The EU-U.S. Economic Partnership: A Defining Feature of the Global Economy
The scale and interconnected nature of the transatlantic economic relationship is unparalleled in the world, with the EU and U.S. together accounting for nearly 30 percent of global merchandise trade, about 40 percent of world trade in services, and well over half of foreign direct investment. In 2012, 45 of 50 U.S. states exported more to Europe than to China – by a wide margin in many cases.
Investment is the real driver of the transatlantic relationship, contributing to jobs and growth on both sides of the Atlantic. Despite recent economic challenges, the United States consistently directs half of its total foreign direct investment (FDI) each year toward the European Union, and the EU’s FDI in the U.S. continually accounts for almost two-thirds of America’s total incoming investment. Approximately 15 million jobs are linked to the transatlantic economy.
In 2012, U.S. investment in the EU was more than three times the total U.S. FDI in the entire Asia-Pacific region. During the same period, EU FDI in the U.S. was almost four times larger than the combined investment by the Asia-Pacific region in the U.S.
Globally, either the EU or the U.S. is the largest trade and investment partner for almost all other countries in the world.
The Free Flow of Goods and Services across the Atlantic
The EU and the United States are each other’s leading partners by trade volume (imports plus exports). Every day, the EU and the U.S. trade goods and services worth $2.7 billion. However, the enormous potential of the transatlantic commercial relationship is far from fully exploited. Given the low average tariffs—under 3 percent—the key to maximizing transatlantic trade lies in not only eliminating these but also tackling non-tariff barriers, including customs procedures, diverging regulatory systems, or measures that can hinder small and medium-sized companies. These non-tariff obstacles generally concern differing requirements for products and procedures that can increase costs, decrease trading efficiency, and limit consumer choice.
The Transatlantic Trade and Investment Partnership
Launched in 2013, the current Transatlantic Trade and Investment Partnership (TTIP) negotiations between the EU and the United States are designed to increase trade and investment across the Atlantic by reducing and, where possible, eliminating remaining barriers to transatlantic trade and investment, whether they are tariffs on farm or manufactured products, restrictions on foreign service suppliers, or limitations on investment possibilities.
A successful agreement will generate new job opportunities for and growth through increased market access and greater regulatory compatibility, while facilitating the development of international standards. By liberalizing most sectors of the transatlantic economy—including manufactured goods, agricultural products, services, and investment—a TTIP agreement will not only remove the main trading obstacles of the past, but also look toward the future: preventing new regulatory barriers; establishing mechanisms that enable a further deepening of economic integration over time; and enhancing cooperation for the development of rules and principles on global issues of common concern.
The Transatlantic Economic Council
Established in 2007, the Transatlantic Economic Council (TEC) advances EU-U.S. economic integration by bringing together governments, the business community, and consumers to work on key areas where greater regulatory convergence and understanding can reap rewards on both sides of the Atlantic.
Chaired by the EU Trade Commissioner and the U.S. Deputy National Security Adviser for International Economic Affairs, the TEC offers a high-level forum to address complex areas like investment, the financial markets, mutual recognition of accounting standards, and secure trade. It provides the opportunity to defuse transatlantic trade disputes as standards are being developed, rather than after the fact.
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