Eurostat announced on the 15th that the total merchandise trade between the EU-27 and China in 2020 will be 586 billion euros, larger than the trade with the United States (555 billion euros). Many media have declared that China has replaced the United States as Europe’s largest trading partner. Daniel S. Hamilton, director of the Europe Program at the Wilson Center, wrote earlier that this claim omits services trade, and that the total services trade between the U.S. and Europe in the first three quarters of 2020 (€296.3 billion) is five times greater than the total services trade between Europe and China (€53.3 billion), and that the U.S. and the EU remain each other’s most important trading partners and most important business markets. The U.S. and the EU remain each other’s most important trading partners and each other’s most important business markets.
The European edition of Politico.eu published an article by Hamilton earlier today, pointing out that the Eurostat report only covers trade in goods. But trade between countries includes more than goods. It also includes trade in services, which Eurostat’s report does not cover. Trade in services is growing faster than trade in goods. Jobs in Europe and the U.S. depend more on services than on goods, and the U.S. remains the EU’s largest services trading partner.
Hamilton likens the U.S.-China/Europe-China business link to a two-lane highway, while the business link between Europe and the U.S. is more like a 12-lane highway.
The highways to and from China are filled with goods. They are busy and crowded. Any type of traffic accident on a two-lane highway can cause traffic congestion. As the crowds witnessed supply chains were disrupted by the spreading Epidemic and the US-China tariff war.
The highway is bordered by narrow bike lanes that provide service. The EU and China have been busy building a new lane on the highway, which they see as an investment route that will eliminate some of the traffic flow and increase overall connectivity. Despite the signing of the China-EU Comprehensive Investment Agreement in December 2020, the investment route remains a construction site, as opposition has emerged from some member states and the European Parliament, and is likely to be subject to a renewed stalemate this year.
In contrast, the commercial highway linking the EU and the U.S. is more like a 12-lane highway. Not only are the speed limits more relaxed and the cargo lanes wider, but there is also additional access to services, capital flows and company sales on both sides of the Atlantic. The transatlantic digital corridor carries 75 percent of the world’s digital content. The innovation corridor carrying R&D processes is most dense between the two international partners. The employment corridor provides jobs for 16 million Europeans and Americans.
On each of these indicators, the ties that bind the EU to the US are much thicker and far deeper than those that bind it to China. For example, in the first three quarters of 2020, U.S. companies invested $55 billion in Europe, seven times more than Chinese companies invested in Europe. Despite the recession caused by the outbreak, U.S. companies will still earn $254 billion in European operations by 2020, 23 times more than they earn in Chinese operations.
Hamilton noted that despite significant political and economic headwinds that have hampered the transatlantic relationship in recent years, the U.S. and the EU remain each other’s most important trading partners and each other’s most important business markets.
Hamilton, director of the Wilson Center’s Europe Program, said many in the media have misinterpreted Eurostat’s data.
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