Most Hoosiers probably didn’t know too much about the European Union until the crisis that broke in the euro zone in 2009. The worries sparked by that crisis were a double-edged sword: They made more of us aware of the EU, but the news we heard was mainly bad.
It was not just that Greece, Portugal, Italy and Spain were in trouble, but there was concern also about the contagion spreading to economic powerhouses such as Germany. The sheer size and reach of the European marketplace meant its problems had dire and immediate implications for a U.S. economy still struggling to recover from the global financial crisis.
There are early signs that the euro zone is pulling out of the worst of its recession, so now might be the time for Hoosiers to learn more about the local impact of this strange beast called the European Union.
Consider some of the hard data: In one form or another, the EU has been around since the 1950s, it now has 28 member states, it is home to more than half a billion people, it is the world’s largest economic bloc (when measured by gross domestic product), it is the world’s largest trading power, and it accounts for more foreign direct investment (incoming and outgoing) than the rest of the world combined.
The EU matters to Indiana because of our mutual trade and foreign investment levels. About one-third of Indiana’s imports come from the EU (compared to 18 percent from Canada and 14 percent from China), while 26 percent of Indiana’s exports go to the EU; this is less than the 35 percent that go to Canada but much more than the 11 percent that go to Mexico and the 4 percent that go to China. Meanwhile, the EU accounts for nearly 60 percent of the foreign direct investment in Indiana.
While several of the big EU member states—notably Germany, France and Spain—account for the biggest shares of Indiana’s trade with the EU, it long ago ceased to be realistic or practical (for planning purposes) to consider EU countries separately.
There has been a single market in goods, people, money and services under construction in Europe for decades, meaning that the countries of the region are increasingly bound in with one another. And 17 of those countries (soon to be 19) share a single currency. All of which means that we need to think less about these countries individually, and more as a group: the biggest economic club and trading power in the world.
The EU-Indiana economic relationship promises to grow stronger as a result of a free-trade agreement under discussion between the U.S. and the EU. Going by the cumbersome title of the Transatlantic Trade and Investment Partnership (T-TIP), the goal of the agreement is to bring down tariffs, open up markets on both sides of the Atlantic, and develop new rules on trade.
Estimates are that it could take another 18-24 months to conclude the agreement, but it is never too early for Indiana business to lobby in favor of the agreement, for political leaders to learn more about its implications, and for higher education in the Hoosier state to prepare its students for the new opportunities T-TIP should present.
China, Mexico and Canada still dominate Indiana’s foreign trade calculations, but it is to the Old World that we should be looking for the best opportunities for more jobs, more investment, and more growth.•
McCormick directs graduate studies in the Department of Political Science at IUPUI. Send comments on this column to email@example.com.