Merkel eyes free trade zone to help the west rival China
Financial Times | Sept. 16, 2006
Merkel eyes free trade zone to help the west rival China
By Bertrand Benoit in Berlin
Spurred by concern about China’s growing economic might, Germany is considering a plan for a free-trade zone between Europe and the US.
A senior aide to Angela Merkel said the chancellor was "interested" in promoting the idea as long as such a zone did not create "a fortress" but rather "a tool" to encourage free trade globally, "which she is persuaded is a condition of Germany’s future prosperity".
Separately, on Friday, the US, Canada and the European Union complained to the World Trade Organisation about China’s tariffs on car parts, raising the prospect of Beijing facing its first WTO dispute.
The three said they had lost patience with Beijing’s refusal to further open the $19bn-a-year market.
News that the free trade zone, last pursued by Sir Leon Brittan, when European trade commissioner in 1998, is being debated in the German chancellery testifies to the rapprochement between Washington and Berlin since Ms Merkel’s election last November.
This convergence of views was underlined this week when Wen Jiabao, Chinese premier, was politely chided by Ms Merkel for China’s poor human rights record and recent restrictions on foreign news agencies, during an official visit to Berlin.
As German perceptions of China have grown more American, Washington’s approach has shifted too. Speaking before his first trip to Beijing, Hank Paulson, US Treasury secretary, this week outlined a more balanced policy mixing traditional US criticism with praise for China’s reforms.
Ms Merkel’s aide said it was "far too early" to tell whether the project of a transatlantic free-trade zone would be part of Germany’s priorities when it assumes the six-month presidency of the European Union and chairs the G8 group of leading industrial nations from January.
Two of Ms Merkel’s most senior advisers, Jens Weidmann on economic policy and Christoph Heusgen on foreign policy, have warned her the initiative could be construed as protectionism.
Yet the notion has struck a chord with Ms Merkel, who has often called for "a global framework of rules" - minimum social, environmental and ethical standards - to prevent competition from sophisticated yet authoritarian low-wage economies eroding western achievements in these domains.
"The west needs to pull together," Gabor Steingart, Berlin bureau chief for the Spiegel weekly, told the FT yesterday. His book, World-War for Prosperity, a warning about the dangers of globalisation published this week, is credited with influencing the debate in the chancellery.
"What Nato did for the west under the cold war, Tafta (Transatlantic free-trade area) can do in the current battle."
Additional reporting by Andrew Bounds in Brussels
