Indeed, Europe is suffering from the biggest recession in decades. But being bearish about the EU is just too easy. Putting things into perspective, it is roughly a 30% bigger economy than China. The EU is also among the wealthiest entities in the world: in 2012, it accounted to almost one quarter of global consumption expenditures. For the European Council of American Chambers of Commerce (AmChams in Europe), it would be a shame to ignore these facts. That is why they released the report The case for Investing in Europe 2013 last week in New York.
“There is plenty right with Europe, giving plenty of reasons for US firms to stay in the course,” the report says. “For firms in the S&P 500, foreign sales in Europe (24%, the last year of available data) were greater than Asia (15%) and South America (less than 6%).”
Central and Eastern Europe are strategic places for corporate America. More than 12% of US firms’ workforce in Europe is now based there, in countries where consumerism has soared over the past decade. Also, Europe is seen by AmChams as a great platform, for example in Turkey, in spite of the current turmoil: total EU-Turkey trade has expanded almost 250% between 2000 and 2011.
The report sheds some light over Europe’s real economic weight. Despite its staggering unemployment rates, plant closures and massive debt loads, there have been remarkable changes. The first moves for a banking and fiscal union are taking place, AmChambs points out, although this still needs a lot of work.
The context of this report’s release is the very sensitive Transatlantic Trade and Investment Partnership, TTIP, that is a new trade and investment partnership between the Washington and Brussels. Talks on the proposed trade pact will launch in July and they are supposed to last for one or two years. If successful, the final agreement would cover half the world’s economic output and about a third of global trade.The AmChams has a clear position about it: the deal could be a game changer if tariffs and barriers are reduced and trade and investment can freely flow on both sides of the ocean.
There are several politically sensitive trade-offs such as employment, environmental and consumer rules. For example, EU consumer organizations strongly object genetically modified food from the US. They also worry about Internet privacy: US plans to ease the movement of electronic data across borders and that is seen by many as a “backdoor way” for American companies such as Google and Facebook. This is even more delicate after the last scandal about data gathering from internet companies by the US National Security Agency.