1.1 Strategic aspects

1.1 Strategic aspects

The European Union continues to pursue the objectives of free global trade in fair international competition, high global environmental and social standards, and the freedom of investment. Given that the current environment makes any progress in strengthening the multilateral order very difficult to achieve, and the increasing strategic rivalry with nondemocratic countries over the last few years, the traditional measures of national and international regulatory policy must be bolstered by suitable economic and security policy measures to achieve a good balance between social welfare and security objectives. Over the last few years, Germany and the EU have accordingly taken a tougher stance in their economic relations with China8 , in their overall relations with autocracies9 and, of course, now especially in their relations with the Russian Federation since the turning point on 24 February 2022.

It is therefore only logical that German and European economic policy also needs to be adjusted to the changed security situation. For some time now, it is no longer presumed that more countries and regions will want to commit to a rule-based global economic system in the foreseeable future. The likely result is, instead, a co-existence of competing economic models in the world. This prospect triggers serious concerns that competition for market access to third states will intensify alongside trends to wall off domestic markets.

A strong global position is imperative if the EU is to reach its goals, as much in security policy as in the protection of the environment. The principle of open markets ends when political interference, particularly on the part of authoritarian governments, aims to make Europe politically or economically dependent. More caution needs to be taken of state-owned companies from non-market economies, in particular. As soon as market participants make their decisions based on criteria other than the economic, a level playing field becomes untenable.

Over the last few years and, more recently, with increased momentum and urgency, the heads of state or government in the European Union have responded by formulating objectives and calling for measures by the EU and its member states to strengthen European sovereignty. Decisions have already been made to this end in many fields of policy, including foreign economic policy. In other fields, extensive analyses have been presented to enable individual member states and European institutions to take further action swiftly. The French presidency of the Council of the European Union presidency also aimed to initiate further decisions in the first six months of the year. Russia’s war in Ukraine has added additional stark challenges to the agenda, particularly in energy and raw material policy.

The European Commission has prepared a large number of dossiers. We welcome the declared intention of the European Commission to strengthen the position of the EU in the global economic setting and to confront systemic competitors with a European strategy. This will first and foremost require close coordination between all areas of European economic policy. A successful strategy towards open strategic autonomy requires three things. First, a diversification of import and export partners in critical segments to enable swift diversion to other markets in general. We must learn the right lessons from the recent approaches of the German government in the field of energy policy, for example. General foreign economic policy must, from now on, include considerations of alternative markets as fallback options from the beginning. Second, EU trade policy can no longer be based on

8 BDI (2019). Policy Paper China. Partner and Systemic Competitor – How Do We Deal with China's State-Controlled Economy? 10 January. Berlin. 9 BDI (2021). Discussion paper. Responsible Coexistence with Autocracies in Foreign Economic Policy Making | Discussion Paper on Shaping Global Economic Relations for Systemically Challenging Counterparties. 16 July. Berlin.