© Pexels/Jess Loiterton

Foreign trade policy cooperation with autocracies

The German economy is globally interlinked – also with trading partners in politically difficult states. The interdependence of Germany and Europe requires a sometimes-difficult balancing act. At the same time, German industry makes its weight felt for sustainably conserving our planet's natural resources and the rule of law. The BDI, therefore, has started a discussion about guiding principles for interdependence.

German industry is strongly cogged into the global economy. In 2020, German companies exported goods worth 570 billion euros to and imported goods worth 478 billion euros from non-EU countries. This constituting almost half of its exports and imports (47.35 percent and 46.61 percent), Germany is thus also closely integrated economically with countries outside the EU. This is particularly true for German industry, where every second job depends on exports.

Precisely because industry benefits considerably from globalisation, it must also face up to the downsides of international trade partnerships. The principle of “change through trade” is increasingly reaching its limits. Market economy, democracy and the rule of law have not spread and prevailed in step with the growth of world trade. Expectations of the “end of history”, of liberal-democratic values and structures taking hold, have been disappointed. On the contrary, we have been observing a strengthening of authoritarian systems for some years. This development poses challenges for businesses and politics.

Change through trade vs. responsible coexistence

In principle, globalization provides opportunities for exchange. As a matter of course, companies provide foremost goods and services. But linked to this exchange, companies also carry our way of life into the world. The main precondition, however, is that liberal-democratic market economies continue to provide wealth and economic opportunity. Without economic strength, without prosperity worthy of imitation, political liberty and the Rule of Law will not take hold in countries governed by authoritarianism. Particularly China and Russia are currently challenging our values in and present themselves as systemic alternatives and counterweights to the “over-liberalised” West. At the same time, these countries represent significant shares of our trade and investment flows.

How should European Member States and economic operators act towards these countries? Under the heading of “responsible coexistence”, the BDI is discussing how to balance economic and political goals sustainably. In this context, it is necessary to define certain principles for economic activity:

  • Democracy and the Rule of Law are the foundations on which we want to help shape the international order.
  • Individual companies must be able to generate profits in order to remain competitive in the long term. Principles for responsible coexistence that make entrepreneurial success impossible cannot be sustainable.
  • Economic strength is a prerequisite for social security and prosperity. A social order that produces neither prosperity nor security will not be able to hold its own as a model in the global competition of systems.

For German industry, it is clear that foreign economic relations require clear boundaries for states and companies. Companies are neither instruments of foreign policy nor can they replace government-like structures. It is not in Europe's interest that economic actors withdraw from regions the standards of which are not comparable with those of the EU. However, in such regions, companies will uphold the principles of the Rule of Law, ensure the safety of workers and the environment in accordance with international standards, and act with respect for and strict observance of human rights. Only in this way can they maintain sustainable production conditions abroad and expect the goodwill of society abroad for their activities. The support of the people in Europe for the foreign activities of our companies will always be measured by the extent to which they comply with European values.

At the same time, the state and companies must accept that fundamentally different social systems will coexist and compete with each other in the long term. Even responsible companies cannot be expected to bring about change as long as states remain inactive. What is more, with regard to global ecological and economic challenges, cooperation is an absolute necessity. This applies in particular to areas such as climate protection, the preservation of biodiversity, global protection against diseases and the digitalisation of all areas of life. Withdrawing from foreign markets and limiting our influence in the world is not an option.

Start of a European discussion

In a market-based democracy, companies are important actors in society. They benefit from the positive features of the Western social order, but also bear responsibility for its functioning. Globally active companies play an important role in shaping relations with third countries. Therefore, economic actors must also take a stand on political issues. The BDI wants to stimulate and deepen a debate on this issue in Germany and the EU and provide guidance for companies and politicians.