BERLIN, Sept. 21 (Xinhua) — The European Union (EU) should reorient its external economic relations towards Asia in light of global challenges, a study by the German Bertelsmann Institute argues.
The findings of the Guetersloh-based think tank will be presented by study author Dr. Cora Jungbluth at the international Asia-Europe Meeting (ASEM) in Seoul on Thursday, and were read by Xinhua in advance.
Jungbluth stressed in her paper that the EU is confronted with the dual threat of protectionist rhetoric from the U.S. Trump administration on the one hand, and the internal economic disintegration represented by Britain’s “Brexit” on the other. Asia, as the “world’s most dynamic growth region,” therefore offers the bloc a much-needed opportunity to forge new strategic partnerships with regards to trade and investment.
The study noted that Brussels was already in the process of negotiating free trade and investment agreements with a number of Asian countries. It was “vitally important,” however, to create a framework for cooperation not just with the largest economies, but the region as a whole in order to ensure long-term benefits.
While the uncertain future of the trans-Pacific trade and investment partnership is illustrative of potential pitfalls posed by bilateral talks, ASEM constituted a highly-promising forum for the EU to launch a “pivot to Asia.”
Since the first ASEM conference was held in 1996, its membership has grown to 53 members. If brought together under the existing blueprints for a vast free trade area of Asia and Europe, these countries would account for 62 percent of the world’s population, 57 percent of global gross domestic product (GDP) and 66 percent of international trade.
Although the creation of such a free trade area is still unrealistic at present, it is “helpful for Europe and Asia to develop visions about the future character of their mutual relations,” said the study.
Despite visibly weakening trans-Atlantic relations, the United States continues to account for the lion’s share of the EU’s external trade.
Washington’s dominance is particularly pronounced in the category of foreign direct investment (FDI) between the EU and non-EU members, where it accounts for 37.1 percent of the EU’s outward and 41.4 percent of its inward stock.
In contrast, Asia still plays a “rather subordinate” role with shares of 13 percent for the EU’s outward FDI and 9 percent for inward FDI. Jungbluth emphasizes that there is enormous scope for an improvement and deepening in Europe-Asia economic relations in this context.
As China resumes the central position in the global economy which it has held throughout most of history, the Chinese FDI stock in Europe has already shot up from 605 million euros to 35 billion euros (720 million U.S. dollars to 41.7 billion dollars) between 2001 and 2015. Although the United States with 17.9 percent remains the EU’s most important external trading partner ahead of China with 14.9 percent in 2016, Washington has already been overtaken by Beijing as regards imports received by the bloc.
As a whole, the wider region of Asia also accounted for the largest share of EU external trade (40.4 percent) in 2016, ahead of the United States (25.5 percent) and the European Free Trade Association (EFTA, 23.5 percent). Even smaller Asian economies such as Indonesia could become important trading partners for Brussels as they maintain significantly higher growth rates than those witnessed in the Western world for the foreseeable future.
The Bertelsmann Institute identifies some hopeful signs in its study that the twin shocks of U.S. President Donald Trump and Brexit have indeed instilled Brussels with a fresh desire to reorient its economic relations to Asia.
The EU has since concluded a new free trade agreement with Japan in July 2017 and announced discussions on a similar accord with the Association of Southeast Asian Nations (ASEAN). Furthermore, trade talks with India, which were previously frozen on account of British resistance, are now set to resume.