By Neil Harris (auth.)
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No. 57. 1995. Reproduced by permission of tha OECD. 9 Current account balances, 1990-96: selected EU countries· and competitors 28 European Business invisible balance (services exported minus services imported). 9 shows these. Note the very significant differences in the position of the US and Japan. These clearly demonstrate how the Japanese surplus is largely the US deficit, an explanation of why the US is threatening a trade war with Japan. E 120 115 110 94 Year Source: European Commission Direclorale General for Economic and Financial Affairs: European Economy Annual EconomiC ReDorllor 1995.
3. Foreign-produced goods compete more successfully with Dutch goods; and they replace Dutch suppliers in some third markets. The Netherlands retaliates by undertaking Foreign Direct Investment (FDI - see Chapter 9) in third markets. 4. The Netherlands begins to import these increaSingly competitive goods. This can be seen now in the case of the car industry and, more recently, personal computers. Japan, for example, now imports Japanese model cars made in the EU. g. the EU copy, the US is undercut, buys' from them, and moves on to new products to sell.
4 does not show is how the centre of political and economic power has shifted Eastward within Europe. With the capital of West Germany in Bonn the Bonn-Paris axis was the most important alliance underpinning the European Community. With the proposed shifting of the German capital back to Berlin at the end of this decade, German preoccupation with the problems of Eastern Germany and the emerging markets of Central and Eastern Europe, the focus of power has now shifted Eastward. Applications for European Union membership by the Visegrad Four nations (the Czech Republic, Hungary, Poland and Slovakia) has reinforced this point.