Three Balancing Acts

Trade relations between Europe and East Asia ¹ have become ever more important. Bilateral trade has increased more than two and a half times since 2000, rising from less than 365 billion US dollars to more than 965 billion in 2012 (IMF 2013). Today, three Northeast Asian economies – China, Japan and South Korea – rank as the second, seventh and tenth-largest trading partners of the European Union (EU) respectively. Meanwhile, the Association of Southeast Asian Nations (ASEAN) has become the EU’s third-largest extra-European trading partner after the US and China. As a whole, East Asia accounted for 27.5 per cent of EU imports and 18.8 per cent of EU exports in 2012 (European Commission 2013b). Yet despite the enormous exchange of goods and services, the trade relationship between the two sides has not been without problems. The EU’s trade deficit with East Asia soared over the past decade, reaching a level of over 260 billion US dollars in 2012. Not surprisingly, dealing with such a huge trade deficit has been a very important issue for the EU’s external trade strategy (European Commission 2006b).