Trade in goods and services and the single market – why does it matter?
Trade in goods and services is one of the key mechanisms fostering competition, consumer choice and allocative efficiency in the single market.
This section measures the level of integration of trade in goods and services in the single market by looking at indicators at both country and EU level.
Country-level indicators provide the amount of trade with other EU countries in 2021 for each Member State expressed as a share of national gross domestic product (GDP). These shares range from about 12 to 60% for goods and from 2 to 40% for services depending on a number of factors such as
- the Member States (smaller countries trade more)
- overall import/export performance
- how integrated the economy is into EU value chains
- how open the economy is to imports
- how competitive the economy is in terms of exports (goods and services sold abroad)
- the size and structure of internal demand.
Higher trade values reflect an economy that is more open, competitive and integrated, in relation to its size.
Between 2019 and 2021 these shares increased for goods (in all countries for which data are available except Luxembourg) and decreasing for services (in all countries for which data are available except Estonia and Cyprus).
Changes over time may be explained by policy measures that reduce trade barriers or improve business conditions for trade, as well changes in the structure of the national economy.
EU-level indicators reflect the overall progress of trade within the EU compared to trade with the rest of the world, and the impact of trade integration on price dispersion across the single market.
The indicators show that trade within the EU is the predominant type of trade for EU businesses and point to an overall trend towards price convergence in the Member States. In particular, In June 2022 trade within the EU amounted to more than €360 bn and represented 60% of overall EU trade. In 2019 about 16% of EU SMEs in the industry sector reported sales to another EU country. In addition, the indicators on price dispersion across Member States, which dropped from 44.6% in 1996 to 24.4% in 2021, confirm the expectations of the single market leading to price convergence overtime. They also show a higher level and faster pace of convergence for the euro area (average yearly growth rate of the coefficient of variation of prices of -2.5% since 1996).
Performance indicators at Member State level
SMEs in the industry sector with exports of goods to other EU countries
This indicator measures the share of SMEs reporting dispatches of goods to other EU countries, based on value added tax (VAT) data. The share is calculated by dividing the number of exporting SMEs (nominator) by the total number of SMEs (denominator).
Higher shares mean that a bigger number of SMEs have the ability to trade across-borders. As these values are based on VAT data, they are at the conservative end and are likely to underestimate the real share of exporting SMEs.
Data cover the industry sector only, i.e. NACE codes B, C, D and E.
Micro-entreprises are included. VAT data are used to estimate the number of traders and the trade value of the smallest traders, which are exempted from Intrastat reporting. These traders account for a limited share of trade value at most 3 % of the total value of exports within the EU and 7% of the total value of imports within the EU – but represent the majority in terms of number of businesses.
No growth rates are available for Cyprus and Malta because 2016 data are missing.
Performance indicators at EU level
Trends in trade within the EU and with the rest of the world
This indicator measures single market integration by the development of trade within the EU and with the rest of the world over time. Trade is defined as the average between imports and exports. Data are in nominal values and monthly.
The first chart shows the coefficient of the price variation of price level indices (in purchasing power parity GDP) for the EU and the euro area, respectively. This is an indicator of price dispersion across Member States.
The second chart shows the average growth rate of the coefficient.
Greater market integration is expected to lead to lower price dispersion.