European Trade Policy at the Service of Geopolitics?

Requirements for New instruments from the Perspective of Family Businesses
Stiftung Familienunternehmen
Munich, 2022
Univ. Prof. Mag. Mag., PhD. Gabriel Felbermayr

Removing trade barriers

“Trade policy must not and cannot be a substitute for foreign policy.” This is a clear message and also one of the key messages of this study, which scrutinises current European trade and sanctions policy. Another is that Germany is the western country that suffers the most from trade sanctions. In 2019 alone, the damage caused by the sanctions against Russia and Iran totalled around eight billion dollars.

Prof Gabriel Felbermayr describes in detail how the number of economic sanctions worldwide has increased over the years (by a factor of 15 since 1950) and what consequences this has for Europe and Germany. And he also makes it clear that foreign governments are not the only ones to blame: “Europe has also become more protectionist.”

The study also emphasises how family businesses, in particular, suffer from efforts to use foreign trade policy to push through non-trade policy objectives such as human rights or environmental and social policy issues. With their often highly specialised products, family businesses are dependent on open international markets. Internationalisation is therefore a central element of their business model and ensures good wages and secure jobs.

The author does not deny that it may be necessary to adapt foreign trade activities to the geopolitical situation, but argues in favour of reforming the necessary instruments. The more demanding the EU becomes in its trade policy, he fears, the more likely it is that foreign governments will lose interest in cooperating with it – to the detriment of all.

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