An open letter on tradeThere has been a lot of talk recently about the trade and investment relationship between the European Union and the United States. Who wins? Who loses?
The fact is, we are both winning and have been for years. Claims to the contrary, including that the United States is at the losing end of this relationship, deserve to be debunked. That’s because the United States makes more money doing business with the EU than with anyone else.
The facts speak for themselves:
Fact No. 1: Together, the U.S. and the EU have created the largest and wealthiest market in the world. The transatlantic economy accounts for half of the global gross domestic product by value, which directly supports more than 15 million high-quality jobs and $5.5 trillion in commercial sales. And nearly one-third of the world’s trade in goods occurs between the EU and U.S. alone.
Fact No. 2: The United States has a partner in the form of the European Union that invests more in the United States than the United States does in it. The EU’s foreign direct investment in the United States is $2.56 trillion, compared with $2.38 trillion in the other direction. Seventy percent of all foreign direct investment in the United States comes from Europe.
Fact No. 3: There is no “buy European” policy for U.S. enterprises to compete with. We have a level playing field in public procurement, regardless of whether you are a European or American company. On top of that, we have eliminated thousands of legal and bureaucratic barriers to trade, leading to an open and thriving marketplace of more than 500 million consumers.
Fact No. 4: The European Union is the top destination for American exports. In 2016, we bought $269.6 billion worth of goods from the United States. And U.S. exports of services to the EU — increasingly the backbone of any modern economy — have been steadily increasing over the years, coming in at a record-setting $231 billion in 2016. That makes us the top destination for U.S. services – in fact, transatlantic trade in services results in a surplus for the United States.
Fact No. 5: Our tariff rates are constant, level and predictable, helping U.S. enterprises to seamlessly enter our markets without having to fear sudden, perhaps unforeseen heightened charges. The United States currently imposes individual tariff rates of more than 15 percent on 330 separate manufactured goods. Yet when U.S. companies sell their products to the EU, they encounter only 45 such tariff peaks.
Simply put, the EU invests more in the United States, buys more American services and employs more American workers than the other way around. As a ready comparison: 45 of 50 U.S. states export more to the EU than they do to China. And what of China’s foreign direct investment into the United States? It’s around one-hundredth that of Europe’s.
This is a relationship, indeed a partnership, that other countries can only dream of. It’s a partnership underpinned by a broad set of shared values, grounded in a common determination for freedom, peace and prosperity. But, as with any partnership, the prospect of unilateral action by one side, to the detriment of the other partner, places the entire mutually beneficial relationship at risk. Placing tariffs on EU steel and aluminum imports — imports that are high-value and support critical U.S. industries — is a significant step in that protectionist direction. So is going after the European auto industry — an industry that invests billions in the United States and creates millions of jobs.
Instead, as the two most free and open economies in the world, let’s focus on what benefits us both. We should work together to address Chinese steel overcapacity and other market distortions. We should work together toward a fair, open and rules-based global trading system. We should work together to improve market access for our companies and farmers around the world. Together we should tackle intellectual property theft and look at how we can further reduce red tape, regulatory barriers and tariffs between us — facilitating innovation and investment, to the mutual benefit of business and consumers on both sides of the Atlantic. This, not tariffs and quotas, would be moving in the right direction.
*This op-ed was co-authored by 29 EU ambassadors to the United States, including Tihomir Stoytchev, ambassador of Bulgaria; Wolfgang Waldner, ambassador of Austria; George Maior, ambassador of Romania; Kirsti Kauppi, ambassador of Finland; Pjer Simunovic, ambassador of Croatia; Peter Wittig, ambassador of Germany; Domingos Fezas Vital, ambassador of Portugal; Stanislav Vidovic, ambassador of Slovenia; Gérard Araud, ambassador of France; Hynek Kmonicek, ambassador of the Czech Republic; Karin Olofsdotter, ambassador of Sweden; Pedro Morenés, ambassador of Spain; Dirk Wouters, ambassador of Belgium; Laszlo Szabo, ambassador of Hungary; Piotr Wilczek, ambassador of Poland; Lars Lose, ambassador of Denmark; Andreas Nikolaides, Chargé d’affaires of Cyprus; Daniel Mulhall, ambassador of Ireland; Rolandas Krisciunas, ambassador of Lithuania; Haris Lalacos, ambassador of Greece; Armando Varricchio, ambassador of Italy; Andris Teikmanis, ambassador of Latvia; Sylvie Lucas, ambassador of Luxembourg; Henne Schuwer, ambassador of the Netherlands; Peter Kmec, ambassador of the Slovak Republic; Pierre Clive Agius, ambassador of Malta; Sir Kim Darroch, ambassador of the United Kingdom; Lauri Lepik, ambassador of Estonia; and David O’Sullivan, ambassador of the European Union.