The EU/China Trade War and German National Interest
In an interview with Spiegel on Monday, Angela Merkel discussed Germany’s role in light of the crisis and the path for future growth and cooperation in Europe. The talk covered pressing issues in the realm of European governance, such as the role of the European Commission, transparency in both Germany and the EU, and the adaptability of the European decision-making process in the context of global economy and trade.
Regarding all of these issues, the overall position of the chancellor indicates an acknowledgement of the need for more centralized coordination, while also remaining cautious not to set aside German national interests: even though “economic coordination in Europe is far too weak and has to be strengthened,” it does not imply “giving more authority to Brussels.” The argument emerged from the debate over the power of the president of the European Commission and the role of the European people in the election process. While criticisms of a lack of transparency in European institutions in part derive from the ability of the commission to elect its president, Merkel points to more urgent efforts of member states to work on issues such as trade, employment, and research before reevaluating the structure of European institutions. Restructuring certain positions would create an imbalance disadvantageous to the current situation.
The debate over Germany’s role and unified economic coordination has recently taken shape in the discrepancy over handling Chinese price-dumping of solar panels. On Tuesday, European Trade Commissioner Karel De Gucht announced that the commission would impose punitive tariffs on China to force negotiation in the coming months. As Chinese companies have been cooperating with officials of the commission in fear of increased tariffs, the Chinese government has threatened to engage in a trade war with Europe—a development that could significantly harm German industries.
Germany, among other nations, has voiced its opposition of the commissioner’s measures but failed at outvoting his decision, an outcome that would require a qualified majority in the commission. Depending on exports to China, Germany’s economy would suffer from a trade war with its largest market in Asia. A potential Chinese retaliation targeted at the steel or auto industry would affect key industries in Germany. Punitive tariffs do not only raise concern about long-term trade relations with China in other sectors, but also in the solar industry itself: the tariffs would negatively affect German companies that contribute to the production of solar panels in China that eventually enter the German market. On the other side, few German producers of solar panels support the tariffs, responding to the increasing pressure created by Chinese price-dumping. Consequently, there is a divide in Germany in which the maintenance of the trade partnership with China outweighs the complaints of individual companies.
Having experienced difficulties in negotiating with China on anti-dumping measures, European Commissioner De Gucht emphasized the need for unified support and a prompt implementation of the tariffs, thereby indirectly criticizing Berlin for complicating the process. The situation exemplifies Merkel’s perspective on the lack of economic coordination and speed in decision-making. In this case, however, it is her administration that seems to contribute to the division of interests. Her prioritization of the German / Chinese trade relationship over the consent of the majority of European member states demonstrates the reason for Germany’s reservation to hand over more power to the European Commission. Apart from Germany’s role in the Euro crisis, its position translates to issues regarding relationships outside of the EU—a stance that complicates the compromise between national and European interests and the coordination of European trade relationships.
René Pfister, Martin Doerry, and Konstantin von Hammerstein. “Angela Merkel in Europe: ‘We are all in the same boat,’” Trans. Christopher Sultan. Spiegel Online, June 3, 2013.
Christoph Pauly and Melanie Amann. “Solar Strife: EU Fires First Shot in Trade War with China,” Trans. Christopher Sultan. Spiegel Online, June 4, 2013.