International trade in Europe - statistics and facts
International trade in Europe is dominated by the European Union, the world's largest trading bloc, with the European single market allowing companies in EU member states to trade across borders without facing trade barriers such as tariffs and quotas. The EU is not only an international economic power due to the trade between its member states however, with EU member states being major exporters to world market, while access through trade agreements to the 450 million consumers of the single market is prized by countries around the world. Other key trading countries in Europe include the United Kingdom (which was a member of the European Union until 2020), Switzerland, Norway, Turkey, and the Russian Federation. Due to the sanctions applied by most European countries on Russia following the invasion of Ukraine in 2022, the Russian Federation has declined in importance as a trading power on the European continent, although its energy exports to the rest of the world remain substantial.
In terms of trade partners, the EU trades the most with the United States and China outside of the single market, while within it, Germany and the Netherlands are the dominant trading nations. The European Union is reliant on non-EU countries for certain goods and inputs in the production process, notably in energy and in some high-tech areas such as computer chips. The EU's strong trading relationships with the two preeminent world economic powers has lead many analysts to suggest that the EU is likely to suffer from a looming geopolitical conflict or decoupling between the world's two largest economic powers. The EU's ability to retain its trade with China while ensuring security concerns regarding sensitive technologies and sectors are assuaged is seen to be one of the key policy challenge facing the union throughout the 2020s.
Other key export markets include the United States and the largest EU economies (France, Belgium, Italy, the Netherlands), while the United Kingdom, which was the second largest export market in 2002 and an EU member state until 2020, has seen its relative share of EU exports halve in the two decades up to 2022. In terms of the split between intra- and extra-EU trade, around 62 percent of exports and imports come from within the EU, while 38 percent come from outside of the EU. The share of the trade of the EU conducted with non-EU countries rose considerably following the global financial crisis and Eurozone crisis, before returning to its pre-crisis levels in the late 2010s.
The Russian Federation's share of EU imports spiked in the early 2000s, doubling in the period from 2002 to 2012, as many EU countries became dependent on imports of raw materials and energy from Russia. In the aftermath of the country's illegal annexation of Crimea from Ukraine and particularly after its invasion of Ukraine in 2022, EU sanctions on Russia have caused its share to decline, with further declines likely to occur in coming years as the EU decouples from Russia.
The EU-UK Trade and Cooperation Agreement was signed in 2020, ensuring that preferential trade arrangements remain in place after the UK left the European Union in the same year. Nevertheless, the UK's share of EU trade has declined in the years since. The largest trade agreement which the EU has sought to conclude in recent decades, the Transatlantic Trade and Investment Partnership (TTIP) with the US, was shelved with the election of U.S. President Donald Trump in 2016, who opposed the deal. TTIP was also rejected by many on the European side due to a fear that it would result in a 'race to the bottom' in terms of standards and some of its provision, notably investor-state dispute settlement (ISDS) provisions, would erode democratic control of key policy areas.
In terms of trade partners, the EU trades the most with the United States and China outside of the single market, while within it, Germany and the Netherlands are the dominant trading nations. The European Union is reliant on non-EU countries for certain goods and inputs in the production process, notably in energy and in some high-tech areas such as computer chips. The EU's strong trading relationships with the two preeminent world economic powers has lead many analysts to suggest that the EU is likely to suffer from a looming geopolitical conflict or decoupling between the world's two largest economic powers. The EU's ability to retain its trade with China while ensuring security concerns regarding sensitive technologies and sectors are assuaged is seen to be one of the key policy challenge facing the union throughout the 2020s.
Who do European countries trade with the most?
Germany is both the single largest exporter of goods to other European Union countries, as well as the largest export market for goods coming from these EU countries. The country's historically large trade surplus, a consistent criticism from other EU countries, has rebalanced over recent years, with its share of total EU imports (that is, exports from Germany to other EU countries) declining from over 15 percent in 2007, to around 13 percent in 2023, and its share of all exports from other EU countries which it imported rising from under 13 percent to almost 14 percent over the same period.Other key export markets include the United States and the largest EU economies (France, Belgium, Italy, the Netherlands), while the United Kingdom, which was the second largest export market in 2002 and an EU member state until 2020, has seen its relative share of EU exports halve in the two decades up to 2022. In terms of the split between intra- and extra-EU trade, around 62 percent of exports and imports come from within the EU, while 38 percent come from outside of the EU. The share of the trade of the EU conducted with non-EU countries rose considerably following the global financial crisis and Eurozone crisis, before returning to its pre-crisis levels in the late 2010s.
Emerging and declining trade partners
China and Poland have both seen their share of exports from EU countries more than double, however, they both remain relatively small at under 4 percent each. While Poland's share of total imports by EU countries (that is, exports from Poland to other EU member states) has also more than doubled, China's increase over the two decades has been the most dramatic, almost tripling in relative size, with the East Asian manufacturing powerhouse becoming the third largest single exporter into the European Union. China surpassed the United States as the largest external exporter into the EU already in 2005, with it now representing 8.7 percent of EU imports versus the U.S.' 5 percent.The Russian Federation's share of EU imports spiked in the early 2000s, doubling in the period from 2002 to 2012, as many EU countries became dependent on imports of raw materials and energy from Russia. In the aftermath of the country's illegal annexation of Crimea from Ukraine and particularly after its invasion of Ukraine in 2022, EU sanctions on Russia have caused its share to decline, with further declines likely to occur in coming years as the EU decouples from Russia.
European trade policy in the 21st century
The European Union is a member of all the major multilateral international organizations which deal with trade policy, such as the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank. The EU has also had a greater focus on concluding trade agreements with key partners across the world in recent years, with many trade agreements concluded with EU candidate countries (countries in the process of joining the EU), such as Ukraine and Serbia, as well as with countries further afield, notably countries in east and south-east Asia such as Japan, South Korea, and Vietnam.The EU-UK Trade and Cooperation Agreement was signed in 2020, ensuring that preferential trade arrangements remain in place after the UK left the European Union in the same year. Nevertheless, the UK's share of EU trade has declined in the years since. The largest trade agreement which the EU has sought to conclude in recent decades, the Transatlantic Trade and Investment Partnership (TTIP) with the US, was shelved with the election of U.S. President Donald Trump in 2016, who opposed the deal. TTIP was also rejected by many on the European side due to a fear that it would result in a 'race to the bottom' in terms of standards and some of its provision, notably investor-state dispute settlement (ISDS) provisions, would erode democratic control of key policy areas.
