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 article More on this topic

Blog Post

The next step of the Belt and Road Initiative: Multilateralisation with Chinese characteristics

The increasingly broad objective of China's Belt and Road Initiative has attracted the attention not only from the BRI members, but also from other major players such as the United States and the European Union.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: April 18, 2019
Read article More on this topic More by this author

Podcast

Podcast

Director's cut: EU-China partnership after the 21st EU-China summit

Guntram Wolff discusses with Alicia Garcia Herrero the results of the 21st EU-China Summit

By: The Sound of Economics Topic: Global Economics & Governance Date: April 12, 2019
Read about event More on this topic

Past Event

Past Event

Spitzenkandidaten series: Frans Timmermans

The sixth event in the The Road to Europe - Brussels Briefing Live: Spitzenkandidaten series. The series features the lead candidates for the European Elections of six parties and is jointly organised by Bruegel and the Financial Times in March and April 2019.

Speakers: Mehreen Khan, André Sapir and Frans Timmermans Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 11, 2019
Read about event More on this topic

Past Event

Past Event

Spitzenkandidaten series: Manfred Weber

The fifth event in the The Road to Europe - Brussels Briefing Live: Spitzenkandidaten series. The series features the lead candidates for the European Elections of six parties and is jointly organised by Bruegel and the Financial Times in March and April 2019.

Speakers: Anne-Sylvaine Chassany, Manfred Weber and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 9, 2019
Read article Download PDF More on this topic More by this author

Parliamentary Testimony

Promoting sustainable and inclusive growth and convergence in the European Union

This speech was delivered by Guntram Wolff at the Informal ECOFIN Meeting in Bucharest on 5 April 2019.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: April 8, 2019
Read article Download PDF More on this topic More by this author

Working Paper

Europe in the midst of China-US strategic competition: What are the European Union's options?

With the trade conflict between the United States and China bringing China-US strategic competition into the open, the European Union faces an urgent question: how to position itself in the competition.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: April 8, 2019
Read about event More on this topic

Past Event

Past Event

Spitzenkandidaten series: Jan Zahradil

The fourth event in the The Road to Europe - Brussels Briefing Live: Spitzenkandidaten series. The series features the lead candidates for the European Elections of six parties and is jointly organised by Bruegel and the Financial Times in March and April 2019.

Speakers: Jim Brunsden, Maria Demertzis and Jan Zahradil Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 4, 2019
Read article More by this author

Opinion

Europe and the new imperialism

For decades, Europe has served as a steward of the post-war liberal order, ensuring that economic rules are enforced and that national ambitions are subordinated to shared goals within multilateral bodies. But with the United States and China increasingly mixing economics with nationalist foreign-policy agendas, Europe will have to adapt.

By: Jean Pisani-Ferry Topic: Global Economics & Governance, Innovation & Competition Policy Date: April 3, 2019
Read about event More on this topic

Past Event

Past Event

Spitzenkandidaten series: Luis Garicano

The third event in the The Road to Europe - Brussels Briefing Live: Spitzenkandidaten series. The series features the lead candidates for the European Elections of six parties and is jointly organised by Bruegel and the Financial Times in March and April 2019.

Speakers: Luis Garicano, Mehreen Khan and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 3, 2019
Read about event More on this topic

Past Event

Past Event

Spitzenkandidaten series: Bas Eickhout

The second event in the The Road to Europe - Brussels Briefing Live: Spitzenkandidaten series. The series features the lead candidates for the European Elections of six parties and is jointly organised by Bruegel and the Financial Times in March and April 2019.

Speakers: Bas Eickhout, Guntram B. Wolff and Rochelle Toplensky Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 2, 2019
Read article More on this topic More by this author

Podcast

Podcast

Director's Cut: China's place in the global trading system

Bruegel director Guntram Wolff and senior fellow André Sapir discuss how potential WTO reform could better accommodate China.

By: The Sound of Economics Topic: Global Economics & Governance Date: March 28, 2019
Read article More on this topic More by this author

Opinion

Takeaways from Xi Jinping’s visit to France and Italy and ideas for the EU-China summit

The author appraises China's strategy towards Europe ahead of next month's EU-China summit.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: March 27, 2019
Load more posts