CNN Newsroom: Global View

home *** CD-ROM | disk | FTP | other *** search

/ CNN Newsroom: Global View / CNN Newsroom: Global View.iso / eur / eur.ec4 < prev next >

Wrap

Text File | 1994-05-02 | 17KB | 337 lines

<text> <title> Europe: World Trade Outlook </title> <article> <hdr> World Trade Outlook 1992: Europe Higher Exports, Lower Imports Lift U.S. Trade Surplus </hdr> <body> By Victor Bailey, Ray Converse, and Richard Humbert Untapped Markets Are Opening Throughout the Region Dramatic change continues to occur in Europe. The European Community (EC) is well on its way to forming a single internal market with a common monetary policy and currency and similar policies on the environment, immigration, and foreign relations. The EC and the seven EFTA (European Free Trade Area) member countries are also negotiating an expanded European Economic Area (EEA) of 19 nations. The freeing of the Baltic States combined with the collapse of the Soviet Union and the subsequent recognition of the republics as independent states with a market-oriented viewpoint offer new opportunities for U.S. trade and investment. Accelerated economic and political reform will facilitate the integration of these new states with the West and open untapped markets for U.S. exports. The United States merchandise trade balance with the world improved by $35 billion in 1991, with Europe accounting for over one-third of this entire improvement. The United States trade surplus with all of Europe increased from $6 billion in 1990 to $19 billion in 1991 as exports gained and imports fell. The U.S. trade balances with all major regions of Europe--the European Community, EFTA, central and east Europe (Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and Yugoslavia), and the former Soviet Union--improved significantly in 1991. The U.S. trade surplus with the EC increased from $6 billion to $17 billion. The U.S. trade balances with Germany, France, and Italy improved strongly; however, the surplus with Ireland declined. The U.S. trade deficit with the EFTA countries declined by nearly half (to $1.8 billion from $3.2 billion) while the deficit with central and east Europe fell to less than $100 million. The trade surplus with the former Soviet Union gained further in 1991, rising from $2 billion to $2.8 billion. U.S. exports to all regions of Europe, except central and east Europe, gained substantially in 1991. Exports to the European Community gained $5 billion to a record $103 billion, with sales to Germany and France registering the largest dollar gains. Exports to EFTA gained on the strength of greater sales to Austria, Norway, and Switzerland. Shipments to central and east Europe declined in 1991 because of sharp falloffs in sales to Romania and Yugoslavia, although growth was robust in most other countries. U.S. exports to the former Soviet Union increased by $500 million following a sharp decline in 1990. Manufactured goods accounted for over 80 percent of U.S. exports to Europe and almost all of the growth. Manufactures shipments to all of Europe increased 7 percent from the 1990 level to $102 billion. Among the top U.S. exports were aircraft and parts, computer equipment, engines and motors, measuring and controlling instruments, electronic components, and telecommunications equipment. Sales of motor vehicles increased nearly 20 percent to $2.2 billion. The United Kingdom, Germany, France, and the Netherlands remained the largest markets for U.S. manufactured goods. U.S. imports from all of Europe declined more rapidly than purchases from the world as a whole, falling 6 percent from the 1990 level to $104 billion. U.S. purchases from the EC declined $5 billion to $86 billion, with purchases from Germany, Italy, and the United Kingdom registering the largest dollar declines. Imports from EFTA also declined in 1991. A large falloff in imports from Romania and Yugoslavia accounted for the overall decline in U.S. purchases from central and east Europe. Imports from the former Soviet Union declined 23 percent to $813 million. Manufactured goods accounted for nearly 90 percent of all U.S. imports from Europe in 1991 and much of the decline. Among the leading imports were motor vehicles and parts, aircraft and parts, engines and motors, measuring and controlling instruments, works of art, computers, and footwear. Germany, the United Kingdom, France, and Italy remained the largest European suppliers of manufactured goods to the U.S. market. Imports of petroleum and petroleum products also declined significantly. However, U.S. purchases of agricultural products increased slightly in 1991 on the strength of increased tobacco imports from Turkey. Western Europe U.S. exports to Western Europe reached a record $118 billion in 1991, up 5 percent from 1990, while U.S. imports fell over 5 percent to $102 billion. The result was a $16 billion trade surplus for the United States, the largest ever. Last year Western Europe accounted for over 28 percent of worldwide U.S. exports. The principal U.S. exports to Europe in 1991 were aircraft, computer equipment, office machines, engines, coal, medicines, telecommunications equipment, electrical apparatus, and corn. U.S. exports to Western Europe slowed recently, but should accelerate in the second half of 1992. This will depend, however, on the extent and speed of the economic recovery in Europe and the United States. Economic activity in Western Europe slowed considerably last year, due to cyclical factors and uncertainties brought about by the Gulf crisis. GDP increased only 1.25 percent in the European Community, down from 2.8 percent in 1990, but is expected to improve to 2-2.25 percent in 1992. Within the EC and based on OECD preliminary data, the United Kingdom experienced a 1.9 percent fall in real GDP in 1991. The economies of Germany--adjusting to the process of assimilating the former GDR--France, and Italy all recorded lower growth last year. Economic weakness was also present in Denmark, Ireland, the Netherlands, Portugal, and Spain. Only Luxembourg posted an increase in its GDP, to 3 percent. Economic activity should improve in 1992. Growth should be modest, ranging from a low of 1.25 percent in the Netherlands to a high of 3.5 percent in Luxembourg. In the four leading economies, growth should approximate the forecast 2 percent EC average, with Germany expected to grow slightly less, following a 3.2 percent increase recorded in 1991. Economic activity in EFTA as a whole was 50 percent below the European average. With its booming oil sector, Norway recorded a 4.1 percent real GDP increase while Austria grew 2.8 percent and Iceland a modest 0.3 percent. Finland, Sweden, and Switzerland all registered declines in economic activity during the year. The 1992 outlook is for improved, yet modest growth in EFTA, averaging less than 0.5 percent. The growth in Norway's economy is expected to moderate, but still increase about 2 percent. Austria should grow slightly less than in 1991, while Iceland is expected to record negative growth. Sweden and Switzerland are expected to show small increases, 0.2 and 1.2 percent, respectively. After registering spectacular 9.2 percent real GDP growth in 1990, Turkey's economy cooled considerably owing to effects of the Gulf crisis--to a GDP growth rate of 2.3 percent. In 1992, with a new administration in place and an ambitious economic plan, GDP is forecast to grow around 2.8 percent. A number of important developments will aid U.S. exporters in the European market. The achievement of a single internal market is well on its way. Although all directives and regulations will not be implemented by the year-end target date, EC members agreed in December 1991 at Maastrict, Holland to expand the process of integration to include a single monetary policy, a single currency, and more integrated policies in environment, immigration, and foreign relations. The prospective merger between the EC-12 and the seven EFTA members--Austria, Finlan