Competitiveness of the EU Agri-Food Sector on the US Market: Worth Reviving Transatlantic Trade?

Karolina Pawlak

doi:10.3390/agriculture12010023

Abstract

The systematically strengthening role of emerging economies has become a factor strongly determining the overall trade policy of the European Union (EU) and the United States of America (USA), as well as their bilateral relations. One of the initiatives aiming at the strengthening of economic ties within the transatlantic partnership, as a consequence promoting stabilization of the positions of the EU and the USA in the world economy, was related with negotiations concerning the Transatlantic Trade and Investment Partnership. The EU-USA trade talks were suspended at the end of 2016; however, the establishment of the EU-USA free trade area might be a breakthrough in the transatlantic relations, while the conclusion of this agreement would significantly determine the competitive position of the agri-food sector of these two economies, both in their bilateral relations and in world trade. In view of the above, the aim of this paper is to estimate the competitive position of the EU agri-food sector in transatlantic trade considering the conclusion of the agreement establishing the EU-USA free trade area. For this purpose, Widodo’s method of mapping products on the target market was applied. Results from the conducted analyses suggest that from 2010–2020 comparative advantages gained by the EU on the US market were sources of an advantageous export specialization. In view of the forecasted dynamic increase in agri-food export from the EU to the USA caused by possible liberalization of bilateral trade, the relatively strong competitive position of the EU on the American market might be maintained or even strengthened. However, such a situation would be determined by the regulatory cooperation progressing with the reduction of tariffs.

Highlights

Along with the processes of economic development, industrialization and servitization of economies we may observe a trend towards a reduction in the share of raw materials and agricultural products in world exports
Similar conclusions are provided by the analysis of values of the Vollrath Revealed Competitiveness Indexes (RC), as well as mapping of products according to the level of Revealed Symmetric Comparative Advantages (RSCA) and the Trade Balance Index (TBI) (Figure 2, Table 6)
The problem of competitiveness in the agri-food sector of the European Union (EU) countries has been investigated in many studies, in relation to the transatlantic relations research has focused mainly on the evaluation of competitive advantages of the EU and the United States (US) agri-food sectors in global trade, neglecting the aspect of bilateral relations

Summary

Introduction

Along with the processes of economic development, industrialization and servitization of economies we may observe a trend towards a reduction in the share of raw materials and agricultural products in world exports. In view of the spatial distribution of production dependent on natural and climatic conditions, the exchange of agri-food products between individual countries and regions of the world remains an important and indispensable part of global trade. In 1937, the European countries accounted for approximately 66% world imports and almost 35% exports of agri-food products, while countries of North and Latin America supplied the world market with about 30% total exports of agri-food products and absorbed 20% of imports [1]. In 2020, European countries executed roughly 43% of global exports and 41% of imports, while countries in both Americas accounted for 27% exports and 18% imports [2]. This means that in the period of 1937–2020, European countries gained in importance as food exporters, at the same time reducing the degree of import penetration in this segment of the market, whereas countries in the Americas maintained their stable position in the world agri-food market

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