A significant part of the history of the European Union is the building up of ever closer economic cooperation between the continent's individual countries. Indeed, when the first common European organization - the European Coal and Steel Community (ECSC) - was established in 1952, the free trade of certain raw materials was one of the central principles. Today, the EU is not only the largest single market in the world. It is also an economy that's keen to do trade with the outside world.
The Internal Market - a borderless economy
At the centre of all economic cooperation at the European level is the Single Market - also known as Internal Market or Common Market - with its four so-called fundamental freedoms: persons, goods, services and capital may circulate freely within the confederation of states.
Since the Single Market was created in 1993, citizens of all EU countries have been free to choose where in the bloc they wish to work, live, study or shop. European companies can market their services in all EU countries, regardless of where they have their headquarters. For example, German airlines do not have to take off or land in Germany.
Products that have legally been introduced to the market in one member state may also be sold in the rest of the EU. Thanks to the freedom of capital, investors are free to decide where in the EU they invest their money or take out a loan.
The availability and range of products and services from across Europe in the individual member states have become more diverse and in many cases cheaper thanks to the Single Market. This is not least due to the abolition of tariffs and the dismantling of national monopolies in favor of free competition. European consumers have been able to benefit in sectors such as telecommunications, energy and air travel.
The EU is also working to standardize the member states' national markets in the areas of finance and digital technologies. The so-called Capital Markets Union is intended to make it easier for small businesses to raise fresh capital and thus make Europe more attractive as an investment location. The Digital Single Market will extend the European rules on telecommunications, copyright and data protection to the digital world.
Improving conditions on the Single Market will remain high on the political agenda of the EU in the coming years. Current tasks include the alignment of national tax systems, the pooling of previously isolated markets for financial services, energy and transport, and the standardization of conditions in e-commerce.
European foreign trade: economic exchange with the world
According to official figures, intra-EU trade accounts for more than 64 per cent of the total trade volume of European Union member states. However, in addition to internal economic relations, opening up to world trade is also a central goal of the bloc. Between 1999 and 2010, EU external trade doubled. It now accounts for around one-third of the bloc's gross domestic product (GDP).
Together with the US and China, the European Union is one of the world's three most important players in international trade. The EU, with its more than 500 million citizens, only accounts for around seven per cent of the world's population. Nevertheless, exports from its member states to other parts of the world accounted for 15.6 per cent of world exports in 2016. By comparison, China's share in the same year was 17 per cent, while US exports made up 11.8 per cent.
EU-based companies are supported by the bloc with business-friendly policies aimed at strengthening their competitiveness. For example, large industrial groups benefit from initiatives to better qualify workers or from projects that help them make the digital transition. Small and medium-sized enterprises can benefit from financial and practical assistance from the EU. This is intended to promote entrepreneurship, start-ups and growth.
Among the top ten companies in the world by revenue are three European enterprises. They are the oil companies Royal Dutch Shell and BP and the carmaker Volkswagen. According to the American business magazine Fortune, they generated sales of more than 816 billion US dollars in 2017, the equivalent to just under 721 billion euros. By comparison, the US retail giant Walmart, the world's largest company by revenue, turned over around 500 billion dollars in the same year (about 442 billion euros). Interactive: Europe’s largest companies by revenue: http://dpaq.de/f2FVY
Good deals by contract
The EU negotiates trade agreements both with individual countries as well as with other regional groupings. Usually the agreements contain tariff reductions or rules for specific sectors of the economy, which in turn allow both sides to gain advantageous access to the markets of the respective partners. For EU-based companies, this often opens up new markets for their goods and products and better access to raw materials. The EU's most important agreements include the new free trade area with Japan and the European Economic Area (EEA) with Norway, Iceland and Liechtenstein.
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