German Alliance Rivals Unite Against Trump

Fear of U.S. protectionism has united German business leaders, trade unions and government. In a joint declaration seen by Handelsblatt, they defend free trade, while calling for “inclusive growth” that sees a fair distribution of the fruits of globalization.
Quelle: dpa
Germany is a export nation and is alarmed at the protectionist tone coming from the U.S.
(Source: dpa)

Donald Trump has made abundantly plain how he feels about open markets and free trade. His protectionism is nothing short of a horror scenario for a nation as reliant on exports as Germany.

In response, the German government, business groups and trade unions have formed an unlikely alliance to bang the drum for free trade.

In a joint statement obtained by Handelsblatt, the heads of the country’s top business federations and trade unions together with Economics Minister Brigitte Zypries, a member of the center-left Social Democrats, have declared their opposition “to efforts at political and economic renationalization” and demanded an “open and fair trading system at the global level.”

In addition to Ms. Zypries, the signatories include the heads of the Federation of German Industries (BDI), the German Chambers of Commerce and Industry, the Confederation of German Employers' Associations, the German Trade Union Federation and engineering industry union IG Metall as well as 12 other associations and trade unions.

The statement is due to be released today at an international industry conference hosted by the economics ministry.

High import tariffs on German goods wouldn’t only breach international rules but would also severely hamper trade to the detriment of the American economy and its trading partners. Matthias Machnig, Deputy Economics Minister

The authors can rely on support from Chancellor Angela Merkel, who on Monday reiterated her opposition to Mr. Trump’s protectionist and unilateralist leanings.

“I have often said that I remain committed to multilateralism, to mutual trade agreements,” she told a news conference in Munich.

In an interview with Handelsblatt, Deputy Economics Minister Matthias Machnig outlined just how reliant Germany is on free trade and said the United States will damage itself with its new protectionism.

“Almost every second euro generated in Germany comes from exports,” he said. “And almost 10 percent of German exports go to the U.S., a further 60 percent to the E.U. So the German economy benefits strongly from the free exchange of goods and services with the U.S.”

“High import tariffs on German goods wouldn’t only breach international rules but would also severely hamper trade to the detriment of the American economy and its trading partners,” he said. “Protectionism makes everyone poorer. Even the U.S. will have to acknowledge facts now.”

The joint statement is an unusual step given that some trade unions traditionally have misgivings about free trade, as became evident during recent negotiations aimed at reaching a trade deal between the E.U. and the U.S., the Transatlantic Trade and Investment Partnership, which has been abandoned for now in the wake of Mr. Trump’s election.

Matthias Machnig, deputy economics minister.

But the fear of new trade barriers on a massive scale has brought a new sense of unity. Mr. Trump had already pledged during his election campaign to impose customs duties on products from various countries and also set his sights on Germany.

“We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs,” he said in his inauguration speech. “Protection will lead to great prosperity and strength.”

Last week his top trade advisor, Peter Navarro, accused Germany of using the undervalued euro to put its most important trading partner under pressure.

The German declaration makes no mention of Mr. Trump or even of the United States. However, the signatories make no secret of the fact that their appeal is directed at him.

“Companies in the U.S. are reliant on German engineering technology and on intermediate products from Europe, Mexico and other regions,” said Dieter Kempf, the head of the BDI industry federation. Mr. Trump was only damaging his own economy, Mr. Kempf said.

The statement was drafted under the auspices of the “Future of Industry” alliance launched by the economics ministry at the end of 2014 to agree measures that boost Germany’s industrial competitiveness.

It’s not only directed at the U.S. but at China as well. “We demand that our international partners, who appreciate and use the benefits of our openness, guarantee equal conditions for market access in their countries,” said the appeal in reference to criticism of high barriers to entering the Chinese market.

For example, China continues to insist that foreign investors in some industries must seek out Chinese partners. Foreign companies also face disadvantages in public tenders. At the end of last year it emerged that the Chinese government plans to give domestic makers of electric vehicles preferential treatment over foreign companies.

The declaration also contains a commitment to “inclusive growth,” ensuring that all people benefit from globalization.

“Only in that way will we create more acceptance,” said the statement. The concept of “inclusive growth” is moving into the mainstream of the political debate in Germany.

The International Monetary Fund and Organisation for Economic Co-operation and Development have been using the term for some time to describe the need for ordinary people to share in the advantages of globalization.

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The German government used it in the title of its latest annual economic report and even business leaders are starting to warm to it. Mr. Kempf called it an important issue shortly after he became BDI president last November.

Mr. Machnig, the deputy economics minister, said today’s convention has an important message. “We want to make clear at the conference that we stand together for open markets, fair trade and inclusive growth, meaning that people should have a fair share of prosperity. And for the fact that certain values must not be called into question. That’s a clear signal and a clear commitment.”

He said large parts of American industry depended on technology made in Germany to regain competitiveness. “Prohibitive tariffs are a completely wrong move there.”

Asked if he saw a risk that some E.U. countries may seek to take counter-measures if the U.S. slaps tariffs on their products, he said: “No, the commitment to open markets and fair trade is now deeply rooted in Europe and will if anything grow given the contributions to the debate coming from the U.S.”

He said the E.U. had made its position clear by reaching its CETA trade deal with Canada last year, and that talks for a free trade deal between the E.U. and Japan were at an advanced stage while trade talks were also underway between the E.U. and Mercosur, the South American economic bloc.

He appealed to China to drop trade barriers. “We are talking about reciprocity. That means: a German or European company must have the same rights in China as a Chinese company in Germany or Europe. That’s far from the case so far. In some industries in China foreign companies are still required to form a joint venture with a Chinese company. We are holding talks with the Chinese government because that must change.”

 

Klaus Stratmann covers politics and energy policy from Berlin. To contact him: [email protected]