The bilateral economic relationship between the United States and the European Union (EU) is the largest such relationship in the world—and it is growing. The modern U.S.-European economic relationship has evolved since World War II. It has broadened as the 6-member European Community expanded into the present 28-member European Union. The ties have also become more complex, covering a growing number and type of trade and financial activities that intertwine the economies on both sides of the Atlantic into an increasingly interdependent relationship. The United States and the EU have embarked on an effort to bind their economic relationship even more tightly with negotiations to form a free trade agreement—the Transatlantic Trade and Investment Partnership (TTIP). U.S.-EU Trade in Goods and Services

The EU as a unit is the largest merchandise trading partner of the United States. In 2012, the EU accounted for $265.1 billion of total U.S. exports (or 17.1%) and for $380.8 billion of total U.S. imports (or 16.7%) for a U.S. trade deficit of $115.7 billion. The EU is the largest U.S. trade partner when trade in services is added to trade in merchandise. In 2012 (latest data available), the EU accounted for $193.8 billion (or 30.7% of the total in U.S. services exports). Trade in goods and services, plus income receipts and payments, plus unilateral transfers, make up the U.S. current account , the most comprehensive measure of U.S. trade flows. In 2012 alone, a total of more than $1,500.5 billion flowed between the United States and the EU. In 2012, an estimated net $150.0 billion flowed from U.S. residents to EU countries into direct investments, while an estimated net $105.9 billion flowed from EU residents to direct investments in the United States. It is a relationship that is likely to grow in importance as advancements in technology and other forces of globalization, plus the future enlargement of the EU, force more trade and investment barriers to fall. The expanded relationship is widely seen as bringing economic benefits to both sides in the form of wider choices of goods and services and greater investment opportunities. But increasing economic interdependence brings challenges as well as benefits. Greater economic integration also challenges long-held notions of "sovereignty," as national or regional policies have extraterritorial impact. Similarly, accepted understandings of "competition," "markets," and other economic concepts are tested as national borders dissolve with closer integration of economies. U.S. and EU policy makers, therefore, continually face the task of how to manage the increasingly complex bilateral economic relationship in ways that maximize benefits and keep frictions to a minimum. For Members of Congress it means weighing the benefits and costs to constituents of greater economic integration and placing this calculation in the context of overall U.S. national interests. The debate over U.S.-EU economic relations will likely become more acute as the United States pursues the Transatlantic Trade and Investment Partnership FTA with the EU.
The United States and the European Union (EU) economic relationship is the largest in the world—and it is growing. The modern U.S.-European economic relationship has evolved since World War II, broadening as the 6-member European Community expanded into the present 28-member European Union. The ties have also become more complex and interdependent, covering a growing number and type of trade and financial activities. The United States and the EU have embarked on negotiations to establish a free trade agreement—the Transatlantic Trade and Investment Partnership (TTIP).
In 2012 (latest data available), $1,500.5 billion flowed between the United States and the EU on the current account, the most comprehensive measure of U.S. trade flows. The EU as a unit is the largest merchandise trading partner of the United States. In 2012, the EU accounted for $265.1 billion of total U.S. exports (or 17.1%) and for $380.8 billion of total U.S. imports (or 16.7%) for a U.S. trade deficit of $115.7 billion. The EU is also the largest U.S. trade partner when trade in services is added to trade in merchandise, accounting for $193.8 billion (or 30.7% of the total in U.S. services exports) and $149.7 billion (or 35.4% of total U.S. services imports) in 2012. In addition, in 2012, a net $150.0 billion flowed from U.S. residents to EU countries into direct investments, while a net $105.9 billion flowed from EU residents to direct investments in the United States.
Policy disputes arise between the United States and the EU, generating tensions which sometimes lead to bilateral trade disputes. Yet, in spite of these disputes, the U.S.-EU economic relationship remains dynamic. It is a relationship that is likely to grow in importance assuming the trends toward globalization and the enlargement of the EU continue, forcing more trade and investment barriers to fall. Economists indicate that an expanded relationship would bring economic benefits to both sides in the form of wider choices of goods and services and greater investment opportunities.
But increasing economic interdependence brings challenges as well as benefits. As the U.S. and EU economies continue to integrate, some sectors or firms will "lose out" to increased competition and will resist the forces of change. Greater economic integration also challenges long-held notions of "sovereignty," as national or regional policies have extraterritorial impact. Similarly, accepted understandings of "competition," "markets," and other economic concepts are tested as national borders dissolve with closer integration of economies.
U.S. and EU policy makers are likely to face the task of how to manage the increasingly complex bilateral economic relationship in ways that maximize benefits and keep frictions to a minimum, including developing new frameworks. For Members during the 113th Congress, it could mean weighing the benefits of greater economic integration against the costs to constituents in the context of overall U.S. national interests. The debate will likely become especially acute as the United States and the EU pursue negotiations to form a free trade agreement—the Transatlantic Trade and Investment Partnership.