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European Trade, Trade With Europe, Trade In The EU

By: EconomyWatch Date: 30 June 2010

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European trade is a complex but efficient system, involving 50 European countries in total, with 27 nations in the European Union (EU). Formed in 1993, the EU works on the same trade objectives as that of the European Economic Community (EEC). It has developed a ‘single market’ and ‘customs union’ among its member states.

European Trade: Significance of EU

Trade in the EU is characterized by free movement of goods, services and people. The freedom of capital flow facilitates uninhibited investment in the real estate and stock markets. All EU member countries follow the same trade policies for all sectors, including agriculture and fisheries. These two sectors account for a significant portion of exports.

Trade in the EU has become simpler with the adoption of the common currency known as the Euro by 16 member states. Benefits of using the Euro are:

Creates a single market

Maintains price stability in member states

Minimizes exchange rate problems

Simplifies travel for European citizens

Insulates the ‘eurozone’ from external economic shocks by boosting internal trade

European Trade: Imports

Some import related facts pertaining to European trade are:

The EU is a customs union. So, all member states are subjected to the same import duties.

The imports from the US face the Most-Favored-Nation (MFN) tariff. The MFN tariff is also applicable to other countries which signed the World Trade Organization (WTO) agreement.

The tariffs on certain processed products are determined on the basis of their ingredients. Tariffs on fruits or vegetables are dependent on season and daily import price.

Trade with Europe: Exports

An EU state does not levy taxes for exports to other member states. According to the Eurostat data for January 2009, the largest exporters among the EU countries are France, Germany and Netherlands

Taxes may, however, be levied on goods exported outside the EU. The global recession in 2007-2008 led to a sharp decline in its trade volumes.

Some truly critical exports that the European countries continued with are:

Machinery: All of Europe.

Automobiles: The UK, France, Germany, Spain and Italy.

Aircraft: France and Germany.

Electronics: The Netherlands, Germany and Italy.

Military equipment: The UK, Germany, France, Italy.

Food products such as wine, pastas, cheese, chocolates, beer and agricultural products: This spans both Western and Northern Europe.

Some of the critical ports in the EU are Southampton, Antwerp and Hamburg.

European Trade: Global Share

The International Monetary Fund (IMF) indicates that the EU accounts for 31% of the global economic output. The combined GDP of the EU nations exceed the GDP of the US. The EU is the largest exporter and second largest importer in the world.

With its strong presence in the world economy, the EU assumes a highly strategic role in devising foreign policies in the WTO, Group of Eight (G-8) summits and the United Nation (UN).