- World trade and the international supply chain are currently under more stress than ever before: The political arena has also undergone radical change as a result of the war in Ukraine. The competition of systems with China is intensifying. What is more, the challenges of climate change continue to be explosive, and the fight against COVID-19 and the consequences thereof is still ongoing.
According to the company’s website news release on November 3, 2022, at present, the rise in energy costs is placing a considerable burden on competition within the chemical industry. The reduction of strategic dependencies and the diversification of relations is gaining momentum while we search for trade policy responses to all these challenges. However, the EU continues to direct its policies towards climate and environmental leadership – and this includes developing unilateral trade barriers such as Carbon Border Adjustment Mechanism (CBAM).
Germany is under pressure as a trading nation
With its products, the German chemical and pharmaceutical industry, as part of an innovative global value network, contributes globally to both prosperity and UN sustainable development goals. In 2021, Germany exported chemical-pharmaceutical products worth more than 230 billion euros – roughly half of which went to countries outside the EU. At the same time, Germany imported chemical and pharmaceutical goods worth in excess of 162 billion euros. The chemical-pharmaceutical industry itself also imports raw materials, infeed products, and technology. The industry operates globally and benefits from its proximity to sales markets, the advantages that come from being in a specific location, and its leading expertise in intellectual property rights. Meanwhile, foreign companies are investing and manufacturing products in Germany. Without trade, we would see a significant loss in value creation. The global network will also help to transform the global economy in line with the UN’s Sustainable Development Goals. However, COVID-19 and the dominance of geopolitics have both taken their toll on supply networks. Resilience is now emerging as a priority for the companies’ coordinate systems alongside efficiency and sustainability.
Within the framework of the World Trade Organization (WTO), the German chemical-pharmaceutical industry has successfully integrated itself in global markets and the international division of labour. This trade order has eroded gradually in recent years, and we are yet to see a new regulatory framework emerge. The EU orients its new trade strategy to the principle of an “open strategic autonomy”: The EU must be brought in good shape for the facing global challenges without throwing its openness into question. Diversified relationships would increase resilience. But the EU is very slow in this respect. The agreement with the South American common market “Mercosur” is ready for ratification but on hold, while facts are being created in Asia with two major trade agreements (RCEP and CPTPP).
THE VCI IS CALLING FOR THE FOLLOWING
- Open markets and modern trade rules – instead of going it alone and implementing protectionist policies. Germany and the EU should work for open markets and fair competition rules, and against protectionism. Climate protection, food, healthcare and prosperity all depend on trade. The WTO provides an important basis for this, but it needs to be modernised or supplemented.
- Embrace competition of systems with China. The EU needs to respond to China's geopolitical and industrial policy strategies with a strategy of its own. It should support companies in the competition of systems with China and coordinate these efforts with partners.
- Form alliances with the USA and other partners by means of trade agreements. Time is running out to implement new regulations, roll out sustainable technologies, and diversify trade relations. It is therefore crucial that we have international agreements. The EU should work closely with the USA in the Transatlantic Technology and Trade Council to address issues affecting transformation and security.
- Compensating for competitive disadvantages from the Green Deal without bulkheading. The ambitious goals and measures of the Green Deal threaten to put industry in Europe at a competitive disadvantage. Compensating for such disadvantages with unilateral measures at external borders which focus on making imports more expensive instead of relieving them is a risky and burdensome venture that must be avoided.
CONTACT PERSON
Dr. Matthias Blum
Bereichsleitung Außenwirtschaft, Industriepolitik
E-mail:mblum@vci.de
Tags: All Products,AlwaysFree,English,Europe,Germany
Published on November 18, 2022 4:01 PM (GMT+8)Last Updated on November 18, 2022 4:01 PM (GMT+8)
