Foreign trade

    Free trade as success factor

    More and more countries are acting in a protectionist manner. Yet free trade creates growth, jobs and prosperity, as many examples from the automotive industry show.

    More and more countries are acting in a protectionist manner. Yet free trade creates growth, jobs and prosperity, as many examples from the automotive industry show.

    Trade and investment

    The German automotive industry and its employees depend on international trade. More than 75% of the passenger cars manufactured in Germany are sold abroad. To secure and strengthen Germany and Europe as a manufacturing location, the EU should strive for free trade and the dismantling of trade barriers worldwide.

    If globalization and free trade are structured fairly, all parties can expect to see a rise in prosperity. Unauthorized price dumping as well as protectionist measures should, therefore, be pursued and dismantled by such supranational organizations as the WTO. The WTO has an important function as a guardian of free trade by monitoring compliance with regulations and resolving trade disputes through arbitration procedures.

    Even if the Doha Round has not yet achieved the desired results, it has provided important impetus and will be developed further. After all, a multilateral dismantling of trade barriers remains the ideal solution. As long as this does not happen, the focus will continue to be on bilateral agreements. Numerous agreements have been signed in recent years, and others are under negotiation. They, too, must comply with WTO regulations and meet the minimum requirements for the scope of liberalization.

    Protectionism

    Many countries are reluctant to dismantle trade barriers and try to protect their economies by putting foreign suppliers at a disadvantage. This particularly affects the automotive industry worldwide. For example, some countries try to force investment in local manufacturing by way of high import duties, and not infrequently there are also non-tariff trade barriers. These often take the form of technical regulations that importers can only meet with difficulty or not at all. Another protectionist measure is minimum requirements for local content.

    In 2020, the WTO registered exactly 3,354 Technical Barriers to Trade (TBT) worldwide. Compared to 2015, when 2,000 barriers were reported, this means an increase of more than 1,300. In the long term, protectionism can hardly be expected to work because it usually develops or defends inefficient economic structures.

    Countries like Mexico have shown that opening markets and free trade, as opposed to protectionism, form the better basis for building a strong automotive industry. Eastern Europe, too, has proven with its admission to the EU and the opening of its markets that this creates jobs. Other countries, on the other hand, rely on coercive measures. South America and Russia, in particular, have drawn attention to themselves in this regard, but India also imposes import duties of over 100% in some cases.

    Angela Mans
    Contact person

    Angela Mans

    Head of the Foreign Trade, Trade and Tariffs Division

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