Blog Post

Is it a Transatlantic, Transpacific or Eurasian global economy?

A look at the data on bilateral trade, services, investment and protectionism between Asia, Europe and the US in recent years gives some indication of the future shape of the world economy.

By: Date: February 14, 2018 Topic: Global Economics & Governance

As the US trade policy has changed with the new administration, many now consider that the EU and Asia have to step up as champions of globalisation. However, Eurasian economic relations have already been more intense than each side’s relations with the US in some dimensions. In this post we look at the data on bilateral trade, services, investment and protectionism between Asia, Europe and the US in recent years.

The chart below shows the evolution of trade volume in recent years – the sum of exports of goods in both directions. EU-Asia trade in goods is by far the most important, peaking at $1.8tn in 2013, consistently more than double the Transatlantic trade. Even looking at the more narrow EU-China trade shows that this trade relation is already bigger than US-China trade.

To Asia, the EU is a greater export destination than the US and likewise, to the EU, Asia is a greater export destination than the US, as shown below. This means the Eurasian trade relation is more important to both partners than their relation with the US.

Another facet of trade is services. The chart below shows the Transatlantic relation is the most important one with regards to trade in services, with a peak at $500bn-worth of services exchanged in 2014.

The Transpacific and Eurasian services relations have experienced moderate growth over the past six years, reaching $299bn and $321bn in 2015 respectively. The Eurasian trade in services is slightly higher than the Transpacific one, although the gap has narrowed.

As can be seen in the chart below, the Transatlantic foreign direct investment (FDI) relations are also far deeper than the other relations. In fact, these strong relations have resulted in deeply intertwined investment stocks across the Atlantic, with $5.8tn-worth of bilateral FDI in 2015. Nevertheless, the Eurasian relation was already deeper than the Transpacific one back in 2009, with $1.1tn- vs $0.8tn-worth of disclosed bilateral FDI.

This gap has persisted over time: in 2015 the Eurasian figure was $1.6tn against $1.3tn for the Transpacific disclosed FDI. We see that Europe is the main investor abroad among the three regions: in 2015, Europe owned $1.2tn-worth of investment in Asia and $2.9tn-worth of investment in the US.

So far we have looked at the exchanges between the US, Europe and Asia. What about policies? The chart below presents information on how trade policies affect the three intercontinental relations we consider. It leverages the Centre for Economic Policy Research’s database on trade policy.

Specifically, the database records every protectionist announcement made by one partner that concerns products currently imported from the other partner. For example, in 2015 the US made 96 protectionist announcements affecting its imports from the EU and the EU made 53 protectionist announcements affecting its imports from the US. We then compute the sum of these two numbers (149) as an indicator of how friendly the EU and US trade policies were towards each other in 2015.

As we can see, Eurasian and Transpacific policies are still much less friendly than Transatlantic policy, with almost twice as many protectionist announcements. Though the gap has narrowed, the Eurasian relation seems slightly less developed than the Transpacific one in terms of trade policy. All three trade relations have seen an increase in protectionist announcements impeding their mutual exchanges since 2012.

The data presented in this post shows that in many aspects, the Eurasian relation is already running deep and, for trade in goods, deeper than their Transpacific and Transatlantic counterparts. For FDI and services, we see that the Eurasian relation is already slightly deeper than the Transpacific one. Nevertheless, in terms of trade policy, the Transpacific relation has been friendlier than the Eurasian one since 2009.

With the current US administration, the One Belt One Road initiative and the trade agreements the EU and some Asian countries currently negotiate, the Eurasian relation might develop further. Rather than a Transpacific one, we are already well on our way towards a Eurasian century.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read about event More on this topic

Past Event

Past Event

What European trade policy in face of an emerging global trade war

On 25 April Bruegel is pleased to host Bernd Lange, Chair of the European Parliament's committee on International Trade.

Speakers: André Sapir, Bernd Lange and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 25, 2018
Read article More on this topic

Opinion

Why this round of U.S. protectionism is different

Although it is not the first time that the world has been caught in the China-U.S. crossfire, this round of U.S. protectionist moves against China is very different, and more worrisome than past ones. They involve a much larger number of products and in that they also target the global competition for U.S. companies and not only the U.S. market. It is in no way just a poker game launched by the U.S. to reduce its bilateral trade deficit with China, but the herald of an era of China-U.S. strategical competition.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: April 24, 2018
Read about event More on this topic

Upcoming Event

May
3
09:30

Protecting EU firms without protectionism

Do we need more effective support for EU companies, more targeted to threatened sectors of strategic importance to the EU? Do we need to revise our competition policy rules on state aid to allow for a more strategic industrial policy support? Do we need new policy approaches to prepare for a changing global environment?

Speakers: Vincent Aussilloux, Tomas Baert, Paolo Casini, Gert-Jan Koopman, André Sapir, Reinhilde Veugelers and Focco Vijselaar Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic More by this author

Blog Post

Trade Wars: what are they good for?

Following the US announcements in early March of their intent to impose steel and aluminum tariffs, and the subsequent threats from China to retaliate with their own tariffs, the global trade picture remains uncertain. The IMF and the World Bank Spring Meetings set off amid US-Japan bilateral negotiations and Trump’s hot-and-cold approach to the TPP. This week we review blogs’ views on tensions over international trade and how they can impact world economic growth.

By: Inês Goncalves Raposo Topic: Global Economics & Governance Date: April 23, 2018
Read about event More on this topic

Past Event

Past Event

The current state and future of the world trading system

This event will discuss the current state of the multilateral trading system and how it might evolve in the future.

Speakers: Iana Dreyer, Marc Vanheukelen, Everton Vargas, André Sapir and Xia Xiang Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 19, 2018
Read article More by this author

Podcast

Podcast

Director's Cut: EU risks US tariff pain in standing by the WTO

As global trade war continues to unfold, Bruegel director Guntram Wolff is joined for this Director's Cut of 'The Sound of Economics' podcast by Bernd Lange MEP, chair of the Committee on International Trade (INTA), to discuss Europe's options.

By: The Sound of Economics Topic: European Macroeconomics & Governance, Global Economics & Governance Date: April 18, 2018
Read article More on this topic

Blog Post

Free trade in Africa: An important goal but not easy to achieve

The signing of the African Continental Free Trade Agreement and the Kigali Declaration may signal a new push towards economic integration on the African continent. However, it remains to be seen how many more countries sign up, how successfully 'phase two' is implemented later this year, and whether the agreement can be built upon to more comprehensively promote trade in services and a reduction of non-tariff barriers.

By: Marek Dabrowski and Yana Myachenkova Topic: Global Economics & Governance Date: April 13, 2018
Read article More on this topic

Blog Post

The European Globalisation Adjustment Fund: Time for a reset

It is only in the last decade that the EU has had an active policy to reintegrate workers who lost their jobs as a result of globalisation, through the European Globalisation Adjustment Fund (EGF). In this blog, the authors assess the performance of the Fund and make three recommendations to improve its effectiveness. To be more successful, the Fund should improve its monitoring and widen the scope of its usage.

By: Grégory Claeys and André Sapir Topic: European Macroeconomics & Governance Date: April 11, 2018
Read article More on this topic More by this author

Opinion

US Tariffs Aim to Contain China’s Technological Rise

While tension increases with each of the imports listed under the new tariffs, it now seems clear that the US are trying to slow down China's technological advances. Though such a protectionist attitude represents an obstacle, China should consider it an opportunity to strengthen relations with its Asian neighbours and the EU.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: April 10, 2018
Read article More on this topic More by this author

Opinion

What Are the Targets in the US–China Trade War?

Following the US announcement of new, high tariffs on imports, China is answering the Trump administration by applying its own series of tariffs. In this article, the author identifies the list of products that each country will be targeting, going beyond purely trade issues as each attempts to weaken the other.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: April 10, 2018
Read article More by this author

Opinion

How Should the EU Position Itself in a Global Trade War?

It is high time for the EU to work on more than just wishful thinking in response to the US challenge to global trade. With the first cracks appearing in the multilateral system, it will be difficult for the EU to maintain a middle course between the US and China.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance, Global Economics & Governance Date: April 5, 2018
Read article More on this topic More by this author

Podcast

Podcast

Director’s Cut: A global trade triumvirate?

In this week’s Director’s Cut of ‘The Sound of Economics’ podcast, Bruegel director Guntram Wolff hosts a discussion with Bruegel fellows Alicia García-Herrero and André Sapir on where Europe will position itself between the two major trading powers of China and the United States if relations continue to cool.

By: The Sound of Economics Topic: Global Economics & Governance Date: March 27, 2018
Load more posts