Alari Purju
Visiting ProfessorEstonian Business School
Estonia
alari.purju@ebs.ee
In May 2023, I published a report in the BSR Policy Briefing series of the Centrum Balticum Foundation. The report analyzes the economic interaction between a group of countries on the coast of the Baltic Sea on one side and the United States of America (USA) on the other side. Baltic Sea Region States (BSR) comprise the Nordic states Denmark, Finland, Norway and Sweden, the Baltic States Estonia, Latvia and Lithuania, and the large European economies Germany and Poland with only some regions located on the coast of the Baltic Sea. Russia also belongs to the BSR, but it has invaded Ukraine and excluded itself from several regular relationships with the other BSR countries and not included into discussion.
All the BSR countries which belong to the EU, have their economic interactions with the USA regulated by the respective EU-USA legal framework. At the same time, the BSR countries still have their individual international trade structure, resource patterns and economic strengths and weaknesses. These assumptions design also the individual international trade and investments patterns of the respective countries.
In absolute terms, Germany has the largest exports and imports values in trade of goods with the USA. Germany´s exports values to the USA are above 100 billion EUR annually, which makes the country an important player in comparison with the other major American and Asian trade partners. The USA´s share in Germany´s exports was 8-10% and in imports 5-7% during a period of 2020-22. Germany´s share in the USA´s exports was 3.5% and in imports 4.5% of the total US´s exports and imports and Germany was respectively the 7th and the 5th most important USA´s foreign trade of goods partner in 2022. The USA´s share was larger in Germany´s exports in chemicals, followed by the machinery and transport vehicles group.
From the Nordic countries, Denmark has with 9.7% in 2022 the largest share of exports to the USA in its total exports of goods. A relatively high share belongs to chemicals and in the chemicals group, the subgroup of medicinal and pharmaceuticals subgroup accounted for approximately half of the chemicals group and from that subgroup, 49.6% of total exports of that subgroup went to the USA. In Sweden´s total exports, the USA was the destination for 9.2% of exports in 2022. Approximately 40% of Sweden´s exports to the USA were machinery and transport vehicles. In Finland´s exports, the share of exports to the USA was 6.6% in 2022. The combined product group of other manufacturing industries contributed 38% of Finland´s total exports to the USA, followed by the group of machinery and transport vehicles which accounted for 32%. In Norway´s total exports, the share of the USA was 2.7 and the largest share was food products and in that group, fish and fish products accounted for 90% of the value of that product group. In exports of Estonia, Latvia, Lithuania and Poland, the USA share accounted for 2-9% and in imports 1-7% during the period 2020-22. In Poland´s exports to the USA, machinery and transport vehicles was the most important product group. In Estonia´s exports to the USA electronics components created 70% of the total exports and it was the department of the global electronics company Ericsson Estonia exports to the USA.
International trade in services is a rapidly growing area in international trade. One special group of services consist R&D, professional and management consulting services, technical or trade related business services. These services are both exported and imported and the countries specialize in certain sector of those services. Very often those services accompany competence in particular production and exports of goods in those industries. For example, Danish exports of pharmaceutical products is accompanied both by exports and imports of services related to R&D and consulting services. ICT related foreign trade in goods is also accompanied by imports and exports of services connected with that sector. Norway´s oil and gas industry also creates a lot of transport services and other different business services.
In the international trade of services of the BSR states, the share of the United States was larger than in international trade of goods. USA played an important role in international trade of services in Germany (14% of the country´s total services exports and 13% of imports), Denmark (14% of exports and 15% of imports), Sweden (12% of exports and 15% of imports) and Finland (17% of exports and 9% of imports). In Germany´s services exports to the USA dominated business services of R&D and business consultations followed by transport related services. In Germany´s imports, the share of R&D and business consultations business services has been most important. In Denmark´s exports and imports of services dominated transport services, followed by R&D and business consultations in international trade of services with the USA. In Sweden´s international trade of services with the USA, R&D and business consultations services dominated in exports and imports, followed by telecommunications, computer and information services. In Finland´s exports of services to the USA, the leading sector of services was telecommunications, computer and information services and in imports, different R&D and business services dominated. In Poland´s exports and imports of services, the share of the USA was 7% and 5% respectively. Both in exports and in imports with the USA, telecommunications, computer and information services was the leading group of services. In Estonia, Latvia and Lithuania as well in Norway´s exports and imports, the share of trade of services with the USA was between 3-5%. In Norway´s services exports to the USA, transport was the leading article, followed by telecommunications, computer and information services. In Estonia, Latvia and Lithuania, telecommunications, computer and information services was the leading article of services exports to the USA and R&D and different business services was a leading article of imports from the USA.
The analysis demonstrates that the economic interactions between the USA and the BSR states are important. At the same time, in the international economic interactions with the USA, the BSR states meet a quite specific economic environment. There are represented the global flows of goods and services, which come from the countries with much larger population and production capacities, as for example the Asian countries.