Unpacking EU Trade Imbalances: What Membership Contenders Reveal
Explore how EU membership candidates stack up in trade, uncovering the persistent imbalances shaping Europe’s economic future and what this means for enlargement and integration.
Key Takeaways
- EU maintains a modest but shrinking trade surplus globally
- Most EU candidate countries run persistent trade deficits with the bloc
- Trade imbalances reflect structural dependency and limited export bases
- Foreign direct investment boosts employment but often lacks transformative impact
- Closing the trade gap requires innovation, infrastructure, and selective investment
Europe’s economic landscape is shifting as Brussels advances a new wave of enlargement. The trade numbers between the EU and its membership contenders tell a tale of booming exchanges shadowed by persistent imbalances. While the EU enjoys a trade surplus, many candidate countries import more than they export, revealing deep structural challenges.
From the lush farmlands of the Western Balkans to the war-impacted economy of Ukraine, these nations are tied to the EU through complex trade agreements. Yet, despite rising trade volumes, the relationship remains uneven, with the EU dominating as a market and supplier of high-value goods.
This article dives into the trade imbalances shaping EU enlargement, unpacking what these figures mean for future integration, economic transformation, and the promise of convergence.
Examining EU Trade Surplus
The European Union stands tall as a global trading powerhouse, boasting a trade surplus of €80.1 billion in the first half of 2025. But don’t let that number fool you into thinking it’s all smooth sailing. This surplus has shrunk from €92.9 billion the previous year, revealing a subtle but telling shift. Imports are growing faster than exports, especially in sectors like chemicals and manufactured goods.
Digging deeper, the EU’s strength lies in exporting high-value manufactured products—think machinery, vehicles, and chemicals—while it leans on imports for energy and raw materials. This dynamic keeps the trade balance positive but also exposes vulnerabilities. Intra-EU trade dwarfs external trade, with a staggering €2.43 trillion exchanged within the bloc in early 2025, highlighting the EU’s internal economic cohesion.
Yet, monthly fluctuations remind us that trade is a living, breathing beast. August 2025 saw a €5.8 billion deficit, a sharp contrast to July’s €12.1 billion surplus in goods. These swings underscore the delicate balancing act the EU plays on the global stage, navigating complex supply chains and shifting demand.
Spotlighting Candidate Countries’ Deficits
Now, let’s zoom in on the EU’s hopeful neighbors—the membership candidates. Countries like Ukraine, Serbia, and Moldova share a common thread: persistent trade deficits with the EU. For instance, Ukraine’s 2024 trade with the EU shows exports of €24.5 billion but imports of €42.8 billion, handing the EU an €18.3 billion surplus. Serbia and Moldova follow similar patterns, importing more high-tech machinery and vehicles than they export.
Why this imbalance? These candidates often rely on importing technology and capital goods to fuel their economies, while exporting lower-value raw materials or agricultural products. It’s like trying to build a high-tech gadget with basic parts—there’s a gap in sophistication and value.
Trade agreements like the Stabilisation and Association Agreements (SAAs) and Deep and Comprehensive Free Trade Areas (DCFTAs) aim to ease these frictions. Yet, technical barriers such as strict EU standards and certification requirements still block many exports. This leaves candidate countries stuck in a cycle of importing what they can’t yet produce, deepening their trade deficits.
Understanding Structural Dependencies
Trade deficits aren’t just numbers; they reflect deep-rooted economic realities. Many candidate countries have small productive sectors that don’t yet meet domestic demand, forcing them to import machinery, energy, and intermediate goods. This structural dependency limits their ability to export competitively.
Take North Macedonia, an outlier that has carved a niche as a production base for EU industries, benefiting from preferential access under the SAA framework. Its exports to the EU are relatively high-value components, unlike Albania’s focus on raw materials and low-value textiles or Montenegro’s tourism-driven, import-heavy economy.
This uneven development means that while some countries are assembly lines for EU products, others remain suppliers of basic goods. The risk? Falling into a middle-income trap where wages stay low and innovation stalls. Without upgrading their industrial base, these economies may struggle to break free from dependence and truly converge with the EU.
Evaluating Foreign Direct Investment
Foreign direct investment (FDI) is often hailed as the magic wand for economic growth. And indeed, FDI brings factories, jobs, and links to EU markets. Serbia’s car plants, for example, have boosted employment and connected the country to European value chains. But here’s the catch: much of this investment targets lower-value production stages.
When FDI focuses on assembly rather than innovation, wage gains remain limited and much of the value flows back to foreign investors. Local supplier networks stay thin, and the hoped-for structural transformation stalls. This duality creates a tension—politicians see FDI as the key to development, while citizens sometimes view it as a cycle that traps economies in low-value roles.
Experts argue for a more selective approach, prioritizing high-tech, quality investments and nurturing domestic companies through industrial and innovation policies. Only then can FDI become a true catalyst for upgrading production and closing the trade gap.
Charting the Path to Convergence
Growth alone won’t bridge the gap between candidate countries and the EU. The OECD warns that full economic convergence remains decades away, with the Western Balkans reaching only about 40% of the EU average output per person. Infrastructure and productivity are the weak links holding back progress.
Inadequate transport networks, for example, choke connectivity between producers and markets, limiting trade potential. Meanwhile, Ukraine’s economy, battered by war, faces staggering challenges despite a recent rebound. Public finances are stretched thin by defense needs, complicating efforts to align with EU standards.
The way forward demands a shift from quantity to quality—selective FDI, targeted market access tied to reforms, and accelerated investment in skills, energy, and transport. If Brussels and candidate countries can orchestrate this transformation, the dream of narrowing the trade imbalance and achieving prosperity within a generation is within reach.
Long Story Short
The numbers paint a nuanced picture: EU membership candidates are increasingly integrated into European trade networks, yet they remain caught in a cycle of dependence and limited industrial transformation. Persistent trade deficits highlight the need for more than just growing exports—they call for upgrading production, innovation, and infrastructure. Foreign direct investment has opened doors and created jobs, but without a strategic focus on high-tech and domestic capacity, these economies risk staying assembly lines rather than full partners. The EU’s modest trade surplus contrasts sharply with the deficits of its hopeful neighbors, underscoring the uphill climb toward economic convergence. For Brussels and candidate countries alike, the path forward demands quality over quantity—selective investment, reform-driven market access, and accelerated development in skills and transport. If these pieces fall into place, the dream of narrowing the gap within a generation can become reality. Otherwise, the risk remains that these nations will be reliable workshops, not prosperous partners.