For Open Markets and Fair Competition
EU Trade Policy
Arguments and Positions
Conditions for international trade are getting more difficult. For some years now, the number of protectionist measures has been rising worldwide.
China is becoming ever more important in world trade – while intervening in the Chinese economy by way of planning, also causing distortions of competition. The USA is more and more putting into question the US commitment to international agreements, has launched tariff increases and is threatening further steps. In context with the negotiations about TTIP (the failed free trade agreement with the USA) a critical debate about trade issues was triggered in the EU.
The German chemical industry – a global player
As part of international value networks, the German chemical industry depends on open markets. With imports and exports and many production sites worldwide, it is fully integrated in the global economy.
In 2017, the German chemical industry exported goods worth over 190 billion euros. Out of this, 45 percent went to countries outside the EU. During the same period of time, Germany imported chemical-pharmaceutical goods to the value of more than 132 billion euros. The German chemical industry itself imported raw materials and other inputs (ca. 46 billion euros) and technology. This safeguards the competitiveness of domestic production.
Many companies of the chemical-pharmaceutical industry have production sites worldwide. They benefit from the proximity to customers or use specific location advantages, and they are major nodal points of global value networks. Conversely, foreign companies invest and produce in Germany.
Rules for trade and investment
With its international integration, the chemical industry is exemplary of the export nation Germany which has made good use of the rules of the World Trade Organization (WTO) for a successful orientation to global markets and for becoming part of the international division of labour.
Since 1995, international trade rules have been set and enforced by the WTO, relying on open markets and fair competition. The WTO has created a world trade order which has contributed to growth and prosperity. This world trade order is in danger, most recently in particular due to pressure from the USA.
Additionally to the WTO regime, many countries conclude bilateral trade and investment agreements with further binding rules.
The EU Member States have transferred the competence in matters of trade and international direct investments to the European Union. This is mandatory for an internal market and leads to a large, strong and attractive economic area that benefits companies and consumers.
- For open markets, against protectionism
Germany and the EU should work for open markets and fair competition and against protectionist measures. Protectionist measures, like those taken by the United States, should be countered flexibly under WTO rules – with both retaliation and offers for negotiations.
- Establish fair competition in and with China
China is pursuing an ambitious industrialisation strategy, using state interventions for this purpose.
In response, the EU needs to develop its own suitable strategy for bringing about fair competition with Chinese companies and coordinate these efforts with like-minded partners.
- Strengthen WTO – develop international trade rules further
Trade needs a reliable framework. Therefore, the WTO and its regime must be strengthened and modernised. Here, the EU should lead the way together with the large trading nations USA and China.
- Conclude trade agreements, ratify them at EU level and provide better explanations to society
The EU should conclude WTO-conforming, bilateral trade agreements with important partners and establish new rules therein. These agreements should be shaped in such a way that approval is required only from the Council and the European Parliament. The advantages of international agreements and free trade should be explained better, points of criticism should be taken up, and constructive approaches for solutions should be developed.