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    • 2.2.1: Clarence K. Streit
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      • 2.2.4.1: Federal Union Inc. In 1941
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    • 3.1.1: G8/G20 Summits 2010
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    • 3.1.4: Transatlantic Economy
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    • 3.4.1: Strengthening Atlantic Institutions
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• 5: Publications
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    • 5.2.1: Transatlantic Community
    • 5.2.2: Transatlantic Security
    • 5.2.3: Transatlantic Economy
    • 5.2.4: Transatlantic Energy and Environment
  • 5.3: Books by Streit Council Board Members
  • 5.4: Publications by Streit Council Advisory Board Members
  • 5.5: Publications by Clarence Streit
  • 5.6: Publications – Early Leaders
  • 5.7: A Foreign Policy for the United States
  • 5.8: For a Union of the West
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Current Trends & Prospects

The Transatlantic Economy: Current Trends & Prospects

It is clear that the strength of the economic relationship between the EU and the US has the potential to outweigh most transatlantic tensions. This is because the combined economies of the EU and US account for nearly 45% of global GDP, 23% of world trade in goods and 30% of world trade in services.

Trade
The EU and the US are both among the largest players in global trade. In 2007, the total trade volume for the EU was $3.642 trillion dollars, while the US accounted for $3.116 trillion dollars. These two countries represent the two largest traders in the world. Furthermore, the EU and the US are each other’s main trading partners and account for the largest bilateral trade relationship in the world. The EU and the US both account for nearly one-fifth of each other's bilateral trade (which includes trade of goods and services), or what amounts to over €1.7 billion ($2.2 billion) per day. In 2008, exports of EU goods to the US amounted to €249.6 billion (19.1% of total EU exports), while imports from the US amounted to €186.4 billion (12.0% of total EU im­ports).

Investment
The investment links are even more substantial. In 2007, investment from the EU to the US was €113 billion, while investment from the US to the EU was €145 billion. The share of EU investment in the US amounted to more than 50% of EU foreign direct investment, while US investment in the EU was more than 61% of EU FDI inflows. Indeed, nearly 60% of global foreign direct investment is between the EU and the US.

Hamilton and Quinlan, “The Transatlantic Economy 2010: Annual Survey of Jobs, Trade, and Investment between the United States and Europe”

Potential and Benefits of Additional Transatlantic Integration
The economies on both sides of the Atlantic are working together in an effective fashion that is generating further trade, increasing jobs, and encouraging economic growth. Nevertheless, transatlantic economic integration still has enormous additional poten­tial.

Trade liberalization of services, often called the sleep­ing giant of US-EU economic relations, is a way to increase employment levels and economic growth. However, liberalization is often associated with legal and political problems as services are heavily regu­lated, especially in the EU; because of this, little has been done in this area.  A pointed expansion of the transatlantic trade of services is unlikely in the near future because this process will face similar problems as the WTO, who also struggled to liberalize the trade of services.

Nevertheless, efforts for transatlantic cooperation continue. In April 2007, European Commission President Barroso, German Chancellor Merkel and US President Bush signed the "Framework for Advancing Transatlantic Economic Integration between the USA and the EU." The signing of this framework signaled the need for transatlantic harmony, better goods, and less regulatory burden. This framework, among other things, established the Transatlantic Economic Council (TEC), which oversees and promotes the implementation of work designed to closer integrate the EU and US economies. The TEC brings together those who hold the political responsibility to foster closer economic ties.

Conclusion
The above information strongly suggests that the EU and US economies are interdependent to a very high degree; that is, the total trade and investment flow between the EU and the US amounts to about €2.7 trillion ($3.4 trillion) per day, which supports approximately 14 million jobs on both sides of the Atlantic Ocean.

Recently, however, both sides have struggled to efficiently develop stronger economic ties. The transatlantic economies can wield more clout, which will result in greater trade volume, larger investment, increased job creation, and ultimately, high economic growth rates, if - and only if - a unified and integrated transatlantic approach is utilized.  The work of the TEC and other organizations targets the unified transatlantic approach, but more must be done. Improving the economic relationship should come in three major areas: 1) All regulations, non-tariff barriers, and other procedures, all of which have led to an impasse in the transatlantic relationship, must be removed; 2) The EU and US economies could focus their energies on issues relevant to both: climate change, economic growth, and security, as this will encourage greater interconnectedness; 3) It is necessary for all countries involved to tackle their own domestic economic issues to rectify any consumer confidence issues.

Once these measures are taken, actors that participate in the transatlantic economy will reap the benefits from a stronger and better connected partnership with the other. For more information, click here.