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- Data from September 2010, most recent data: Further Eurostat information, Main tables and Database.
The European Union (EU) has a common trade policy (known as the common commercial policy). In other words, on trade issues, including issues related to the World Trade Organization (WTO), the EU acts as a single entity. In these cases, the European Commission negotiates trade agreements and represents Europe’s interests on behalf of the EU’s 27 Member States.
The EU Treaty (TEU) establishes the overall aims and objectives of the EU’s trade policy: Article 3 sets out the general aims, including a highly competitive social market economy, aimed at full employment and social progress. Article 206 of the Treaty on the functioning of the Union (TFU) explains how the common commercial policy must operate in principle: ’to contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers’. Article 207 of the TFU sets out the scope, instruments and decision-making procedures. Article 218 of the TFU establishes the current inter-institutional procedure for the conclusion of international agreements, principally by the Council.
The EU’s trade policy aims to make the EU competitive in foreign markets. Being an open economy, the EU seeks to secure improved market access for its industries, services and investments, and to enforce the rules of free and fair trade. A coordinated trade policy takes on even greater importance in an era of globalisation, when economies and borders have opened up, leading to an increase in trade and capital movements, and the spread of information, knowledge and technology, and involving a process of deregulation. The economic impact of globalisation on the EU is felt through trade in goods and services, as well as through financial flows and the movement of persons linked to cross-border economic activity.
Globalisation acquires a higher profile when it is measured by actual trade flows. Within the EU, there are two main sources of trade statistics. One is international trade in goods statistics (ITGS), providing information on trade in merchandise goods, collected on the basis of customs and Intrastat declarations. This provides highly detailed information on the value and quantity (volumes) of international trade in goods as regards the type of commodity. The second main source is balance of payments statistics (BoP), which register all the transactions of an economy with the rest of the world. The current account of the BoP provides information on external trade in goods and services, as well as income (from employment and investment) and current transfers. For all these transactions, the BoP registers the value of exports (credits) and imports (debits).
Main statistical findings
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In 2009 the EU-27 economy reversed its previous trend of progressively more integration with the international economy in terms of its level of credits and debits relative to GDP. The average value of EU-27 trade flows of goods corresponded to 9.7 % of GDP in 2009, down from the 11.3 % share of the previous year. The level of trade integration of services also fell from 3.9 % of GDP in 2008, to 3.8 % in 2009. As can be seen from Figure 1 this was the first fall for goods after five years of increased integration, and for services it followed four years of increased integration.
Data sources and availability
The article on external trade in goods gives an overview of the EU’s trade in merchandise goods (within the ITGS framework) while the article on international trade in services provides an overview of its trade in services (within the BoP framework). The global financial and economic crisis which started in 2007 had a huge impact on the international exchange of goods and services and on the intensity of global financial flows and business activity. These effects are clearly evident in the data presented in these two articles. The upward trend of the EU trade in goods and services ceased in 2009. However, as the crisis was a global economic shock, the EU-27 remains the largest global exporter and importer of goods.
Trade integration of goods and services is defined as the average value of debits and credits (summed and divided by two), presented in relation to GDP: the terms credits and debits are used for international trade in services which can roughly be considered to be equivalent to exports and imports. This indicator is calculated for both goods and services, based on balance of payments data; if the values increase over time, then the reporting territory became more integrated within the international economy. It is normal that smaller countries will display a higher degree of trade integration, as they are more likely to import a range of goods and services that are not produced within their domestic markets.
