The leadership of the World Trade Organization seems to be able to teach the global supply chain one or two things about resilience. After Omicron forced member states to cancel this week’s large ministerial meeting in a short time, Director General Ngozi Okonjo-Iweala quickly stepped up and said that no one gave up and started planning Resume negotiations. There are some ideas for rescheduling the ministerial meeting in March, although this seems a bit ambitious to us. In any case, Okonjo-Iweala stated that she will work hard to advance major issues such as fishery subsidies and intellectual property exemptions for Covid-19 vaccines through ambassadorial negotiations in Geneva.

Although the WTO agreement on domestic service supervision is not large in scale, it has symbolic significance and is yielding results. We remain highly skeptical about the progress of intellectual property exemptions, despite some more promising voices about fisheries. At least they will give it a try.Today’s main article focuses on what the change of the Berlin government means for the trade policies of Germany and the European Union. Concession waters Showed us why the latest surge in Covid cases in Germany will exacerbate supply chain barriers.

The greens move with the grain

The traffic light era is coming, and the new Social Democratic Party/Liberal Democratic Party/Green Alliance is coming soon Power in Germany. On some issues, all parties come from, for example, different perspectives-financial sadism Free of order The relative sanity of FDP and SPD. You might predict that a similar trade conflict will arise between the traditional free market FDP and the Green Party, which has been granted the Ministry of Economy and Climate to implement trade policies. The Green Party has been criticizing Angela Merkel’s strategy of friendly exchanges with China, and they hope to include human rights and environmental concerns in the trade agreement.

In practice, there may be more alliances and unity than this, and More continuous With Merkel. The German Green Party of the Bundestag is actually very pragmatic in terms of its relationship with companies: Mikko Huotari, Executive Director of the Bundestag Merish The think tank pointed out that they support the record of the German export industry at the state level. No matter who is in the government, large industrial companies like Volkswagen are very good at promoting their interests. In any case, Olaf Schultz’s Chancellery will undoubtedly have a great say in trade policy.

The most interesting part is the overall background. With the disillusionment of the German public and companies about dealing with China, German policy has been turning to a mentality of skepticism about traditional trade agreements that are purely focused on access to export markets.

Reinhard Bütikofer, the veteran German Ministry of Environmental Protection and the Chinese hawks of the Chinese hawks, was a member of the negotiation team of the Green Party Alliance. This week, he incredibly quoted the words of former Social Democratic Party Chancellor Gerhard ScherØder, usually not one of his political heroes. Regarding foreign policy, he said, “Wir wollen nicht alles anders, aber vieles besser machen” (“We don’t want everything to be different, but we want to do better.”). Given that German voters kept the coalition government in power throughout the postwar period, his quote reflects an instinctive respect for consensus.

Bütikofer believes that an emerging consensus that doubts China is aligning Germany’s business, human rights, and national security communities. A useful lesson is the fate of the China-EU Comprehensive Investment Agreement (quit) The Merkel government bid for Germany’s export sector and struggled through the coming days of its EU rotating presidency last year.China’s subsequent move Severe sanctions To parliamentarians across Europe (including Bütikofer, who is clearly satisfied), and even think tanks like Merics, means that CAI is in a deep freeze.

If the sanctions are lifted and Beijing does some serious work on reconciliation, CAI may be supported by a majority of seats in Germany and the European Parliament. SPD is rooted in industrial unions and instinctively wants to support German manufacturing. However, China’s growing belligerence and its “dual cycle” strategy puts the domestic economy above exports, which indicates that CAI may become a fulcrum for Sino-European relations. “I never advocate decoupling,” Bütikofer said. “On the other hand, we have indeed seen some decoupling with Chinese characteristics, and we must solve this problem.”

More broadly, under the continued pressure from France, the overall thinking of EU policy has turned to be skeptical of traditional trade agreement models.

A typical example is EU-Mercosur The trade agreement is because EU environmentalists worry that Brazil will burn the Amazon River, and French cattle farmers who are threatened by beef imports also conveniently support this view. In response to public opposition, Merkel cautiously expressed “quite doubt” about the agreement last year and stopped actively promoting it.new Alliance statement Going further and clearly requiring strong measures against deforestation as a condition of approval.

Another example: The European Commission has prepared a series of unilateral (sorry, “autonomous”) arms Against foreign fraud (not in technical terms), including Anti-coercion instrument, New corporate due diligence responsibilities for environmental and human rights standards, and tools to prevent subsidized foreign companies from stealing government procurement contracts in the EU.

Germany is generally cautious about these tools, warning the committee not to impose a heavy burden on industry and not to incur foreign retaliation against exports. Hotari said, especially in terms of procurement, “The message to the committee now is that what you have done is good, and we will not set up as many obstacles on your path as we did in the past.”

We will study other aspects of German trade policy in future newsletters, especially carbon border pricing. But our preliminary conclusion is: What we need to pay attention to is not only Schultz for Merkel, but also the basic trends of Europe’s focus on China and trade.

Concession waters

Ordinary readers will know our view that most of the chaos we see in the supply chain comes down to a huge shift in demand, from services to consumer durables. The world and his grandmother used the pandemic as an excuse to hoard everything from laptops to dumbbells. No wonder the system is under pressure.

To understand the scale of the shift—and how important it is still—we show you the chart below. It shows that the surge in Covid cases in Germany has triggered the cancellation of restaurant reservations. This will free up more disposable income for the purchase of physical goods on Christmas Eve. Claire Jones

Trade ties

scoop Aime Williams and Andy Bounds from Brussels: The United States is Back down Resolve the steel and aluminum tariff dispute with the United Kingdom because the United Kingdom said that London is threatening the Good Friday agreement in Northern Ireland.

American Progress Policy Institute Trade facts this week Say Donald Trump’s tariffs May have increased by about 0.5% inflation.

Chad Bown of the Peterson Institute Look systematically why Trump/Biden trade policy That’s it.

Intel CEO Said, waiting for U.S. legislation Safe semiconductor supply, The government should Increase investment in U.S. companies (Nikkei, $) than Samsung with TSMC Prevent intellectual property from “returning to Asia.”

Good news for trade, not good news for the earth. Large coal miners In indonesia Turn a loss into a profit (Nikkei, $) In the first nine months of this year, with China, India With neighbors Southeast Asia It is the main export destination. Alan Beatty and Francesca Regalado