HELP! Economic Translator Needed

Investment Analysis Clubs Macro Economic Trends and Risks
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https://marginalrevolution.com/marginalrevolution/2025/02/european-union-fact-of-the-day-2.html
The IMF estimates that Europe’s internal barriers are equivalent to a tariff of 45 per cent for manufacturing and 110 per cent for services. These effectively shrink the market in which European companies operate: trade across EU countries is less than half the level of trade across US states. And as activity shifts more towards services, their overall drag on growth becomes worse…

Europe has been effectively raising tariffs within its borders and increasing regulation on a sector that makes up around 70 per cent of EU GDP.

This failure to lower internal barriers has also contributed to Europe’s unusually high trade openness. Since 1999, trade as a share of GDP has risen from 31 per cent to 55 per cent in the eurozone, whereas in China it rose from 34 per cent to 37 per cent and in the US from 23 per cent to just 25 per cent. This openness was an asset in a globalising world. But now it has become a vulnerability.

How do internal barriers contribute to openness?

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From the FT:

The paradox is that while internal barriers remained high, external barriers fell as globalisation accelerated. EU companies looked abroad to substitute for lack of domestic growth and imports became relatively more attractive. For instance, since the mid-1990s, trade costs in services are estimated to have dropped by 11 per cent within the EU but by 16 per cent for non-EU imports. This helps explain why trade in services inside and outside the EU is about the same today as a share of GDP — unthinkable in a fully integrated large economy.

The second factor holding Europe back is its tolerance of persistently weak demand, at least since the global financial crisis of 2008. This has exacerbated all the issues caused by supply constraints. …

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OK external barriers have declined as internal barriers have risen.
I’m going to lay down now. My head hurts.

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OK external barriers have declined as internal barriers have risen.
I’m going to lay down now. My head hurts.

I think it makes sense. Example: Italy wants to keep it’s car manufacturing sector alive, so it erects “non-tariff” barriers to prevent Fiat being overrun by the much larger German and French companies. Of course, now, Fiat is owned by a French company. I have read that the Italian PM has been venting, very loudly, about that French company bringing in Polish built cars, adorned with Italian flags.

Steve

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