EUROPEAN UNION - UNITED STATES OF AMERICA SUMMIT - USA IS EU’S LARGEST TRADE AND INVESTMENT PARTNER

No. 64/05
June 20, 2005

EU - USA SUMMIT
USA IS EU’S LARGEST TRADE AND INVESTMENT PARTNER

Goods

Taking goods and services together, the EU25 and the USA are each other's main trading partners, and account for the largest bilateral trade relationship in the world. The EU25 and the USA are also each other’s most important source for foreign direct investment¹ (FDI). The huge amount of bilateral trade and investment illustrates the high degree of interdependence of the two economies.
On the occasion of the European Union - USA summit--which will take place on Monday, 20 June, in Washington--Eurostat, the Statistical Office of the European Communities, issued data on trade and investment between the USA and the EU25.

USA: a quarter of extra-EU25 exports of goods and 15% of imports in 2004

In 2004, the EU25 exported around 235 billion euro of goods to the USA, while imports amounted to 160 billion. The most notable feature of EU-US trade over recent years has been the continued growth in the EU25 surplus: from just over 20 billion in 1999 to more than 75 billion in 2004. This increase in the surplus is in particular due to a decrease in the level of imports from the USA, which have fallen by a quarter from their peak of 205 billion in 2000. In relative terms, EU25 imports from the USA fell from 22% of total EU25 imports in 1999 to 15% in 2004, while exports declined from 27% in 1999 to 24% in 2004. Around 45% of EU25 exports to the USA, and half of EU25 imports from the USA, were “machinery and vehicles².”

Among the EU25 Member States, Germany was the largest exporter to the USA in 2004, with 65 billion, or 28% of the total, followed by the United Kingdom (40 billion or 17%). The United Kingdom (35 billion or 22%) and Germany (32 billion or 20%) were also the largest importers. Most Member States recorded a surplus in trade with the USA in 2004. The largest surpluses were registered by Germany (+33 billion), Italy (+12 billion) and Ireland (+10 billion), and the largest deficit by the Netherlands³ (-8 billion).

EU25 trade in goods with the USA
million euro

	1999	2000	2001	2002	2003	2004
USA
Exports	186 573	237 588	244 881	247 044	226 526	234 140
Imports	165 340	205 643	202 533	181 824	157 386	157 670
Balance	21 233	31 945	42 348	65 220	69 140	76 470
Total Extra-EU25
Exports	689 434	857 782	895 843	903 549	883 047	968 215
Imports	746 622	995 980	983 748	942 207	940 814	1 029 464
Balance	-57 188	-138 198	-87 904	-38 658	-57 767	-61 249
USA / total extra-EU25
Exports	27%	28%	27%	27%	26%	24%
Imports	22%	21%	21%	19%	17%	15%

EU25 trade in goods with the USA by product
million euro

	Exports		Imports		Balance
	1999	2004	1999	2004	1999	2004
Total	186 573	234 140	165 340	157 670	21 233	76 470

Primary products:	14 452	24 915	13 328	13 429	1 124	11 486
Food & drink	7 958	9 800	5 569	5 272	2 389	4 528
Crude materials	1 800	3 023	6 168	5 655	-4 368	-2 632
Energy	4 694	12 092	1 592	2 502	3 103	9 591
Manufactured goods:	168 440	205 303	146 983	141 334	21 457	63 969
Chemicals	27 421	46 575	20 984	31 184	6 436	15 391
Machinery & vehicles	94 193	102 813	93 498	79 181	695	23 631
Other manuf’d articles	46 826	55 915	32 501	30 969	14 325	24 947
Other	3 681	3 921	5 029	2 907	-1 348	1 015

EU25 and Member States trade in goods with the USA
million euro

	Exports		Imports		Balance
	1999	2004	1999	2004	1999	2004
EU25	186 573	234 140	165 340	157 670	21 233	76 470
Belgium	8 756	16 023	11 648	12 877	-2 893	3 146
Czech Republic	583	1 261	1 042	1 061	-459	201
Denmark	2 615	3 439	2 202	1 778	414	1 662
Germany	51 425	64 801	30 030	31 922	21 395	32 879
Estonia	43	152	91	113	-47	40
Greece	561	648	1 411	1 887	-850	-1 239
Spain	4 459	5 754	6 136	5 938	-1 677	-184
France	24 086	24 044	23 490	19 025	597	5 019
Ireland	10 242	16 500	6 957	6 750	3 286	9 749
Italy	20 547	22 374	10 024	9 993	10 524	12 382
Cyprus	12	13	156	108	-143	-94
Latvia	92	95	56	75	35	19
Lithuania	116	371	172	156	-56	214
Luxembourg	287	252	926	481	-639	-229
Hungary	1 220	1 336	909	1 034	311	302
Malta	396	333	225	160	171	173
Netherlands³	8 096	12 296	18 451	20 316	-10 355	-8 020
Austria	2 837	5 667	2 727	1 858	110	3 809
Poland	711	1 457	1 553	1 154	-842	303
Portugal	1 140	1 741	1 059	1 047	81	694
Slovenia	244	401	277	225	-33	176
Slovakia	140	1 060	272	253	-133	807
Finland	3 179	3 175	1 711	1 350	1 469	1 825
Sweden	7 307	10 532	4 086	2 949	3 221	7 583
United Kingdom	37 477	40 416	39 730	35 162	-2 253	5 254

USA: a third of extra-EU25 trade in services

In 2004, the EU25 exported a little less than 120 billion euro of services to the USA, while imports of services from the USA amounted to a little more than 100 billion. The EU25 had a surplus of 15 billion in trade in services with the USA, which accounted for a third of total extra-EU25 trade in services. This surplus was mainly due to transportation services (+8 billion), as well as insurance, travel and financial services (+4 billion each), while royalties and license fees recorded the largest deficit (-8 billion).

Among the EU25 Member States, and as for trade in goods, the United Kingdom (29% of total exports and 19% of imports in 2003) and Germany (16% and 18% respectively) were the largest traders of services with the USA. Most Member States recorded a surplus in trade in services with the USA. The largest surpluses were registered by the United Kingdom (+12 billion) and France (+6 billion) and the largest deficit by Ireland (-11 billion).

EU25 trade in services with the USA
million euro

	Credit		Debit		Net
	2003	2004	2003	2004	2003	2004
Total	110 114	118 374	101 053	103 336	9 061	15 038
of which:
Transportation	21 339	24 972	15 742	16 548	5 597	8 425
Travel	17 875	19 980	15 779	16 077	2 097	3 903
Other services	70 496	72 997	68 336	69 378	2 160	3 619
of which:
Communications services	2 177	2 462	2 511	2 736	-334	-274
Construction services	1 170	954	775	685	394	269
Insurance services	7 821	6 299	1 698	1 991	6 123	4 309
Financial services	7 916	9 140	4 358	5 351	3 558	3 789
Computer and information services	5 846	5 516	3 979	4 194	1 868	1 321
Royalties and license fees	6 896	8 521	16 236	17 006	-9 339	-8 485
Other business services	31 869	33 562	32 609	31 384	-740	2 178
Personal, cultural and recreational services	1 983	1 958	3 534	3 609	-1 551	-1 651
Government services, other	4 816	4 583	2 636	2 421	2 181	2 163
Total extra-EU25	330 818	356 261	293 649	315 037	37 169	41 225
USA / total extra-EU25	33%	33%	34%	33%

EU25 and Member States trade in services with the USA, 2003
million euro

	Credit	Debit	Net
EU25	110 114	101 053	9 061
Belgium	6 160	4 371	1 789
Czech Republic	337	331	5
Denmark	2 497	2 039	458
Germany	17 959	18 108	-149
Estonia	100	48	52
Greece	4 906	2 376	2 530
Spain	5 230	4 951	279
France	14 678	8 184	6 494
Ireland	4 545	15 077	-10 531
Italy	5 009	6 759	-1 750
Cyprus	347	292	56
Latvia	150	50	101
Lithuania	78	60	18
Luxembourg	1 079	950	129
Hungary	864	1 444	-580
Malta	:	:	:
Netherlands	6 689	7 118	-430
Austria	1 863	2 924	-1 060
Poland	:	:	:
Portugal	681	495	186
Slovenia	67	101	-34
Slovakia	212	206	6
Finland	391	1 031	-640
Sweden	3 871	3 967	-95
United Kingdom	31 661	19 447	12 214

: Data not available

Large variation in EU25 FDI in the USA

In 2003, the EU25 invested nearly 54 billion euro in the USA and received just over 50 billion of US investment. The USA was the largest investment partner of the EU25, accounting for nearly 45% of both outward and inwards flows of FDI.

The United Kingdom was the main net investor in the USA in 2003, with a difference of 21 billion. The Netherlands was the main net recipient of US FDI, with a difference of 14 billion.

EU 25 FDI flows with the USA
(million euro)

	USA			Total Extra-EU25	USA / Extra-EU25
	2001	2002	2003	2003	2003
EU25 FDI (outward)	139 184	-8 875	53 720	126 229	43%
FDI in the EU25 (inward)	61 143	52 148	50 364	113 222	44%
Net EU25 FDI flows (outward minus inward)	78 040	-61 023	3 357	13 007

EU25 and Member States FDI flows with the USA, 2003**
(million euro)

	EU FDI flows in the US (outward)	US FDI flows in the EU (inward)	Net EU FDI flows (outward minus inward)
EU25	53 720	50 364	3 357
Belgium	293	2 017	-1 724
Czech Republic	12	180	-168
Denmark*	103	671	-569
Germany	4 830	4 951	-121
Estonia	c	15	:
Greece*	20	-48	68
Spain*	1 776	3 856	-2 080
France	6 256	3 489	2 767
Ireland	-616	-4 033	3 417
Italy	606	720	-114
Cyprus	3	6	-4
Latvia	3	23	-20
Lithuania	:	16	:
Luxembourg	2 700	5 413	-2 713
Hungary	-4	240	-244
Malta	:	:	:
Netherlands	12 753	26 867	-14 114
Austria	88	792	-704
Poland	-16	486	-502
Portugal	51	84	-33
Slovenia	-61	9	-69
Slovakia*	1	6	-5
Finland	-1 249	669	-1 918
Sweden*	1 772	-1 251	3 023
United Kingdom	26 262	4 971	21 291

Negative sign stands for disinvestment

: Data not available
c Confidential
* Excluding reinvested earnings
** Data include Special Financial Institutions, holding companies specialized in making FDI
transactions

1. Foreign direct investment (FDI) is the category of international investment that reflects the objective of obtaining a lasting interest by an investor in one economy in an enterprise resident in another economy. The lasting interest implies that a long-term relationship exists between the investor and the enterprise and that the investor has a significant influence on the way the enterprise is managed. Such an interest is formally deemed to exist when a direct investor owns 10% or more of the ordinary shares or voting power on the board of directors (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). FDI flows presented here include re-invested earnings, unless specified.

2. Machinery and vehicles includes power-generating and industrial machinery, computers, electric and electronic parts and equipment, road vehicles and parts, ships, airplanes and railway equipment.

3. Dutch imports, and therefore the trade deficit, are over-estimated because of the “Rotterdam effect,” where goods destined for the rest of the EU arrive and are recorded in harmonized EU external trade statistics in Dutch ports. This then has a positive effect on the external trade balances with the USA of those Member States to which the goods are re-exported, as these shipments would be recorded as intra-EU trade with the Netherlands, rather than extra-EU trade with the USA.

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