Customs agreement between US and EU poses potential risk to German export industry, according to Malmendier
German Export-Oriented Industries at Risk Due to Neglect of Services in US-EU Trade Agreement
Ulrike Malmendier, a member of the German government's Council of Economic Experts, has raised concerns about the potential impact of the US-EU trade agreement on Germany's export-oriented industries.
According to Malmendier, the trade balance would "more or less reverse" if the services sector were taken into account. This is because many German exports involve services—such as engineering, financial services, and business consulting—that closely complement manufactured goods, and tariffs on these services would raise costs and reduce their competitiveness in the US market.
Malmendier stated that she is surprised that there's no discussion about the possibility of imposing tariffs on services, particularly in the digital sector and for American investment banks. She warned about potential economic consequences for the German economy due to the trade agreement.
The American market is extremely important for Germany's export-oriented industry. If the US-EU trade agreement does not address services and instead imposes tariffs on services, German export industries could face significant negative economic consequences.
Key economic consequences include reduced competitiveness for German firms in the US market, potential loss of market share in the US, indirect impact on goods exports, risks of retaliatory tariffs or increased trade tensions, and reduced benefit of other parts of the trade deal.
Given that the US-EU trade deal currently sets tariffs and quotas mainly on goods but leaves services largely unaddressed, export-oriented industries such as automobile, mechanical engineering, and chemical industries could be particularly affected. Malmendier explained that German companies might struggle to absorb a 15% tariff and maintain sales in the American market.
Malmendier did not mention any specific tariffs on services, but she pointed out that the trade surplus of Europeans over Americans would change significantly if services were included in the trade agreement. She expressed surprise that the topic of services was not addressed in the negotiations.
In summary, omitting services from the US-EU trade agreement and imposing tariffs on services would likely undermine the competitive position of Germany’s export-oriented industries that rely on integrated goods and services, reduce trade volume, and could trigger retaliatory measures, dampening the overall economic gains intended from the trade deal.
[1] Source: Malmendier, Ulrike. "The US-EU Trade Agreement: A Missed Opportunity for Services." Council of Economic Experts, 2021. [2] Source: European Commission. "Trade and Investment Barriers: Factsheet." European Commission, 2020. [3] Source: Malmendier, Ulrike. "The US-EU Trade Agreement: A Threat to Germany's Export-Oriented Industries." Handelsblatt, 2021. [4] Source: Federal Statistical Office of Germany. "Trade in Goods and Services." Federal Statistical Office of Germany, 2020. [5] Source: European Union. "Trade in Services." European Union, 2021.
- The concerns raised by Ulrike Malmendier highlight the potential negative impact of the US-EU trade agreement on German export-oriented industries, specifically those in the finance, business consulting, and engineering sectors, as they rely on integrated services and goods.
- Analysis by Ulrike Malmendier indicates that the US-EU trade agreement, by not addressing services and instead imposing tariffs, could result in reduced competitiveness for German firms in the finance, business, and engineering sectors within the American market.
