:”The October meeting of U.S. and EU investment policy officials, the first since 2008, clearly re-established that the European Union and the United States share a common agenda on investment issues, as outlined in our July 14 letter as well as the May 2008 Joint Statement. We look forward to further active and substantive efforts by you as TEC Co-chairs and your administrations in this area.” Background
Beginning with the Treaty of Rome in 1957, the European Economic Community began a process that led to the adoption of standards designed to implement freedom of labor, capital, goods and services. This continues as the cornerstone of the development of the ‘single European market’ instituted on January 1, 1993.The November 1, 1993, Maastricht Treaty took the European Community even further, creating European citizenship and a three-part framework:
- a detailed plan for economic and monetary union;
- authority for a common foreign and security policy; and
- policies for justice and domestic affairs.
Membership in the single currency, known as the euro, includes Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Britain, Sweden and Denmark have chosen to retain their national currencies. On January 1, 1999 governments, businesses and banks started using the euro in their accounting. On January 1, 2002, national currencies were discontinued and euro bills are being used for day-to-day commerce. On March 1, 2002, domestic currencies within the euro zone lost their legal status.
The EU Presidency rotates between each member country, taking turns for six months at a time as chair of EU meetings and representing the European Union at international events.On October 29, 2004, 25 European government leaders signed the European Union’s first constitution. The measure was written to establish a process to select a continent wide president and foreign minister, as well as increase the European Parliament’s power and influence on issues like agriculture and foreign trade.In November 2004, European nations began the process of voting for the constitutional treaty. Twelve countries approved the constitution (Austria, Cyprus, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Slovakia, Slovenia, and Spain), but France and the Netherlands both rejected the treaty in national referendums. In response to these “no” votes, EU leaders have put the constitution on hold and are currently considering potential changes to the treaty. All 28 EU member states must approve the measure for it to go into effect.In December 2007, the Treaty of Lisbon was signed during the European Parliament. Because the “treaty establishing a constitution for Europe” was never ratified, the Treaty of Lisbon was necessary. This treaty’s objectives are to make the European Union more democratic by increasing accountability, openness, transparency and participation. The Treaty of Lisbon was ratified by all EU members, nearly a 2 year process concluding with the Czech Republic’s ratification on November 13, 2009.Negotiations to discuss Turkey’s membership in the European Union began in October 2005. The decision held several conditions, including the cessation of talks if Turkey does not continue to improve their record on human rights and democracy, as well as an agreement to curb a potential surge in labor migration out of Turkey upon joining. If the negotiations are successful, Turkey will be the first Muslim member of the European Union, and one of the largest. The accession process is due to end in 2014. Those who support Turkey’s membership status believe it can serve as a bridge between cultures, encouraging peace and stability in the region.
On May 17, 2002 in Madrid, President Ricardo Lagos President of Chile, Spanish Head of Government, José María Aznar, and the President of the European Commission, Romano Prodi, signed a historical agreement between Chile and the European Union. After three years of talks, a pact was struck which frees most of the $7.2 billion of trade between Chile and Europe, including contentious areas like fish and wine.
A proposed Euro-Mediterranean Free Trade Agreement between nations of the European Union and countries of the South Mediterranean is due to be established. Together with the European Free Trade Association (made up of non-EU member states Switzerland, Iceland, Liechtenstein, and Norway), the Euro-Mediterranean Free Trade Zone will include 600-800 million consumers.In December 2006, Balkan leaders signed a free trade agreement (the Central Europe Free Trade Agreement, or CEFTA) including Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Moldova, Montenegro, Romania and Serbia (including the UN administered area of Kosovo). Romania and Bulgaria left CEFTA when they became members of the European Union in January 2007. CEFTA consolidates 32 bilateral free trade agreements into one regional agreement. EU Trade Commissioner Peter Mandelson commented that, “CEFTA will replace the spaghetti bowl of regional FTAs in South Eastern Europe with a single agreement that will boost trade and attract investment. The expanded CEFTA will offer real economic benefits to all sides. But it also sends an important political signal. Closer trade relations in South Eastern Europe are a foundation for stability and growing prosperity.”In November 2005, U.S. Secretary of Commerce Carlos Gutierrez headed a U.S. delegation to the first informal EU-U.S. economic ministerial meeting in Brussels, where transatlantic economic integration and shared economic challenges were discussed. Business and government leaders from the United States and the European Union regularly participate in the Transatlantic Business Dialogue (TABD) to discuss priorities for eliminating trade and investment barriers across the Atlantic. The TABD includes senior representatives from companies from the European Union and United States who meet on a regular basis to discuss ways to ease the flow of bilateral trade. Representatives also gather for ‘early warning system’ meetings when potential trade disputes arise.
Trading Partner Portals
A Transatlantic Zero Agreement
Estimating the Gains from Transatlantic Free Trade in Goods
2010 study by the European Centre for International Political Economy (ECIPE) demonstrating the significant economic and trade benefits of eliminating tariffs on transatlantic trade. The report was prepared by ECIPE Director Fredrik Erixon and his team, with a grant from the U.S. Chamber and the Confederation of Swedish Enterprise, using widely respected economic models and techniques to project the GDP, national income, and trade effects from eliminating U.S. and EU tariffs on goods imported from the other party. Although both the U.S. and the EU have generally low tariffs, the huge volume of trade between the world’s two largest economies means that cost reductions and productivity gains from removing tariffs are significant.