His call reflects what has become the conventional wisdom, to interpret the widespread predictions of future economic growth in China and India as meaning that Asia will be the new center of gravity for the world economy, and for the foreign and economic policies of the United States.

Certainly the emerging markets like China and India (but also including Russia and Brazil and Poland and Turkey) accounted for half of global growth last year, and on current form will soon be producing more than half of all the wealth generated on the planet.

The conventional wisdom, however, is wrong. By far the most important economic relationship for the United States is the balanced and mutually beneficial trade and investment relationship with Europe.

For example, U.S. investment in Ireland in 2006, at $413.3 billion, was greater than all of U.S. investment in Latin America.

U.S. investment in the Netherlands alone, at $33 billion, was greater than U.S. investment in all of developing Asia (that is Asia excluding Japan and South Korea).

The plain fact is that Europe is a vastly more important market for U.S. companies and for their affiliates operating in Europe than China or India.

For example, sales in China by U.S. affiliates at $86.5 billion were less than a third of the level in Germany ($308 billion), and less than half of the sales in the Netherlands ($195 billion) or France ($193 billion) or Ireland ($151 billion).

Sales by U.S. affiliates in India, at $16 billion, were roughly half of the $31 billion in sales in Poland.

The vast bulk of U.S. investment overseas goes to Europe (59 percent of the total in 2006, which is markedly higher than it was in 2001). And this is more than balanced by the commitments Europe has made to the U.S. economy, which provided almost 75 percent of all the foreign investment that came into the U.S. economy in 2006. Europe invests about five times as much in the United States as it does in China.

These figures, which come from "The Transatlantic Economy 2008," written by Dan Hamilton and Joseph P. Quinlan of the Center for Transatlantic Relations at the School of Advanced International Studies in Washington, underpin their argument that "The trans-Atlantic economy remains in many ways the foundation of the global economy, notwithstanding the much-discussed rise of emerging markets."

On raw trade figures, trade across the Pacific has long exceeded trade across the Atlantic, but that is not quite the way that the global economy works these days. The role of trade in the traditional sense, in which goods are made in one country and then packed up and shipped and sold in another country, no longer reflects the reality of global commerce.

Increasingly, companies prefer to send investment rather than goods, so they can build a factory or start an affiliate in the market they are targeting. As a result, the real measure of commerce between countries needs to include flows of foreign investment and affiliate earnings. This is also a more balanced way to trade, since it involves employing local people, making a commitment to the foreign market by building a plant or establishing a subsidiary.

Altogether, the trans-Atlantic economy of Europe and the United States is worth nearly $4 trillion a year and directly employs 14 million people. That is the total number of Europeans working for American companies in Europe, and Americans working for European-owned companies in the United States. And on the whole, they have higher-paying jobs than the average and work for employers who offer better labor and environmental standards.

The trans-Atlantic economy has also been good for shareholders on both sides of the Atlantic. Europe accounted for about half of the global earnings of U.S. corporations. U.S. affiliates in Europe earned $147 billion in 2006 -- that is profits, not just sales. And European affiliates operating in the United States posted record 2006 profits of $89 billion -- more than 20 times what their affiliates earned in China and India combined.

These two economies are bound at the hip, mutually dependent and mutually profitable. Together, they dominate the global economy. Each has a total gross domestic product of about $14 trillion (depending on the ups and downs of the exchange rate) in a global economy of around $50 trillion.

(Note that most of the assessments of the size of the Chinese economy are based not on dollar GDP figures but on PPP, or purchasing power parity, which seeks to account for the different costs and prices in different countries. Until last month the World Bank reckoned that under PPP, China's GDP was more than $8 trillion, but the recalculation reckoned that in realty it was not much more than $5 trillion. In dollar terms, China's GDP is around $2.5 trillion, larger than that of Britain but smaller than that of Germany.)

What all this means is that forecasts of the inevitable dominance of the global economy by China or India should be treated with some care. Their giddy ascents remain at risk from global slowdowns or recessions, from environmental and social problems, from political upheavals and stock market crashes. And they also remain at risk from the growing political rhetoric against free or "unfair" trade.

Protectionism is a real threat, but much more to the trade between the United States and China than to the far more balanced and mutually dependent economic ties between the United States and Europe. And that puts into an interesting and rather different context Balladur's proposal for a "union of the West." Follow the money, and it is already under way.

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