Germany is one of the most open markets and successful economies in the world. That means it is also open to investments from abroad. Fair competition based on the free market made Germany what it is today in economic terms.
But ever since developing countries like China started growing so fast, we are confronted with new, unresolved challenges.
For instance, state-owned companies in emerging economies enjoy government support, even as they invest around the world with all their might. They do so under conditions that make it impossible for other bidders to compete – namely those bidders that operate in the framework of a free market, private economy.
The choice is not between 'protectionism' and 'open markets.' It is between open markets on one hand, and state intervention and unfair competition on the other.
It is for good reason that in Germany and Europe, we have rules governing competition to which all must adhere. Subsidies or other support in acquiring firms are not allowed. They don’t fit in with our European economic order. We want the decisive factor to be product quality and not simply the most attractive financial offer.
What would be desirable is an international legal framework governing competition, in order to guarantee fair global competition regarding financing, also in acquiring companies.
As long as we don’t have such binding regulations – and it appears that we won’t get them in the foreseeable future – some help in combating unfair trade practices is offered by anti-dumping and anti-subsidy laws.
For this reason, I propose strengthening what the European Union can do against unfair trade.
First, existing regulations should be applied more quickly and effectively.
Second, we need to achieve real impact in cases where excess global capacities lead to dumping exports below actual cost.
The German and European steel industry, for instance, is currently struggling with low prices caused by a flood of cheap Asian steel on the market. The situation demonstrates how important decisive action is for making instruments for protecting trade more effective.
We also don’t have the right tools to fight unfair practices in company acquisitions. These takeovers – including from countries outside the European Union – are under the protection of freedom of capital movements within the internal European market.
It is possible to examine commercial acquisitions from the standpoint of German foreign trade legislation, and then to prohibit them if aspects of public order or security interests are endangered. But these legal hurdles are quite high, and they distort a view of critical and fundamental questions regarding economic policy.
The time has come to remove these obstacles. What if free movement of capital is exploited by others, in order to take over European companies by using unfair advantages?
In that case, our free-market guarantees expose us to abuse from outside.
So we must seriously ask ourselves whether we want to allow investors from outside the European Union to operate in our free market framework, with abundant financial means provided by state intervention in their own economies.
In no way am I ready to sacrifice jobs and firms on the altar of open European markets. The choice is not between “protectionism” and “open markets.” It is between open markets on one hand, and state intervention and unfair competition on the other.
Should it only be possible for state agencies to intervene when investments involve security or defense? In my opinion, this is not enough. For this reason, I hope to begin a discussion in the European Union with the European Commission and member states.
For industries that are strategically important to the European economy, we should consider weighing the interests of investors against E.U. interests with regard to industrial policy.
The fields where tomorrow’s prosperity will grow are changing. We must take this changed situation into account.
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