布鲁盖尔-Instruments-of-a-strategic-foreign-economic-policy_131页_5mb

Summary of "Instruments of a Strategic Foreign Economic Policy"

Core Content

This study, conducted by the Kiel Institute for the World Economy (IfW Kiel), DIW Berlin, and Bruegel, is commissioned by the German Federal Foreign Office. It examines the strategic foreign economic policy instruments that Germany and the European Union (EU) should employ in light of growing geopolitical tensions, especially between the US and China, and the increasing use of economic tools for achieving foreign policy goals.

The report emphasizes the need for a more integrated and strategic approach to foreign economic policy, moving away from the traditional separation of economic and security objectives. It argues that Germany and the EU must actively shape international economic and political relations rather than adopt a decoupling strategy that would weaken their global influence.

Main Viewpoints

• Interdependence as a Tool: Economic interdependence is increasingly weaponized by major powers to achieve geopolitical goals. This necessitates a more nuanced approach to foreign economic policy that considers both economic and non-economic objectives.

• Multilateralism as a Pillar: The EU and Germany should continue to promote multilateralism as a central pillar of their foreign economic strategy. This includes strengthening the role of the WTO and engaging in bilateral and plurilateral trade agreements.

• Strategic Partnerships: Building and maintaining strategic partnerships is crucial. The EU and the US should work together to exert influence on China, particularly to encourage it to open up its economy and reduce harmful state subsidies.

• Defensive Instruments: The EU needs to enhance its defensive instruments to protect its economic interests, including investment screening mechanisms and rules to block foreign investments with excessive subsidies. These instruments help ensure fair competition and provide a retaliatory mechanism when international rules are breached.

• Globalization and Protectionism: Protectionism is viewed as a mistaken policy choice that could undermine the interests of the middle class and weaken Europe's competitiveness. The report argues that a new golden age of globalization may emerge as the world recovers from economic crises.

Key Information

1. Monetary and Macroeconomic Policies

• A strong international role of the euro is essential for Germany and the EU's foreign economic policy.
• The digital euro, deep capital markets, and a stable financial system are important for maintaining this role.
• The EU should continue to integrate national policies into a coherent framework, such as the banking union, capital market union, and single market for services.
• Strengthening the Digital Single Market and increasing investment in technology is vital for Europe's competitiveness and resilience.

2. Climate Policy

• The EU's Green Deal will have significant impacts on global trade, including reduced fossil fuel imports and increased demand for raw materials for green technologies.
• The EU should complement its domestic carbon pricing with a well-designed Carbon Border Adjustment Mechanism (CBAM) to prevent carbon leakage and encourage global decarbonization.
• A transatlantic agreement or an open climate club could incentivize China to increase its climate efforts, as it is a major emitter.

3. Technology Policy

• Digital technologies are central to modern trade and economic policy, and their weaponization is a growing trend in geopolitics.
• The EU needs to strengthen its regulatory framework, increase investment, and improve the Digital Single Market to remain competitive.
• Defensive measures such as investment control are necessary to protect key technologies and reduce vulnerability to China's growing influence.

4. Trade Policy

• Trade policy instruments are used not only to promote domestic welfare but also to influence foreign governments and shape international standards.
• The "Brussels Effect" refers to the EU's ability to influence global standards through its internal market and regulations.
• The EU must ensure that its trade agreements are self-enforcing, with mechanisms to minimize incentives for non-compliance.
• Sanctions are increasingly used as a tool for achieving international objectives, and the EU should enhance the credibility and effectiveness of its sanctioning mechanisms.

Policy Conclusions

• Germany and the EU should not pursue decoupling or dismantling international linkages, as this would weaken their economic and political influence.
• The EU must strengthen its macroeconomic imbalances procedure (MIP) to address internal market barriers and promote free trade and investment.
• A proactive approach to developing the digital euro is recommended to protect Europe's economic interests and increase its leverage in global markets.
• The EU should deepen transatlantic cooperation on climate, technology, and trade to better manage geopolitical interdependencies.
• The integration of national policies into a common framework is essential for protecting economic interests in a polarized world.

Strategic Recommendations

• Enhance the International Role of the Euro: Through financial integration, stable institutions, and fiscal coordination.
• Strengthen the Digital Single Market: By increasing investment, improving venture capital funding, and ensuring data sovereignty.
• Promote Global Decarbonization: Through the EU's Green Deal and the use of CBAM to encourage foreign producers to decarbonize.
• Develop Strategic Partnerships: Especially with China, to encourage economic openness and reduce state subsidies.
• Improve Trade Agreements: To ensure they are self-enforcing and help maintain global stability.
• Enhance Sanction Credibility: By improving intelligence, decision processes, and creating resilience funds.

Conclusion

The report concludes that Germany and the EU must adopt a more strategic and integrated approach to foreign economic policy. This involves a balance between promoting multilateralism, strengthening defensive instruments, and fostering strategic partnerships. The EU's role in shaping global standards and maintaining economic stability is critical, and its policies must be designed to address both economic and geopolitical challenges effectively.