5. EU Trade in Goods & Services

How much the EU trades in goods & services compared to other economies in the world

by a good deal the number 1 in goods, even more so in services

Composition of EU’s external trade in goods

mainly manufactured goods: around 65% of all exports & 60% of imports
import more fuel than export

EU main trading partners in goods (regions)

mainly trades internally (70% of exports, 70% of imports)
exports to more than imports from North America
exports to less than imports from Asia (East Asia, not Middle East)

EU main trading partners in goods (countries)

US, China, Switzerland

CET

Common External Tariff
(does not directly cover services)
tariff is quite low for most goods, but high for agriculture
sometimes 0 tariff for goods not made within the EU (no domestic industry to protect)

Composition of the EU’s external trade in services

biggest sectors value wise are

• other business services

• telecommunications, computer & information services

• charges for use of intellectual property

• travel

• transport

For every sector, only negative balance is in charges for use of intellectual property

EU main trading partners in services (countries

US, Switzerland, China

Modes of Supply for trading in services

• cross-border supply (through electronic means)

• consumption abroad (tourists come to exporting country)

• commercial presence (affiliate established in foreign country where there are importing consumers)

• presence of natural persons (person in foreign country where there are importing consumers)

commercial presence is the most important / common

EU main trading partners

US, China, Switzerland

External EU trade: goods v. services

trade in goods: 71%
trade in services: 29%

EU’s trade balance with main trading partners

Positive trade balance overall
positive with US
negative with China

EU trade competences during 1950s

Treaty of Rome: EU had supranational powers for external trade policy (“Common Commercial Policy”), individual member states could not legislate on trade matters or conclude international trade agreements

EU trade competences during 2010s

Lisbon Treaty 2009: Common Commercial Policy now includes trade in services, some parts of intellectual property rights, FDI (many prior bilateral arrangements now have to be cleared up)

Allocation of trade responsibilities within EU

TFEU: European Commission negotiates trade matters with third nations (in accordance with directives proposed by the Council & approved by the Parliament).
European Parliament now proposes trade legislation too

EU external trade policy goals 1958-2006

reciprocal tariff cuts with other European nations
reciprocal tariff cuts with non-European developing nations
unilateral tariff preferences for developing nations

EU external trade policy goals 2006 onwards

“Global Europe” strategy
want more FTAs with the following partners as priority:

• Association of Southeast Asian Nations

• South Korea

• India

• Mercosur (Argentina, Brazil, Paraguay, Uruguay (+Venezuela)

motivation: IMF forecasts that 75+% of global growth will be from China & other developing nations

EU external trade policy progress towards goals from 2006

FTA with South Korea
No FTA with India or ASEAN yet, still optimistic
Agreement but no ratification with Mercosur, some doubt

Renewed Lisbon strategy

First Lisbon strategy (2000) aim: focus on economic efficiency to reduce social inequalities in Europe. Failed

Renewed Lisbon strategy (2005) aim: focus on EU’s economic objectives, social cohesion will follow as a byproduct

EU existing trade arrangement categories

• trade arrangements within Europe

• preferential trade agreements with former colonies

• unilateral preferences to developing nations

• trade agreements with industrialised countries