Economic and political risks in international trade pose major challenges for state export insurance, especially in emerging and developing countries. New business models and changed value chains require a reform of Hermes Cover.

Open markets are vital for the competitiveness of German industry. German companies are active worldwide. They produce a lot for foreign countries, and they source raw materials and parts from suppliers from countries. If the world economy will increasingly break up into blocks, Europe's attractiveness as a business location could suffer considerably. This is shown by the joint project on globalisation scenarios by companies, the BDI and the Bertelsmann Foundation.

In global system competition, things are getting rougher and rougher. Trade conflicts are being fought with ever tougher sticks. In the future, the EU must make full use of its trade and foreign policy competences. Member states must show willingness to put aside special interests. The new German government must bring the weight of Europe's largest economy to bear. Only a trade policy that focuses on opening markets can be successful.

For the European Union (EU), international trade and investment under fair conditions are a requirement for securing growth, sustainability and jobs. Therefore, the EU needs an effective and balanced toolbox to create a level playing field worldwide.

In mid-February 2021, EU Trade Commissioner Valdis Dombrovskis presented the European Commission’s new trade strategy, which places a stronger focus on environmental and climate protection as well as the assertion of the EU’s own interests. The BDI warns against overloading the trade agenda with too high expectations and creating additional trade barriers.

The global division of labour has enabled worldwide gains in prosperity. But even before the corona pandemic, the interdependence of global value chains seems to have lost momentum. This is linked to protectionism that has been spreading worldwide for years. At the same time, digitalisation fuels structural changes. In both areas, the European Commission and the German Federal Government must work to establish sustainable and future-oriented rules.

While public procurement markets in the European Union (EU) are comparatively open for international bidders, third countries are often reluctant to open their own markets. In order to rebalance the situation, the European Commission has proposed an International Procurement Instrument (“IPI”). The aim is to establish a legal framework for the access of goods and services from third countries to European procurement markets and to gain more leverage in trade negotiations with key partners to open their markets.

As globalisation has advanced in recent decades, emerging markets such as China, India, and Brazil have expanded their economic importance. Germany is benefiting from this. However, the global power shift is also accompanied by geoeconomic risks.

Protectionism is on the rise. In addition to import and export tariffs, market access barriers include quantitative import restrictions, unnecessarily complicated technical standards, and subsidies. This endangers economic growth and jobs worldwide. The German economy, in particular, is suffering from the global trend towards isolation.

Global economic growth is losing momentum – not least because of the trade conflict between the United States and China. So far, worldwide economic losses are mostly concentrated in these two countries. German companies, however, are also suffering: they are impacted through production networks, market distortions, and production locations abroad. Above all, the new uncertainty is damaging investments – and thus tomorrow’s growth.

Digital trade is on the rise. It offers great opportunities to both producers and consumers. At the same time, there are few rules governing this new type of trade – neither under the World Trade Organisation (WTO) nor in bilateral trade agreements. And there is a severe risk of protectionist setbacks.  

U.S. President Donald Trump accuses Germany of trading unfairly, pointing at the country’s trade surplus. However, a look at the bilateral trade balance alone is misleading. Germany's high surplus reflects different business models of German and U.S. companies. For the whole picture, it is important to have a look at all trade and investment relations between the European Union (EU) and the United States.

Globalisation has fostered growth and prosperity worldwide. At the same time, its consequences for social justice and the environment are contested. A look at the facts shows that globalisation also benefits the poorest and does not have to be harmful to the environment. However, it is important to shape the legal framework of globalisation. Much remains to be done.