Hubertus von Baumbach: How Fair Is World Trade?

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German industry is globally competitive – but it depends on open markets. The trend towards more protectionism worldwide is worrisome. Hubertus von Baumbach is Chairman of the Board of Managing Directors at Boehringer Ingelheim. He is chairman of the BDI Committee on Foreign Trade. He argues for greater fairness in world trade.

Companies Need Fair Conditions of Competition

Its great innovative capacity makes German companies globally competitive. But if they are to fully benefit from their competitiveness in the markets, companies need fair conditions of competition. This also applies to the company I represent. Less than 10 percent of Boehringer Ingelheim’s sales are in Germany, but about 30 percent of its workforce is here, and it pays about 80 percent of its total taxes in Germany. The company, its employees, and the state all profit from the opportunities offered by trade. That presupposes, however, that global markets are and remain sufficiently open. And this is, unfortunately, not always the case. German manufacturers frequently find themselves competing with rivals who benefit from national preferential treatment. Tariffs and non-tariff barriers sometimes also make it difficult for companies to access foreign markets.

In order to level the playing field, the General Agreement on Tariffs and Trade (GATT) was signed nearly seventy years ago, in 1947. Since then several global trade liberalisation rounds have been concluded, most recently the Uruguay Round that produced the World Trade Organisation (WTO) in 1995. The WTO offers a recognised framework under which its now 162 members can settle trade disputes and defend themselves against unfair trade practices. Critics regard the impasse in the latest round, the so-called Doha Round, as evidence that multilateral trade liberalisation has failed in practice. Yet, the WTO’s multilateral approach must remain the ultimate objective, if global trade is to be placed on a footing of fair competition. There are also, however, many other matters in need of regulation, such as competition questions, investment, services, and digital commerce. Agreements reached between two or more WTO members – in compliance with the multilateral agreements – can contribute to closing these gaps more quickly and can in the medium- to long-term form the basis for WTO agreements.

I would like to see the European Commission engage itself even more for greater fairness in the global markets. I am convinced that the European Union’s new trade strategy “Trade for All” represents a step in the right direction. It proposes a responsible trade and investment policy that seeks to satisfy all relevant groups. In parallel, the EU supports the developing countries’ integration in the global economy, both in the WTO and through economic partnership agreements.

BDI Advocates Greater Fairness in World Trade

BDI is a firm advocate of greater fairness in world trade. In an imperfect world trade system finding the right balance between protection and openness is a never-ending task. We face up to that challenge. For example, in April 2016, the BDI’s Foreign Trade Committee discussed how to ensure fair competition with Chinese steel producers with EU Trade Commissioner Cecilia Malmström. We are also engaged through the G7 and G20 processes in dialogue between states on achieving fairer conditions in world trade. We work tirelessly to improve equality of opportunities. A level global playing field would promote equitable and sustainable trade practices and strengthen the competitive position of our companies in the global markets.