The BDI Is Actively Helping Shape Global Governance

Stefan Mair © BDI

Few countries are integrated into the global economy as deeply as Germany. Germany has greatly benefited from globalization. At the same time, this has also created vulnerabilities. German industry relies on open and rules-based markets which ensure an international level-playing-field. Stefan Mair, Member of the BDI Executive Board, explains how BDI helps to shape global economic governance.

What influence does global governance have on German industry?

Germany is one of the biggest trading countries in the world. In 2017, the share of German trade in gross domestic product – in other words, the German foreign trade ratio – was 87 per cent. Germany is also closely integrated into the global economy through investment. According to the German Central Bank, foreign direct investment accounts for almost 3 million jobs in Germany, while our companies have made direct investments abroad totalling more than €1 trillion, which account for some 7 million jobs in other countries.

However, this economic strength has spawned a considerable dependence. More than almost any other country, Germany relies on stable international framework conditions, free markets, sustainable supply chains, and fair competition. This means that the success of the German economy depends heavily on global developments that go well beyond Germany’s sphere of influence. And the challenges are by no means simply of a bilateral or regional nature. Climate change, the impact of digitisation on society, and the safeguarding of a rules-based world trade regime all have an impact on Germany’s economic well-being and demand joint global efforts.

How can German industry play an effective role in shaping global governance?

Above all, it is necessary to work together with governments, to inform them about the problems and needs of Germany industry and to use our expertise to support them. To this end, the BDI has also offices in Brussels, Washington D.C., and Beijing.

The most important thing in global governance is international cooperation. BDI works closely together with industry federations from all over the world. Only by coordinating and aligning our positions and activities can we play an effective role on the global stage. Our involvement in the B7, B20, Global Business Coalition, BIAC, BusinessEurope and the International Chamber of Commerce is essential to effectively represent the interests of German industry in global governance.

Moreover, industry – like civil society overall – is not just an object of global governance but also an actor. BDI allows German companies to play an active role in global governance processes, for example, through ICANN or initiatives aimed at global standardisation.

What will be the most important challenges in global governance in the coming years?

There is no shortage of global challenges. Political tensions and crises such as the trade conflict between the United States and the rest of the world, Brexit and the ongoing conflicts in the Middle East have a direct impact on growth and employment in Germany. The growing political and economic instability can be overcome only if the strength of the law prevails over the law of the stronger.

In addition, there are issues such as climate change and the resource shortage that will take generations to resolve but which we must make every effort to tackle here and now. Without sustainability, we cannot guarantee the future prosperity of Germany, a country that lacks raw materials. It is precisely for this reason that we must pursue a smart resource strategy.

German industry depends on open and stable world markets. The protectionist tendencies of recent years are cause for concern. A fair, rule-based and future-oriented world trade regime must be a top priority. The restrictions on U.S. imports introduced by the Trump administration are damaging to the global economy. The EU should contribute to the de-escalation of the trade conflict and base its response on the tried and tested rules of the World Trade Organisation.  

The European Union is essential for Germany’s role in overall global governance processes. It must not allow the departure of the United Kingdom to create internal divisions; on the contrary, what is needed now is closer European integration. We must strengthen the Eurozone, continue to push ahead with the single energy and digital markets and complete the economic and currency union. The EU remains a cornerstone of growth and employment.