While the rise of emerging markets from Asia and Africa to the Americas has captured attention in recent years, it’s easy to overlook that the United States and the European Union remain the world’s largest — and in many ways, most prosperous — economies.
What’s more, the flow of transatlantic trade represents by far the largest commercial relationship in the world, accounting for fully one-third of global gross domestic product (GDP) and supporting an estimated 15 million jobs on both sides of the Atlantic.
As global economic leaders, the United States and the European Union have benefitted tremendously from open markets, free enterprise, and the global rules-based trading system. More than any other countries, we built this system together, and it pays us dividends every single day.
The United States and EU are one another’s largest trading partners and by far each other’s largest foreign investors. Consider these facts:
- Europe accounted for more than half of global foreign direct investment (FDI) flows into the United States last year.
- European companies employ more than 4 million Americans in every single state across the country.
- R&D expenditures by these same entities — which exceeded $40 billion in 2015 — account for nearly three-quarters of all R&D performed by majority foreign-owned affiliates across the United States.
- Fully 10 percent of U.S. goods exports were generated by European-headquartered companies in 2015.
Equally robust numbers characterize U.S. investments in and exports to the European Union.
- Nearly two-thirds of U.S. global foreign investment went to Europe in 2017.
- U.S. services exports to Europe reached $279 billion in 2016, accounting for more than a third of total U.S. services exports.
- Sales by European affiliates of U.S.-headquartered firms hit $3 trillion in 2016, nearly one and a half times as much as total U.S. exports to the world.
What these figures demonstrate is simple: The United States and European Union benefit handsomely from one another’s prosperity.
Good friends can have their differences, and the U.S.-EU relationship is no exception. Since negotiations of the Transatlantic Trade & Investment Partnership (TTIP) were paused in 2016, relations have frayed.
Policymakers on both sides of the Atlantic have shifted their attention elsewhere and have advanced proposals that add to the strain. European proposals to tax large digital American companies raise the spectre of a “tax war.” This comes on top of suggestions of a potential “trade war” arising from U.S. tariffs on steel and aluminium imports, which may yet hit Europe if the current temporary exemption is not extended.
There are legitimate policy divergences to address, and there are shared challenges that are best tackled together. Despite our differences, it is essential that we not lose sight of the benefits of the $5.5 trillion economic relationship between the United States and Europe for American workers, consumers, and businesses. When you overlay these commercial ties on top of our shared history, common values, and mutual strategic interests, you have a relationship that is by definition second to none.
With this special relationship comes special responsibility. We must jointly address current threats to the global trading system, such as Chinese policies that disadvantage non-Chinese firms in that country. We must also tackle emerging challenges head on, like striking the right balance between protecting national security and individual privacy without unduly hampering the robust data flows that fuel today’s global economy.
Both the U.S. and EU must remain committed to a global rules-based paradigm and work together to set better and more effective rules fit for today’s reality. After all, if we don’t play by the rules we’ve set, how can we expect others to do so?
The business community demonstrates its commitment to this relationship on a daily basis. Next week, the U.S. Chamber and BusinessEurope will jointly host an inaugural Transatlantic Business Works Summit at which companies will discuss ways to deepen our ties in such critical sectors as infrastructure, energy, and the digital economy.
The litany of complaints that the U.S. and Europe have lodged with one another over the last four decades is long and multi-faceted. The differences we must confront are real and not insignificant. Some are bridgeable, while others may not be.
Whether we do this in the context of a comprehensive trade negotiation or some other fashion is a conversation for another day. The bottom line is that government leaders and policymakers owe it to the millions of Americans and Europeans whose futures are tied to the transatlantic relationship to jointly foster opportunities and address global challenges.
The costs of inaction are great but the opportunity arising from shared prosperity is immense.