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“Nous Choisissons L’Europe”: EU’s Economic Development and Current Challenges

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Abstract

EU member states can no longer remain competitive in isolation given the current interdependencies at the international level. We analyse in this chapter the trade tendencies in the European Union, and we show the relatively large distance between Germany as the European top exporter and importer, and the following economies. We also analyse economic relations between member states that are designed to respond to non-EU challenges. We find that national member states engage in more collaborative and transnational development strategies for the coming years as a survival strategy in the current international context. Finally, we show how dependent the EU states have become on the single market by looking in depth at a case study of the United Kingdom’s trade relations.
Nous Choisissons LEurope:EUs
Economic Development and Current
Challenges
Clara Volintiru and Gabriela Drăgan
1 Introduction
Undoubtedly, the EU is at a new crossroads. Although reform is inevitable, the way
to be chosen is still under scrutiny. The Unions reform scenarios, advanced by the
European Commission in March 2017, indicate the existence of at least ve possible
directions of evolution by 2015: maintain the current situation (scenario 1: Carry-
ing on); returning to a previous integration stage (scenario 2: Nothing but the single
market); improve the current situation and deepen the integration process (scenario
5: Doing much more together); or initiate radical changes in the functioning of the
EU (scenario 3: Those who want more do more and scenario 4: Doing less more
efciently). Each of these ve scenarios emphasizes the need for urgent reform of the
EU institutions and policies and the inevitable impact of reforms (and Brexit) on the
next EU budget.
1
Whatever EU institution and policy reform solutions are chosen, the urgency
to reform the EU as a whole has left the European economy with little room to
Bruno Le Maire, French Minister of Economics, public interview 05.10.2017, http://www.
parismatch.com/Actu/Politique/Bruno-Le-maire-Nous-choisissons-l-Europe-contre-la-Chine-
et-les-Etats-Unis-1363628, last accessed 27.01.2018.
1
European Commission, White Paper on the future of Europe. Reections and scenarios for the
EU27 by 2025, available on https://ec.europa.eu/commission/sites/beta-political/les/white_paper_
on_the_future_of_europe_en.pdf, last accessed 31.01.18.
C. Volintiru (*)
Bucharest University of Economic Studies, Bucharest, Romania
e-mail: clara.volintiru@rei.ase.ro
G. Drăgan (*)
Bucharest University of Economic Studies, Bucharest, Romania
European Institute of Romania, Bucharest, Romania
e-mail: gabriela.dragan@ier.gov.ro
©The Author(s) 2019
P. Dobrescu (ed.), Development in Turbulent Times,
https://doi.org/10.1007/978-3-030-11361-2_5
59
manoeuvre. Although, according to the Autumn 2017 Economic Forecast, the EU
economic recovery, supported by resilient private consumption, stronger global
growth and falling unemployment recorded the fastest pace in the last decade
(2.3% in the EU and 2.2% in euro area) and predicted trends are also favourable
(a trend that is expected to continue in the next years in both the euro area and the EU
(2.1% in 2018 and 1.9% in 2019)), internal and external risks could affect the pace of
EU economic growth in the short and medium-term. Primarily, internal risks are
related to the outcome of the Brexit negotiations, the evolution of public nance and
populist movements in different EU member states, while the main external risks are
linked to the new geopolitical tensions (from the Middle East to North Korea), the
extension of protectionist measures (see, among others, some of Donald Trumps
latest declarations) and, last but not least, signicant economic adjustments in China.
In fact, on the global market, the EU position appears to be increasingly fragile
and exposed to multiple risks. Thus, the EUs share in the global GDP is rapidly
shrinking, from 31.4% in 2004 to 23.8% in 2014, while the Unites States has moved
from 28.1% to 22.2%. Meanwhile, the Chinese share of world GDP has risen very
rapidly: from 4.5% to 13.4%, moving ahead of Japan (5.9% in 2014).
2
The same
evolutions are evident in terms of international trade, where Chinas share in global
exports has risen from 3.1% in 2000 to 13.6% in 2016.
3
Moreover, as Glenn and
Sweeney noticed, Chinas share in global exports is the highest share any country
has enjoyed since the United States in 1968,
4
a success that contradicts the
widespread predictions that rising costs for Chinese labour and a currency that
has increased nearly 20% against the dollar in the last decade would cause China to
lose market share to cheaper competitors.The Economist (2017), analysing Chinas
position on international competition, notices that though this country is not the rst
in the process of industrialisation, none has ever made the leap so rapidly and on
such a monumental scale. While a decade ago Chinese boom towns churned out
zips, socks and cigarette lighters (...), today the country is at the global frontier of
new technology in everything from mobile payments to driverless cars.
5
Since Chinas rapid growth has changed both the global rules of the game and
recalibrated the position of developed and developing countries on the international
market, and internally the economic crisis has profoundly affected the EU growth
engines, the only realistic option for the EU is to rethink its model of development
2
Eurostat, The EU in the world: economy and nance, http://ec.europa.eu/eurostat/statistics-
explained/index.php/The_EU_in_the_world_-_economy_and_nance, last accessed 31.01.18.
3
World Trade Organisation (WTO), Annual Report, 2001, p. 20, https://www.wto.org/english/res_
e/booksp_e/anrep_e/wto_anrep01_e.pdf, World Trade Organisation (WTO), Annual Report, 2017,
https://www.wto.org/english/res_e/booksp_e/anrep_e/anrep17_e.pdf, last accessed 31.01.18.
4
Elias Glenn, Pete Sweeney, China seizes biggest share of global exports in almost 50 years,
Reuters, Business News, April 22, 2016, https://www.reuters.com/article/us-china-exports/china-
seizes-biggest-share-of-global-exports-in-almost-50-years-idUSKCN0XJ097, last accessed 31.01.18.
5
The Economist, How China is battling ever more intensely in world markets. But does it play fair?,
23 September 2017, https://www.economist.com/news/leaders/21729430-does-it-play-fair-how-
china-battling-ever-more-intensely-world-markets, last accessed 31.01.18.
60 C. Volintiru and G. Drăgan
and reform its policies and institutions by deepening the interdependencies among
member states. The EU 4.0 revolution is not only a possible option but a mandatory
choice.
2 Economic Survival Strategies for EUROPE 4.0
2.1 Crisis Hits: First Aid Kit
The economic crisis that started at the end of 2007 in the USA and the beginning of
2008 in the EU had by all accounts a different impact on the two regions. This can be
easily explained by the different governing structure. The US government was able
to take political action swiftly to deal with the aftermath of the nancial bubble,
while the hybrid political ecosystem of the EU had to deal with numerous tensions
between the diverging interests of the member states. While periphery states such as
Greece, Italy and Portugal preferred to manage the economic crisis from a social
economic model targeting record high unemployment, the wealthy core of the
Eurozone (e.g. Germany, the UK) opted for austerity measures as the prescribed
solution to curb governmental debt. In contrast, the United States opted for quan-
titative easingmeasures that essentially meant printing more money, but they also
helped the housing market to recover
6
as well as keeping unemployment at bay. The
decit problems may be solved by the Eurozones approach to the crisis but the long-
term damage of extremely high youth unemployment (up to 50% in some periphery
countries) and growing inequalities
7
is not being addressed. In this context, the
positive effects of economic growth might no longer be distributed to all European
citizens.
A European Central Bank assessment after the nancial crisis warned that the
global economy continues to be exposed to the risk of a creeping return of trade
protectionism, and as Georgiadis and Gräb found, countries pursue more trade-
restrictive policies when they experience recessions and/or when their competitive-
ness deteriorates(2016, p. 1). Knetter and Prusa (2003), Bown (2008) and Bown
and Crowley (2013) all point to the negative correlation between losses in compet-
itiveness or economic decline and the likelihood of a country adopting anti-dumping
measures.
Most evaluations of losses in competitiveness or economic slowdown take into
consideration the real exchange rates. This is a useful methodological approach for
large N datasets but we can equally assess the decline of competitiveness at case
6
Mark Weisbrot, Why has Europes economy done worse that the US?, 16 January 2014,
https://www.theguardian.com/commentisfree/2014/jan/16/why-the-european-economy-is-worse,
last accessed 10.02.2018.
7
European Commission. Competitiveness in low-income and low-growth regions: The lagging
regions report. 10 April 2017. http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/
lagging_regions%20report_en.pdf, last accessed 10.02.2018.
Nous Choisissons LEurope:EUs Economic Development and Current Challenges 61
study level through various changes in the performance of economic agents. As the
global nancial crisis swept across the Western world, companies saw their prots
diminish while governments resorted to austerity measures. Some authors have
strongly critiqued the capacity of the austerity measures to reignite a growth ten-
dency in the economy, amongst whom the strongest has been Mark Blyth (2013).
Even in the absence of austerity measure, the European Union has made a clear
emphasis on downsizing inward protectionism such as state subsidies and state aid.
In this context, we can see how large-scale producers in Europe are facing the double
constraint of a declining consumption capacity in the domestic market and less state
intervention in their favour.
The European Union was built on what was initially called the European Coal and
Steel Community (ECSC), which was established upon the proposition of the French
foreign minister Robert Schuman in 1951. Looking back on the industries that lay at
the foundation of the EU, the context could not be more different. The Third Report
on the State of the Energy Union
8
stated clearly that the days of the coal industry are
numbered as closure aids are granted to member states in the fast-paced transition
process towards a clean energy economy. In contrast, the downturn of the steel
industry is not yet a foregone conclusion.
According to ofcial trade statistics, the top importers of iron and steel worldwide
are Germany with $23 bil., United States of America with $22 bil., China with $17
bil., Italy with $14 bil., and South Korea with $14 bil. Similarly, the top exporters of
iron and steel worldwide are China with $43 bil., Japan with $24 mil., Germany with
$21 mil., South Korea with $19 mil. and Russia with $14 mil. Together, the EU
market represents almost 40% of the worldwide imports or exports of iron and steel.
The steel industry is relevant on many accounts to the European economy.
International trade revenues are only part of the story. Equally important is the
scale of employment in this sector. Currently there are approximately 300,000
people in direct employment in steel reneries across member states, and one
could expect a matching gure for those in dependent or indirect employment. It
is true that the number of employees in this sector is signicantly lower than a decade
or two ago. The decrease of the number of employees however is not only related to
a decrease in domestic consumption and delocalisation processes. Technological
advances are one of the driving factors in the lowering levels of labour intensity in
many industrial sectors, not just steel. Finally, the steel industry is relevant to the
European economy not by itself but also because of its contribution to two of the
most competitive sectors in the EU: the automotive and construction industries. Very
early on, given the increased economic integration driven by WTO negotiations, the
European Union placed its global competitiveness aspirations on the back of higher-
value products and services, where it could retain an advantage in the face of
emerging markets with larger economies of scale than its own.
9
8
European Commission (2017) Third Report on the State of the Energy Union, available at: https://
ec.europa.eu/commission/publications/third-report-state-energy-union_en, last accessed 22.01.18.
9
European Commission (2006) Global Europe: Competing in the World, A Contribution to the EUs
Growth and Jobs Strategy. http://trade.ec.europa.eu/doclib/docs/2006/october/tradoc_130376.pdf
62 C. Volintiru and G. Drăgan
Protectionist measures nowadays take many forms so as to escape the commonly
agreed upon liberalization framework. One form of defensive protectionist measures
is the anti-dumping regulation aimed at addressing the unjust imbalances in the
world trade. As such, the European Union and the United States have throughout
2017 seen a sustained campaign against the steel imports from China that many
believe are sold at dumping prices. It is not hard to imagine that in the regulatory
context in which the Chinese economic actors operate, the state-owned enterprises
(SOEs) that are active in this sector benet from state support in the form of
subsidies or preferential interest loans. On this ground, the EU has imposed anti-
dumping measures in this sector while the US is challenging the market economy
status of China at WTO. These actions are consequential not only in terms of
protecting a strategic economic sector but also in terms of the larger cooperation in
trade liberalisation at the global level.
The multilateral system of cooperation that saw the inclusion of China in 2001
and Russia in 2012 in WTO seems to be counterbalanced by regional and bilateral
approaches nowadays. In the aftermath of the nancial crisis, the European Union
has been much more successful in pushing through bilateral trade and investment
partnerships with neighbours (e.g. Eastern Partnership countriesUkraine, Georgia
and the Republic of Moldova) and historical partners (e.g. Canada) than multilateral
rounds of negotiations within the WTO format.
2.2 Lagging Behind in Consumption
The decline of the single markets capacity is not solely based on economic cycles
and recessions. Throughout the past decades, the population in the European Union
member states has been recording a steady downward trend. For some countries,
especially in Southern, Central and Eastern Europe, an important factor in the
demographic decline is emigration. Eurostat data (2017) shows the migration pat-
terns within the European Union begin from the crisis-affected countries in the South
or the poorer regions in the East and head mainly towards Germany, which has been
additionally targeted heavily by outside migrants. Still, across Europe, low birth
rates are the primary causal factor of the population decline. Increases in life-
expectancy have also increased the median age of the population, leading to what
is frequently referred to as the greying Europe.
The demography crisiswith the well-known ageing of the population is not
only relevant from the perspective of the burden it applies on social security
expenditures and, more specically, pension funds (Vasile et al. 2012), it also has
a profound impact on the relative positioning of the European economy as a whole
from the perspective of the downsizing consumer market. In a recent study on this
topic, a Romanian economist looks at the car sales data across the world as a proxy
for middle-class purchasing capacity (Silva 2017). Based on the International Orga-
nization of Motor Vehicle Manufacturers (OICA) reports, the European Union has
levelled at a total purchasing of approximately 15 mil. personal cars yearlythis has
Nous Choisissons LEurope:EUs Economic Development and Current Challenges 63
been relatively constant across the past decade, with a slight decrease after the
nancial crisis of 2008. Similarly, the United States recorded approximately
11 mil. personal car sales in the past decade. In contrast, Asia reached approximately
40 mil. personal car sales, out of which approximately 25 mil. are sold only in
Chinarecording a ve-fold increase since 2005.
The sharp difference between the Western powers and Asian economies in the
volume and historical trends of consumption is a sombre reminder that the economic
growth of the European Union member states can only be achieved through inno-
vative development strategies. According to the latest Global Competitiveness
Report (20172018), EU economies have improved their innovation capacity over
the past decade (especially Germany, Netherlands and Sweden), but as a whole still
trails behind the United States, Japan and Israel.
For the European Union, consumption is an ambivalent point of reference. On
one hand, much like in many developed economies across the world, household
consumption represents an important driver of economic growth measured in gross
domestic product (GDP) increases. In the EU, household consumption represents
roughly 60% of GDP (almost three times higher than governmental consumption).
Still, in the context of an cumulative effort of approx. 5 bil. EUR for the current
nancing period devoted to the transition to a clean and sustainable economy, we see
consumption patterns coming under the scrutiny of these new environmental goals.
10
2.3 Economic Drivers
A quarter of the European Unions trade with outside partners is realised by
Germany alone (see Fig. 1). It has a positive trade balance, meaning that it exports
more than it imports. It has seen a slight decrease over the past years, from a total
exports annual value of $1.4 bil. in 2012 to $1.3 bil. in 2016. This however follows
the overall trend of the main trade powers in the European Union: France, Italy,
Netherlands, the United Kingdom and Belgium. All top traders in the European
Union have been colonial powers, with the exception of Germany, which, inciden-
tally or not, outperforms them by far. The status of former colonial powers is
important even within the context of the European Union because the preferential
trade relations with the former colonies (e.g. favourable tariffs on imported goods)
were granted since the Treaty of Rome under French pressure and Belgiums and the
Netherlands support (Dinan 1999).
One of the main elements of the trade performance of Germany is its own market.
As we can see from the two graphs showed above, while lower than its exports
10
European Commission (2011) 571 nal, Roadmap to a Resource Efcient Europe http://ec.
europa.eu/environment/resource_efciency/about/roadmap/index_en.htm; A /RES/66/28 (2012)
UN General Assembly resolution 66/288, The future we want. http://www.un.org/en/develop
ment/desa/population/migration/generalassembly/docs/globalcompact/A_RES_66_288.pdf
64 C. Volintiru and G. Drăgan
levels, German imports are still almost double the value of French imports, the
second-ranked importer in the European Union (see Fig. 2). The relatively high
purchasing power of private sector and household consumers in Germany is granted
by a well-balanced developmental model, labelled as social-market capitalism
(Gilpin 2001)orsoziale Marktwirtschaft, that combines the free market principles
with economic policies designed to support the general development of the economy
(e.g. monetary, trade or scal). As a result, we can see that the German economy
meets both social indicators that portray the general welfare of the population as well
as competitiveness landmarks. It has some of the largest multinational companies in
the world while also having a large and dynamic SMEs sector. Sustained economic
growth in Germany is also maintained through technological innovation, having
substantial public and private funding allocated in this direction, and high value-
added products as a result.
The main economic products with which Germany dominates global markets are:
vehicles other than railway or tramway rolling stock, and parts and accessories
thereof18% of world exports, largest exporter globally; machinery, mechanical
appliances, nuclear reactors, boilers12%, ranked second-largest exporter globally,
pharmaceutical products16% of world exports, largest exporter of this product
globally, and other technological intensive products such as aircraft and electrical
machinery.
Despite the current snapshot, the European top exporters are losing ground
in sectors that are growing at global level. This is mostly due to the increasing
competitiveness of multinational companies in emerging markets. As such, a series
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Fig. 1 EU exports by country of origin. Source: Adapted by the authors based on data from
trademap.org
Nous Choisissons LEurope:EUs Economic Development and Current Challenges 65
of reactions have been recorded recently in Western Europe. France, Germany
and Italy presented a public letter in 2017 amid concerns over the size of Chinese
investments in European state-owned enterprises (SOEs). They claimed that a
growing number of non-EU investors were buying up European technologies for
the strategic interest of their home country.
11
The large Chinese investment through
its state-owned COSCO company in the Piraeus port of Greece last year is only part
of a larger-scale investment plan across the EU and it Balkan periphery. In response,
a series of mergers, acquisitions and allianceshave been launched amongst
Western European states to consolidate their European position. Saint-Nazaire
has teamed up with the Italian Group Fincantieri and Alstom, the state-controlled
producer of TGVs, has teamed up with the German company Siemens and they are
reportedly on track to introducing autonomous trains on the market. The stated goal
of this latter fusion is to create a new European champion that is big enough to take
over the world leader CRRC of China.
12
As state participation in French companies
is currently valued at over $100 bil., we might expect future consolidation moves
amongst the founding members of the European Union in the near future.
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EU Imports by country of destination, mil. $
Germany United Kingdom France Italy Netherlands Belgium
Fig. 2 EU imports by country of destination. Source: Adapted by the authors based on data from
trademap.org
11
Le Guernigou, Yann; Thomas, Leigh. France, Germany, Italy urge rethink of foreign investment
in EU. 14 February 2017, Reuters, https://www.reuters.com/article/uk-eu-trade-france/france-ger
many-italy-urge-rethink-of-foreign-investment-in-eu-idUKKBN15T1ND?il¼0, last accessed
27.01. 2018.
12
EU signals big asset sales to greenlight Alstom-Siemens tie-up, Financial Times, 27 November
2018, https://www.ft.com/content/a0383fae-f18f-11e8-9623-d7f9881e729f, last accessed 27.11.18.
66 C. Volintiru and G. Drăgan
As we can see from the comparative gures on export competitiveness and
relative growth, Eastern Europe and Central Asia are in a marked downturn com-
pared to world export growth. In contrast, East Asia is performing above global
growth trends (see Fig. 3). As the European Union is highly integrated through a
common trade policy, the slowdown in parts of it can have widespread repercussions.
The poor trade competitiveness of Eastern European markets as well as the Eastern
Partnership countries with which it recently established Deep and Comprehensive
Free Trade Areas (DCFTAs) (i.e. Moldova, Ukraine, Georgia) can be a signicant
challenge for sustainable growth. The EUs engagement in increasingly bilateral
trade relations with close historical or neighbouring partners (e.g. CETAwith
Canada, TTIPwith the USA, DCFTAwith Eastern Partnership (EaP) countries)
can be seen as a clear disengagement from multilateral trade integration efforts.
Given the economic gures of export competitiveness compiled by the World
40%
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0%
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–40%
–40%
–30%
–20%
–10%
0%
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20%
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40%
–60%
2008 2010 2012 2014 2016
2008 2010 2012 2014 2016
Change in Eastern Europe & Central Asia’s Export Growth
Change in East Asia & Pacific’s Export Growth
Change in World Export Growth
Change in World Export Growth
log first differences (delta log), year-on-year
log first differences (delta log), year-on-year
II II
II II
Fig. 3 World exports and change in export market share (region growth minus global growth).
Source: World Bank, https://mec.worldbank.org/export-growth/ECA
Nous Choisissons LEurope:EUs Economic Development and Current Challenges 67
Bank, the EUs detachment from other markets that are experiencing strong growth
trends might be a vulnerability for the European economy in the long term.
Approximately 30 mil. persons are employed throughout the European Union in
the manufacturing sector, which makes it responsible for 15% of total employment
in the EU, and approximately EUR1700 bil. of value added annually. Nevertheless,
in the majority of manufacturing sectors in which Europe is export- competitive the
value-added is greater than the employment levels (e.g. manufacture of machinery
and equipment, manufacture of motor vehicles, manufacture of electrical equipment,
manufacture of chemicals and chemical products). Part of the downturn of Eastern
European markets in export competitiveness can be explained by their lowering
production in these higher value-added manufacturing sectors. Out of the top 10 -
European manufacturing companies, 8 are German3 are in the automotive indus-
try, 2 in engineering, 1 in chemicals and 1 in aerospace and defense. While
employment levels are high in such areas as the manufacture of textiles and furniture,
their value added is much lower.
2.4 Trade Relations with Historical Partners: Implications
for Brexit
The European Union is increasingly represented as a single unit, from statistical
repositories (almost all relevant databases have a EU 28 category) to international
trade deals. In recent transatlantic negotiations, such as the CETA and TTIP, the
European Union was the counterpart given the exclusive competencies of the trade
policy, but national and local interests differed signicantly. The unitary approach
of the EU in international economic affairs is not an easy feat. The subnational
differences reect the well-known challenges of multi-level governance (Hooghe
and Marks 2001), the signicant divides across European regions, as well as the
political posturing that creates tensions in multi-level game diplomatic efforts
(Putnam 1988). Amongst all of these structural challenges, we currently nd the
additional element of unsteadiness: the potential exit of Britain (i.e. Brexit) from the
European Union.
As seen in the previous section of this contribution, the status of colonial powers
and the worldwide coverage this implied correlates with modern-day economic trade
performances. What is important beyond current economic ties is also the process
through which the former metropoles have become detached from their periphery
and embedded their power aspirations in the European Union. Some authors point to
the sobering effect the Suez crisis had on the relative self-projections of European
powers (Hansen 2002) as it was in this context that France really became committed
to the European Community negotiations and the Treaty of Rome (Young 1996;
Anderson 1997). Nevertheless, no European Empire was more focused on trade and
economic relations between the centre and the periphery than the British Empire.
68 C. Volintiru and G. Drăgan
Before and after the Referendum in Britain on the question of its EU membership,
the Commonwealth was largely referred to in public discourse as a substitute for
the EU market. Called by many analysts the Empire 2.0 strategy, at the end of a
dedicated Summit in 2017 on the trade relations between Britain and its former
colonies, Patricia Scotland, the Commonwealth Secretary, stated: Because we share
common law, common language, common institutions and common parliamentary
structures, that has given us a de facto advantage.
13
Over half of the United Kingdoms imports came from the European Union over
the past decade, but less than half of its exports go to the European Union in return.
In contrast, less than a tenth of its trade is engaged with the 49 Commonwealth
markets that do not belong to the European Union (i.e. Cyprus and Malta). Overall,
the value of the trade between the United Kingdom and its former colonies repre-
sents only 16% of the value of the trade between the United Kingdom and other
member states. One of the reasons the trade potential with the Commonwealth states
is so overrated is that there are some very large markets in this set of countries
judging by population level. If we look at only the top 8 countries by population in
the Commonwealth,
14
we nd a total of approximately 2 billion persons. In contrast,
the entire European Union has only half a million people. Still, even though we can
count Canada and Australia amongst the most developed nations, and some of the
most dynamic emerging markets such as India and Singapore, the Commonwealth is
largely comprised of small, poor states. The geographical distance between UK and
them is an additional impediment for trade (Fig. 4).
Out of the total $1.3 trillion global market, a fth of worldwide exports of
vehicles other than railway or tramway rolling stock, and parts and accessories
thereof is done by Germany, followed by non-European economies such as Japan,
the United States of America, Mexico, Canada and South Korea. Germany exported
a total value of $235 bil. worth of vehicles worldwide in 2016, out of which it
exports between $62 and 66 bil. annual value of this product to the United Kingdom
alone.
3 Perspectives
European member states can no longer be relevant international actors by them-
selves. Their strength and developmental perspectives are intrinsically linked to
each other. As the political turmoil spreads from one country to another, taking
various shapes and arguements, the economic reasoning behind the existence of the
European Union is clearer than ever. Evidently, when we analyse trade data we can
13
Roberts, Dan. Drive to replace UK-EU trade links with closer ties to Commonwealth. 10 March
2017, The Guardian https://www.theguardian.com/global-development/2017/mar/10/drive-to-
replace-eu-trade-links-with-closer-ties-to-commonwealth-economies, last accessed 27.01. 2018.
14
India, Pakistan, Nigeria, Bangladesh, South Africa, Canada, Ghana and Australia.
Nous Choisissons LEurope:EUs Economic Development and Current Challenges 69
clearly see that the sum of the parts is not the same as the single market itself. The
existence of a large internal marketconstitutes a signicant advantage, even to a
large market like Germany. However, it is clear that not even Germany, the trade
championof the European Union, can afford to rely solely on the internal market
consumption. Asian markets are growing at a much faster pace than European ones,
driven primarily by the larger consumption patterns based on population gures.
With a sharply declining population in many European member states, the gains of
the single market in trade will become smaller and smaller.
As this chapter points out, there are no value-similar alternatives to the European
Union for Western powers. At the beginning of the integration process, the historical
peripheries of the colonial power still played a somewhat important role in their trade
and development, which is why preferential relations were established from the very
beginning with these states. However, as the globalization process progressed and
the single market developed, the value of intra-EU trade relations and extra-EU trade
relations is incomparable. Taking the Brexit context as a test case, we compared the
United Kingdoms trade relations with EU member states and Commonwealth
partners. Despite public rhetoric and political discourse, the evidence is clear: the
latter is less than a fth of the rst. As such, any decision to cut away or distance
itself in any way from the EU core would only involve a signicant risk to the
economic growth of any European country.
UK Imports from EU; 379
UK Imports from EU; 347
UK Imports from EU; 330
UK Imports from world; 694
UK Imports from world; 630
UK Imports from world; 636
UK Exports to the EU; 242
UK Exports to the EU; 204
UK Exports to the EU; 194
UK Exports to the world; 511
UK Exports to the world; 466
UK Exports to the world; 411
2014 2015 2016
Fig. 4 UK trade balance
70 C. Volintiru and G. Drăgan
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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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