VCI position in a nutshell

EU Trade Policy

World trade has been losing momentum. The causes are manifold: Protectionist measures are on the rise world-wide. China is intervening by way of planning and distorting competition. The USA has put into question its commitment to international agreements, increased tariffs and started a trade war with China.

It is still open what course the US trade policy will take under the new leadership. Moreover, Brexit brings new barriers between the EU and Great Britain.

In the EU, too, there is an increasing debate about the protection of domestic products. Furthermore, with its "Green Deal" the EU Commission wants to focus its policies on climate and environmental protection and the circular economy – which comes with the conception of new trade barriers such as border adjustment measures.

A strong factor: global networks

With its products, the German chemical and pharma-ceutical industry, as part of innovative international value networks, contributes globally to prosperity and the UN sustainable development goals. In 2019, the industry exported goods worth ca. 202 billion euros. Out of this, roughly half went to countries outside the EU. During the same period of time, Germany imported chemical-pharmaceutical goods to the value of more than 145 billion euros. The German chemical and pharmaceutical industry itself imports raw materials, other inputs and technology.

Many companies of the industry have production sites worldwide and benefit from the proximity to customers or use specific location advantages. Also, foreign companies invest and produce in Germany.

Changing world trade – further strengthen the EU

Within the framework of the World Trade Organization (WTO), the German chemical industry has successfully integrated itself in global markets and the international division of labour. The world trade order created by the WTO has contributed to growth and prosperity. Over the past years, this order has eroded gradually. Therefore, the EU has presented proposals for reform.

The European Union has the competence for its Member States in matters of trade and investment, so that the EU can benefit from the strength of the single market. The EU has concluded comprehensive free trade agree-ments with several countries. The agreement with the South American common market "Mercosur" is ready for ratification. While EU processes are lengthy, currently facts are being created in Asia with two major trade agreements (RCEP and CPTPP).

At present, the EU is revising its trade strategy towards an "open strategic autonomy". It is important to get the EU in shape for the changed global environment without calling its openness into question. Another important point is that the German federal government advocates exports and trade interests in the setting of the EU.

THE VCI IS CALLING FOR THE FOLLOWING

  • Open markets and modern trade rules – against protectionism
    Germany and the EU should work for open markets and fair competition rules – and against protectionism. This should be reflected in the new EU trade strategy too. Climate protection, food, healthcare and prosperity can be safeguarded only with free, rules-based trade. The EU should reform the WTO together with the USA, Japan, China and others.
  • Constructive dialogue with the USA
    The US has increased tariffs vis-à-vis the EU and is threatening further increases. The European Union should take a strong stance while seeking unity with the new US administration.
  • Competition of systems with China
    The European Union needs to respond to China’s geopolitical and industrial policy strategies with an EU strategy of its own. The EU should seek fair competition with Chinese companies and coordinate these efforts with like-minded partners.
  • Bilateral trade agreements
    The EU should conclude bilateral free trade agreements with important partners. A conclusion of the negotiations with the UK is the top priority.

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Contacts

Dr. Matthias Blum

E-Mail: mblum@vci.de