Annex: The European Union in the World

Annex: The European Union in the World

The European Union is globally interconnected like no other association of states. Although the EU's share of world trade has fallen slightly in recent years, it remains at a high level and represents an important foundation for the EU's growth, competitiveness and employment.

Although the EU population accounts for just under six percent of the world's population36 , in 2020, the EU's total exports (goods) accounted for 31 percent of global exports (including intra-EU trade). In 2020, the European Union thus ranked first, ahead of China (14.7 %) and the United States, whose share was 8.1 percent. In 2020, the EU's total imports (goods) amounted to 28.8 percent of global imports (including intra-EU trade). In 2020, the European Union was thus well ahead of the U.S. at 13.5 percent. China ranked third with a share of 11.5 percent. 37 EU exports secured 36 million jobs in Europe in 2017. This figure has increased by two-thirds since 2000.

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The export ratio of the 27 EU Member States – the ratio of exports of goods and services to gross domestic product (GDP) – was 46.7 percent in 2020. 39 This corresponds to a minus of 2.7 percent compared to the previous year. However, imports are also important for the EU-27: The import ratio –the ratio of imports to GDP – was 42.7 percent in 2020 – down two percent on the previous year. 40 These figures underline the importance of trade for the EU. According to initial estimates, extra-EU goods exports amounted to 148.3 billion euros in January 2021, a decrease of 10.8 percent compared to January 2020. Imports from the rest of the world amounted to 139.9 milli- billion euros, a decrease of 16.9 percent compared to January 2020. The EU registered a surplus of 8.4 billion euros in trade in goods with the rest of the world in January 2021. Compared to January 2020, intra-EU trade in January 2021 decreased by 5.4 percent to 244.9 billion euros.

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Due to the Covid-19 pandemic, imports and exports decreased in 2020 compared to 2019. As a result, the real GDP growth rate registered a decline of 6.1 percent in 2020. 42 EU exports recorded a decline of 9.3 percent. EU imports also decreased by 7.1 percent compared to the previous year. 43 In 2020, China was the European Union's most important trading partner overall, accounting for 16.1 percent of the EU's total external trade. The USA (15.2 %) and the United Kingdom (12.2 %) followed in second and third place. With a share of 18.3 percent of all EU exports, the United States was the top destination for European goods exports in 2020, followed by the United Kingdom (14.4%) and China (10.5%). The leading supplier of goods to the EU in 2020 continued to be China, with a share of 22.4 percent of all EU imports. The volume of goods imports from China was thus almost double that of the United States,

36 Worldbank, Population, total, <https://data.worldbank.org/indicator/SP.POP.TOTL> (accessed 12 April 2021). 37 World Trade Organization, Merchandise exports by product group – annual (Million U.S. Dollar) und Merchandise imports by product group – annual (Million U.S. Dollar), <https://data.wto.org/> (accessed 15 April 2021). 38 European Commission, Studie: Internationaler Handel sichert über 36 Millionen Arbeitsplätze in der EU, <https://ec.europa.eu/germany/news/20181127-handel-36-millionen-jobs-der-eu_de> (accessed 13 April 2021). 39 Eurostat, Exports of goods and services in % of GDP, <https://ec.europa.eu/eurostat/databrowser/view/tet00003/default/table?lang=en> (accessed 13 April 2021). 40 Eurostat, Imports of goods and services in % of GDP, <https://ec.europa.eu/eurostat/databrowser/view/tet00004/default/table?lang=en> (accessed 13 April 2021). 41 Eurostat, Überschuss des Euroraums im internationalen Warenverkehr in Höhe von 6,3 Mrd. Euro, Press release 35/2021, <https://ec.europa.eu/eurostat/documents/2995521/11562995/6-18032021-BP-DE.pdf/cb022f21-7d8c-148f-65380e463c86a782?t=1616088646979 > (accessed 13 April 2021). 42 Eurostat, Real GDP growth rate – volume, < https://ec.europa.eu/eurostat/web/products-datasets/-/tec00115&lang=en> (accessed 21 April 2021). 43 Federal Statistical Office, Zusammenfassende Übersichten für den Außenhandel: Vorläufige Ergebnisse, Fachserie 7 Reihe 1, <https://www.destatis.de/DE/Themen/Wirtschaft/Aussenhandel/Publikationen/Downloads-Aussenhandel/zusammenfassende-uebersichten-jahr-vorlaeufig-xlsx-2070100.html>, (accessed 13 April 2021).

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which followed as the second most important supplier with 11.8 percent. The United Kingdom (9.8 %) follows in third place.

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In the first eleven months of 2020, China was the EU's main trading partner. This result is due to an increase in imports (+ 4.3 %) and exports (+ 1.1 %). At the same time, trade with the United States recorded a significant decrease in both imports (- 13, 0 %) and exports (- 9.3 %). 45 The EU balance of trade in goods has shown a continuous surplus since 2012. In 2019, the EU recorded a plus of almost 200 billion euros. Due to the Covid-19 pandemic, international trade in goods, including the EU's trade in goods with its main trading partners, decreased, especially in the first half of 2020.

Foreign companies owned 34.2 percent of total EU assets in 2018. European companies owned 45.4 percent of foreign direct investment in 2018. China, on the other hand, allowed only 6.5 percent direct investment by foreign companies in 2018. 46 This leaves the EU with one of the most open investment systems in the world. International investment is an important driver of economic growth and jobs. 16 million jobs in the EU depend directly on foreign direct investment held by investors from third countries

Main trading partners of the European Union

2020, Share of extra-EU trade

China 16%

others 31%

India 2%

South Korea 3%

Norway 2%

Japan 3%

Turkey 4% Russia 5% United States 15%

Switzerland 7% United Kingdom 12%

Quelle: Europeam Commission, Client and Supplier Countries of the EU27 in Merchandise Trade (value%), <https://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_122530.pdf> (accessed 22 April 2021).

44 European Commission, Client and Supplier Countries of the EU27 in Merchandise Trade (value%), <https://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_122530.pdf> (accessed 22 April 2021). All figures exclude intra-EU trade. 45 Eurostat, Überschuss des Euroraums im internationalen Warenverkehr in Höhe von 25,8 Mrd. Euro, Press release 10/2021, <https://ec.europa.eu/eurostat/documents/portlet_file_entry/2995521/6-15012021-AP-DE.pdf/c114d653-00f1-5c62-fb408c70195cad76> (accessed 13 April 2021). 46 European Parliament, Die Europäische Union und ihre Handelspartner, <https://www.europarl.europa.eu/factsheets/de/sheet/160/die-europaische-union-und-ihre-handelspartner> (accessed 13 April 2021).

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(2017: 6.3 trillion euros). For years, there has been both a steady increase in foreign direct investment in key European sectors and an increase in investment from China. The traditional and largest investors, accounting for 80 percent of all foreign assets in all sectors of the EU economy, include the United States (2.2 trillion euros), Switzerland (800 billion euros), Canada, Norway, Japan and Australia. Investments by state-owned enterprises from China, Russia and the United Arab Emirates have grown particularly strongly. In 2017, they made three times more company acquisitions than in 2007.

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The Covid-19 crisis is having a massive impact on trade and economic growth not only in the European Union, but around the world. Especially in the early phase of the pandemic in 2020, there were production losses due to employee illnesses and a shutdown of production for infection control purposes. During the course of the year, a new normality in dealing with the threat of the Covid-19 pandemic gradually emerged, but the economic recovery to pre-crisis levels will take some time, despite expected economic growth.

After the gross domestic product of the European Union fell by more than six percent in 2020, the European Commission expects the European economy to grow again in the next two years. The GDP is expected to grow by 3.7 percent in 2021 and by 3.9 percent in 2022. Due to the different effects of the pandemic on the EU Member States, it can be assumed that the speed of the economic recovery will also vary within the EU.

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47 European Commission, Ausländische Direktinvestitionen: Kontinuierlicher Anstieg ausländischen Firmeneigentums in Schlüsselsektoren der EU, <https://ec.europa.eu/germany/news/direktinvestitionen20190313_de> (accessed 13 April 2021). 48 European Parliament, Ausländische Direktinvestitionen: EU-Interessen schützen, <https://www.europarl.europa.eu/news/de/headlines/economy/20180122STO92231/auslandische-direktinvestitionen-eu-interessen-schutzen> (accessed 13 April 2021). 49 European Commission, European Economic Forecast, Winter 2021, Institutional Paper 144, February 2021, <https://ec.europa.eu/info/sites/info/files/economy-finance/ip144_en_1.pdf> (accessed 13 April 2021).

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