- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Trade relations with the EU
The EU and the US are each other’s biggest trading partners and investors. The willingness of the US to cooperate on WTO reform, the withdrawal of reservations from the GPA in the health sector, the suspension of tariffs in the case of Airbus, a new look at the digital tax solution within the OECD and the possibility of cooperation in the field of trade and technology can be considered positive in current EU-US trade relations. It can be considered negative that the US has not yet waived the tariffs under Section 232 and negotiations on the suspension of the imposed tariffs are not progressing much. In general, exports from the EU to the US are consistently significantly higher than exports in the opposite direction. Between 2011 and 2021, exports to the EU and imports from the EU increased significantly. The negative balance of the USA results mainly from the balance of the goods market, on the other hand, the positive balance exists for services.
|Exports from the EU (million EUR)||324,131.00||351,054.20||384,624.90||353,191.50||399,321.50|
|Imports into the EU (million EUR)||203,457.90||214,672.80||235,217.90||203,017.40||232,481.90|
|Balance with the EU (million EUR)||-120,673.2||-136,381.4||-149,406.9||-150 174.1||-166,839.6|
Source: European Commission
Trade relations with the Czech Republic
For several years now, the USA has been our most important export partner outside the EU and also one of our most important export destinations from the point of view of the added value of exported goods (aircraft engines, medical equipment, microscopes, etc.). The growth trend of both exports and the total volume of trade with the USA has been clear since the beginning of the Czech Republic’s existence. Overall, American exports consist of items with greater added value than exports from the Czech Republic to the USA. The positive development of the Czech economy is also reflected in changes in the structure and main items of our exports to the USA.
|Exports from the Czech Republic (billion CZK)||93.2||90.9||106.5||104.3||ON|
|Imports to the Czech Republic (billion CZK)||88||101.4||107.7||99.8||ON|
|Balance with the Czech Republic (billion CZK)||-5.4||10.4||1.3||-4.5||ON|
Trade relations with countries outside the EU
The US is the second largest exporter of goods in the world. After the EU, the most important trade partners of the USA are China, Canada and Mexico (in terms of goods). The huge deficit in the trade balance is mainly with China.
|Exports from countries outside the EU (million EUR)||990,989.0||1,064,875.8||1,011,755.1||857,973.5||1,086,478.5|
|Imports to countries outside the EU (million EUR)||1,785,195.3||1,941,050.5||1,884,459.4||1,782,575.0||2,202,768.1|
|Balance with non-EU countries (million EUR)||-794 206.3||-876 174.7||-872,704.3||-924,601.5||-1,116,289.6|
Source: EIU, Eurostat
Foreign direct investment
Foreign direct investment in the United States increased by $187.2 billion to $4.63 trillion at the end of 2020, from $4.44 trillion at the end of 2019. This increase primarily reflected a $119.2 billion increase from Europe, primarily Germany.
The life sciences sectors will continue to grow as the focus on developing more effective vaccines and treatments for Covid-19 continues. In addition, companies should continue to invest in combating the next potential pandemic. We assume that FDI in the biotechnology and healthcare sectors will increase by 15% in 2022, or 10%. However, pharmaceuticals will remain the largest life sciences sector with FDI growth of about 7%. Sectors that bore the brunt of the restrictions in 2020, such as aerospace, construction and real estate, leisure and tourism, are expected to return to positive growth. Although the threat of Covid-19 remains and there is not a full return to “normal”, regulations are allowing these sectors to reopen and investment interest should increase. It is expected, that investments in non-renewable energy will decline slightly year-on-year in 2022 and continue the overall downward trend. FDI in renewables and alternative energy is expected to grow further after 2021 is a record year for investment. Electrification and decarbonisation will be on the agenda of most governments in 2022 after the COP26 meeting in November. This should be reflected in favorable opportunities for companies to further invest in the establishment of renewable resources. However, the question mark is the current new international situation and uncertainty, especially in the energy and commodity markets. This should be reflected in favorable opportunities for companies to further invest in the establishment of renewable resources. However, the question mark is the current new international situation and uncertainty, especially in the energy and commodity markets. This should be reflected in favorable opportunities for companies to further invest in the establishment of renewable resources. However, the question mark is the current new international situation and uncertainty, especially in the energy and commodity markets.
FTAs and treaties
Treaties with the EU
Agreements with the EU There is currently no free trade agreement between the EU and the USA. For many years, the EU negotiated with the United States a trade and investment agreement, i.e. the Transatlantic Trade and Investment Partnership, TTIP. However, no agreement was reached in the end. An alternative platform is now the so-called Trade and Technology Council (TTC), established in June 2021, which, however, should not result in binding contractual instruments.
Contracts with the Czech Republic
Contracts with the Czech Republic The Ministry of Foreign Affairs of the Czech Republic registers a total of 65 contractual documents with the USA.
Among the most important treaties and agreements are: Agreement between the Czech and Slovak Federal Republic and the United States of America on mutual support and protection of investments (1991)
Treaty between the Czech Republic and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion in the Field of Taxes on Income and Property (1993)
Agreement between the Government of the Czech Republic and the Government of the United States of America on Air Transport (1996)
Agreement between the Czech Republic and the United States of America on scientific and technical cooperation (2008)
Treaty on Social Security between the Czech Republic and the United States of America (2007)
Agreement between the Ministry of Industry and Trade of the Czech Republic and the Department of Energy of the United States of America regarding cooperation in the area of non-proliferation of nuclear materials and technologies, Prague (2007)
Agreement between the Ministry of Defense of the Czech Republic and the Department of Defense of the United States of America on the exchange of engineers and research and scientific personnel (2009)
Agreement between the Government of the Czech Republic and the Government of the United States of America on Mutual Procurement of Material and Services for Defense Purposes (2012)
Agreement between the Ministry of Industry and Trade of the Czech Republic and the Department of Energy of the United States of America on cooperation in civil research and development in the field of nuclear energy (2014)
No development assistance is provided to the United States of America.
The USA received some form of assistance from other countries in connection with the removal of the effects of the devastating hurricane Katrina in 2005 and the subsequent floods in the states of Texas, Louisiana, Mississippi and Alabama. In this context, the Czech Republic also provided official assistance. Foreign countries provide the US with humanitarian aid in the event of natural disasters.
The main federal institution providing foreign development and humanitarian aid is USAID (US Agency for International Development), which is an independent part of the US Department of State. In addition to USAID, the US Congress annually allocates budget funds for the provision of official development assistance (ODA) to a number of other departments (e.g. commerce, defense, homeland security, education, justice, etc.), government agencies (NIH, CDC, NOAA, etc.) and government independent agencies (EPA, Peace Corps, Ex-Im Bank, NSF, etc.). US statistics work with the term “US Economic and Military Assistance”. The main recipient countries of foreign aid are, for example, Israel, Afghanistan and Egypt. After the attack by Russia, Ukraine also comes to the fore of American interest.
As individuals, Americans are a very generous nation, giving and withdrawing money to charity and other projects, including foreign ones, is a completely automatic activity of many rich people and celebrities. Celebrities like Bill Gates, Warren Buffet, Angelina Jolie and many others are most involved. Funds selected in this way amount to many billions of dollars annually and are directed to all parts of the world for a wide range of programs, primarily health and educational.
The Czech Republic provided aid of several million to the municipality of West in the state of Texas, where stored ammonium nitrate exploded in 2013. The explosion killed 15 people, including several Czechs from the large Czech community that lives there.
Prospective fields of study (MOP)
Perspective field 1 – Transport and infrastructure
Despite the significant impact of the coronavirus crisis and the war in Ukraine on the US economy, massive investment in infrastructure is one of the top priorities for the new US administration. In addition to transport investments in infrastructure to solve congested transport corridors, the development of new technologies that have an economic, ecological and safety aspect is also expected. This particular area could be a chance for Czech companies to enter the local market. In the next decade, at least as much should be spent on safe and sustainable roads, bridges and airports as on fighting the pandemic. Rebuilding crumbling roads and bridges, supporting aging water infrastructure and expanding broadband in rural areas are important.
Perspective field 2 – Energy
The energy industry in the US has not been spared the effects of the coronavirus crisis. There was a significant drop in demand for oil, which led to a drop in both prices and production. With the economic revival in 2021, the situation began to improve, or on the contrary, to deviate in an alternative direction, when even the USA was not spared from the global increase in energy prices, which has a whole range of causes. Additionally, in February 2021, there was an energy crisis and multiple blackouts in the deregulated market in Texas due to a cold weather wave. In addition to the crisis, a significant factor is the arrival of a new administration, whose view on energy differs dramatically from the administration of Donald Trump, even though the trend of a gradual transition to clean energy has already been going on to some extent in recent years. Economic recovery and new goals in the field of energy create an interesting mix of opportunities, however, the accent on strengthening the domestic industrial base in accordance with the principle of “Buy American” is becoming more and more evident. As of February 19, 2021, the USA is again a party to the Paris Climate Agreement, the new government has frozen new contacts for oil and natural gas extraction and strongly emphasizes the creation of new jobs in clean energy (of course, but primarily on the territory of the USA). President Joe Biden has set the goal of achieving carbon neutrality in the US in 2050. The US government supports nuclear as a low-emission energy source, including research into small modular reactors or new types of reactors. Opportunities can also be seen in the field of renewable energy sources and the planned development of electromobility, which includes both the cars themselves and charging stations. The war in Ukraine significantly affected the entire field,
Perspective branch 3 – Industry and engineering
The United States remains the world’s second largest market for engineering products and the second largest industrial producer after China. Even before the pandemic, the US administration tried to create a business environment conducive to the return and further expansion of manufacturing companies in the United States through a combination of tax, trade and regulatory measures. In the post-Covid period, we can expect the approval of further administrative steps with the aim of reducing the enormous dependence on imports, among other things, of industrial products and machinery, mainly from China. It can also be expected that the products of selected industrial sectors will be designated as a strategic necessity, which will help a partial renaissance of American industry. The share of industrial production in GDP fell to the current roughly 11 percent in 2019 from 15 percent in 2005. 60 percent of the demand for machinery and technology is covered by imports. Demand for machinery will depend on development trends in individual production sectors. The trend in the post-covid period will be the effort to bring production closer to the local customer (localization of production), either because of the threat of outages within subcontractor chains, or because of concerns about the escalation of trade wars and the related introduction of import tariffs.
Perspective field 4 – Entertainment industry – games
While the coronavirus pandemic is completely devastating to the majority of the entertainment industry in the US, its gaming industry is becoming an economic giant and one of the fastest growing industries in the country. The industry saw record profits and spending, and video games were one of the most stable growth categories in terms of popularity and investment. Video games are more than just an entertainment industry, they are reshaping the way we interact with the world during the pandemic. Total consumer spending on the gaming industry reached $57 billion in 2020 (according to NPD’s annual report), up 27 percent from 2019. An analysis by Research and Markets, titled United States Video Game by Category, states that the United States has also the most extensive representation in this field in terms of number of employees. The position of leaders of the video game industry has been occupied for a long time by three companies – Sony, Nintendo and Microsoft. These three gaming brands are the most well-known in the US, with Nintendo being the most popular and played. Mobile games are becoming the biggest mover lately. However, the growing trend of the gaming industry may also be a reflection of the development that began even before the pandemic itself, which further accelerated it.
Perspective field 5 – Healthcare and the pharmaceutical industry
The pandemic has thrust the already robust healthcare and pharmaceutical industries even further into the spotlight. Sufficient protective equipment and the success of the research, or production related to medicines or vaccines against covid-19 has become a criterion for the success of saving a large segment of the population and for the timeliness of abandoning the restrictive measures suffocating the economy. The dominant theme at the end of 2020 was the start of a large-scale vaccination campaign in the USA, which continues relatively quickly and successfully, and thus contributed to the positive turn of the situation in the USA after the second fall wave of the coronavirus. During the first wave, the USA, like other countries, suffered from a lack of protective medical equipment (gloves, respirators, protective suits, etc.). Even in light of this shortcoming, Joe Biden signed an executive order in February 2021, which aims to make supply chains for critical products in the United States more resilient and secure. Healthcare is one of six sectors where an in-depth analysis of the entire industrial base will take place. It is therefore necessary to count on a strong accent on the self-sufficiency of the USA, but at the same time, perhaps also an opportunity for suppliers from “friendly” countries.
Perspective field 6 – Healthy nutrition
The COVID-19 pandemic in the US (as in other parts of the world) has fundamentally accelerated the growth of the health food and dietary supplement segments. The driving force is consumer demand for a healthier lifestyle and diet. In addition to the coronavirus, the fundamental reasons include the long-term unsuccessful fight against obesity or cardiovascular diseases and other civilizational ills. If we add to this a relatively expensive health care system, Americans are forced not only by trend, but also from a practical point of view to put more emphasis on prevention. From the segment of healthy nutrition, it is therefore appropriate to mention products based purely on plant-based raw materials (so-called plant-based), i.e. plant-based alternatives to e.g. meat or dairy products. A number of global products have already responded to the growth in demand with massive investments in the development and improvement of taste and nutritional properties, indicating obvious potential. When it comes to food supplements, demand is growing not only for classic sports supplements (vitamins, minerals, proteins), but also for products with an anticipated positive impact on immunity.