foreign trade

   Although Spain's foreign trade cannot be compared to that of traditional trading nations such as Germany or the UK, it is nevertheless among the top twenty in the world, with about 2 percent of visible global trade by value (compared to about 9 percent for Germany and 5 percent for the UK). In invisibles or services Spain is in the top ten countries because of the importance of its tourist sector. After a period of limited (though not negligible, as is sometimes assumed) growth during the years of political isolation in the 1940s and 1950s, Spain's foreign trade grew more rapidly following the introduction of a new tariff as a result of negotiations with the OECD under the reformist Minister of Commerce Alberto Ullastres. This trade liberalization was only partial, however, and was followed ten years later by a further relaxation under the Luxembourg Accord with the EEC which offered a substantial reduction of the latter's external tariff to Spanish exporters. Further lowering of trade barriers followed after agreements with EFTA and GATT. Between 1985 and 1995 Spain's foreign trade virtually trebled, much of it being associated with the EC. Already during the 1970s Spain's major trading partners were countries in the EC, especially as far as exports were concerned. On the eve of accession (1 January 1986) Spain's exports to the EC had already breached the 50 percent mark; nevertheless this geographical shift in trade was given a further boost after accession, so that today the EU accounts for well over twothirds of Spain's foreign trade, with the value of her exports to the EU exceeding the value of imports from the EU by some 5 percent of Spain's total international trade. Within the EU, Spain's biggest trading partner by a considerable margin is France, followed by Germany, Italy and the UK. Outside the EU, Spain's biggest trading partner by far is the US, from whom Spain imports almost twice as much as she exports.

   As well as a change in the geographical distribution of Spain's foreign trade there has been a change in its composition. Whereas thirty years ago Spanish manufactures were only just beginning to challenge agricultural products as the major type of export, now they are six times more important by value (not counting leather goods and textiles). The reason for the large shift is not hard to find. The biggest export by far is that of road vehicles, for Spain is a major car manufacturer and some 70 percent of her production is exported. Also important are industrial machinery and equipment; other metallic manufactures; and chemicals. These four types of manufactures account for well over half of Spain's exports compared to about 12 percent for non-processed agricultural products, 5 percent for processed food, drinks and tobacco, and a similar percentage for leather goods and textiles. Nevertheless agricultural products are still very significant, the most important items being fresh fruit (especially oranges) and vegetables. In processed foods the most important exports are alcoholic drinks and preserved fruit and vegetables. Turning now to imports, Spain is also a major importer of manufactures. The four types of manufactures referred to above account for almost exactly half of Spain's imports. Other important items on Spain's shopping list are fuels, at about 11 percent of the total shopping bill the most expensive item other than machinery and vehicles; animal products, especially fish and crustaceans (about 5 percent of imports); processed foods and drinks (5 percent); textiles (5 percent); plastic and rubber products (4 percent); vegetable products, especially cereals and animal feed (4 percent); precision instruments (3 percent); and paper products (3 percent).

   Spain's international trade is to a very significant degree in the hands of Spanish subsidiaries of foreign companies. In 1993 the top ten exporters were: Seat-Volkswagen, GM-Opel, Renault, Ford, Citroën, Michelin, IBM, Repsol Petroleum, Peugeot and Nissan (of which only Repsol is Spanish). The top ten importers were: Repsol Petroleum, Renault, GM-Opel, Ford, Seat-Volkswagen, CEPSA, Petronor, Citroën, IBM and Peugeot (Repsol, CEPSA and Petronor are importers of crude oil). These ten companies accounted for 23 percent of Spain's total foreign trade in merchandise.

   The cost of Spain's merchandise imports exceeds that of her exports, thereby creating a deficit in visible trade. In invisible trade, however, Spain has a healthy surplus which makes all the difference to the balance of payments. It should be pointed out, however, that the surplus in invisible trade applies to tourism services only; in non-tourist services there is normally a small deficit.

   Further reading

   - Chislett, W. (1996) Spain 1996. The Central Hispano Handbook, Madrid: Banco Central Hispano (chapter 3 surveys recent developments in foreign trade, investment and balance of payments).

   - Harrison, J. (1993) The Spanish Economy: From the Civil War to the European Community, London: Macmillan (chapter 8 offers a succinct survey of foreign trade). Ministerio de Economía y Hacienda (annual series) Estadística del comercio exterior de España, Madrid (trade statistics).

   C. A. LONGHURST