Being from Ireland, it is hard to escape the emphasis that is placed on the importance of external trade for economic growth and prosperity. But at an aggregate levels who do the EU trade with and who contributes the most to European trade? We can look at the EU in two ways when considering trade. Firstly, we can look at the part of the EU which is within a monetary union. These countries, 17 in total, share a common currency (or are pegged to the Euro). Trade outside of the common currency zone includes not only non-EU countries but also members of the EU who have chosen not to adopt the Euro. Secondly, when considering EU trade we can look at the whole EU-27 countries as a whole.
When looking at Euro-area external trade Figure 1 displays the EA-17 main trading partners. It can be seen that approximately 33% of EA-17 exports go to the UK and that the EA-17 imports almost 26% of its goods and services from the UK. These figures are closely followed by the US. However, the main external partner which the EA-17 import from is overwhelmingly China, with the EA-17 importing almost 36% of their goods and services from China.
When considering the EU-27 as a whole we can see the dominance of three external partners; the US, China and Russia. The US is the largest market for the EU-27’s exports but the EU-27 imports the most from China. Indeed, the EU-27 imports almost as much from Russia as they do from the US.
Figure 3 shows the proportion of trade (both exports and imports) which originate from each country. It can be observed clearly that Germany is the key driver of EU trade, exporting and importing the largest amounts to/from outside the EU-27 countries. This is followed closely by the UK, Italy, France and the Netherlands. Looking at Ireland, even though trade is of huge importance to our domestic economy, when compared to some of the larger EU-27 countries, in terms of magnitude our exports and imports are miniscule.
Justin Doran is a Lecturer in Economics, in the Department of Economics, University College Cork, Ireland.