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

Reforming decision-making for EU taxation policy

How should the EU taxation policy be reformed?

Speakers: Johannes Becker, Pierre Moscovici, Paola Profeta and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 21, 2019
Read about event More on this topic

Upcoming Event

Feb
27
12:30

Diverging narratives: European policies and national perceptions

A look at the politicians' view of the EU.

Speakers: Pierre Boyer, Giuseppe Porcaro, Ruth Reichstein and Laura Shields Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic More by this author

Podcast

Podcast

Director's Cut: Balancing free trade with national security interests

In this episode of Director's Cut, Stephanie Segal of CSIS joins Bruegel's Guntram Wolff and Maria Demertzis for a conversation about the tension between free trade and national security issues, and the emerging threats to multilateralism.

By: The Sound of Economics Topic: Global Economics & Governance Date: February 19, 2019
Read article More on this topic More by this author

Blog Post

How the EU could transform the energy market: The case for a euro crude-oil benchmark

There is a strong case for an oil benchmark in euros. Trading energy markets in more than one currency is not unprecedented, and indeed used to be the norm. Europe – with its powerful currency and reliable regulatory environment – should stand a good chance of success.

By: Elina Ribakova Topic: Energy & Climate Date: February 13, 2019
Read about event More on this topic

Past Event

Past Event

The world’s response to China’s Belt and Road Initiative

This event will look at the Chinese Belt and Road Initiative as well as the response from the rest of the world.

Speakers: George Cunningham, Uri Dadush, Jean-Francois Di Meglio, Theresa Fallon, Alicia García-Herrero and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 8, 2019
Read article More on this topic More by this author

Podcast

Podcast

Director's Cut: Reflections on five years of China's Belt and Road Initiative

Bruegel fellows Alicia García-Herrero and Uri Dadush join Guntram Wolff for this Director's Cut of 'The Sound of Economics', focusing on the progress made by China's Belt and Road Initiative, how it will continue to develop, and the reactions it has stirred across the world.

By: The Sound of Economics Topic: Global Economics & Governance Date: February 7, 2019
Read article Download PDF More on this topic

Working Paper

Countries’ perceptions of China’s Belt and Road Initiative: A big data analysis

Drawing on a global database of media articles, the authors quantitatively assess perceptions of China’s Belt and Road Initiative (BRI) in different countries and regions. They also identify the topics that are most frequently associated with the BRI.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: February 6, 2019
Read article More on this topic More by this author

Blog Post

The American tax debate

The debate over two different proposals for tax reforms: Senator Elizabeth Warren’s plan for a tax on wealth, and Congresswoman Alexandria Ocasio-Cortez’s plan for a higher top marginal tax rate on income

By: Enrico Bergamini Topic: Global Economics & Governance Date: February 4, 2019
Read about event More on this topic

Past Event

Past Event

Rules-based trading system and EU-Australia

At this event the Australian Minister for Trade, Tourism and Investment, Senator the Hon Simon Birmingham will speak about Australia-EU bilateral trade, the FTA negotiations and the importance of multilateral rules-based trading system

Speakers: Senator the Hon Simon Birmingham, André Sapir and Guntram B. Wolff Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: January 22, 2019
Read article More by this author

Blog Post

What 2019 could bring: A look inside the crystal ball

Economic performance prospects in Europe, the US and Asia in 2019. We start off by reviewing commentaries and predictions about the euro zone, which many commentators expect to perform below potential as uncertainties continue to dampen a still robust recovery.

By: Michael Baltensperger Topic: European Macroeconomics & Governance, Global Economics & Governance Date: January 14, 2019
Read article Download PDF More on this topic

Policy Contribution

The Belt and Road turns five

Five years after its launch, Michael Baltensperger and Uri Dadush reflect on China’s Belt and Road Initiative. The plan to revive ancient trade routes has the potential to enhance development prospects across the world and in China, but that potential might not be realised because the BRI’s objectives are too broad and ill-defined, and its execution is too often non-transparent, lacking in due diligence and uncoordinated.

By: Michael Baltensperger and Uri Dadush Topic: Global Economics & Governance Date: January 10, 2019
Read article More on this topic More by this author

Opinion

Lose-lose scenario for Europe from ongoing China-US negotiations

Without an expectation of a larger market for European exports in the absence of additional opening up by Chinese authorities, European exporters should not enjoy the ongoing China-US negotiations.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: January 9, 2019
Load more posts