Supply chain law: This means that the economy is harming itself

Supply chain law: This means that the economy is harming itself

The dispute in the
Federal Government the EU supply chain law now threatens to undermine the entire project. On Friday it was announced that the vote on the law was postponed. Once again it is clear that the short-sighted economic interests of some German export companies are prevailing and the federal government has still not recognized that Germany’s long-term prosperity depends on reliable rules and global partnerships on equal terms. Europe and Germany are threatened not only with irreparable political but also economic damage.

The federal government’s approach shows once again their dysfunctionality. For a long time, the federal government and its responsible minister, Hubertus Heil (SPD), contributed productively and constructively to the negotiations at EU level. But then the federal government wanted to in the decisive vote in the Council of the European Union
still included on Friday. It is astonishing that the Federal Minister of Finance and the Federal Minister of Justice, both from the FDPwho are the driving forces behind this blockade, even though they have no technical responsibility.

At first glance, preventing and further weakening the EU supply chain law may seem like a triumph for German business associations. But at EU supply chain law

it goes, among other things about the protection of human rights, appropriate working conditions, the protection of the environment, climate and biodiversity and preventing abuse of market power by European companies, especially in the poorest countries of the Global South. If Germany were to abstain, which in fact seems like a no vote, it would not only be a moral failure. In the long term, it would also cause considerable damage, especially to the open German economy and its most important brand core, the reputation of products made in Germany. German export companies have never distinguished themselves through cheap prices, but always through high quality and reliability. If, as would be the case with the new supply chain law, the products meet the highest standards in terms of human rights, protection of the climate and the environment and ethical requirements, this would be a sign of particularly high quality – and not necessarily a loss Competitiveness.

Two years ago, politics and business in Germany reached a compromise on supply chains, which included a voluntary commitment by all German companies to protect human rights and environmental protection – but apparently without the desired result: a survey showed that only one in five companies made this voluntary commitment fulfilled. Instead of admitting their own failure, business associations have successfully tried to prevent an effective German supply chain law. And now their efforts at the EU level appear to be successful again.

Germany’s competitive advantages are quality and sustainability

Some arguments are justified, but others are not. For example, the argument that a supply chain law would be too costly for companies and would cause them to lose competitiveness in global markets is ethically unjustifiable. From an economic perspective, this argument cannot be justified either, since German companies were able to maintain their market share in global markets despite the rise of China and Asian low-wage countries. It is true that some German companies have lost global market share – for example German car manufacturers in China. In other sectors, however, the highly specialized could hidden champions German medium-sized companies often expand their market shares. This competitiveness is not based on low costs, but on the reputation of products made in Germany, which stand for high quality, reliability and sustainability.

A well-thought-out EU supply chain law could protect this reputation and serve as a quality certificate, which has already been recognized by some German companies – because there are also those
who are also vehemently in favor of a strict supply chain law at the European level for economic reasons. The business associations’ argument that a supply chain law would force German and European companies to withdraw from certain countries is perfidious and ethically unjustifiable: Can child labor or forced labor ever be defended with the argument that otherwise the country would have to be held accountable for such behavior abandoned and produced elsewhere?

However, the business associations also have a valid argument: it is actually almost impossible for small companies to check their own supply chains. But politics can help here, for example by offering certification processes in the affected countries via the foreign chambers of commerce or other public institutions and thus taking on this work for small companies.

Same standards in Europe

It should actually be in the own interest of local companies that a supply chain law applies not only in Germany, but also at the European level, so that all companies in Europe have to follow the same standards. The Federal Government’s planned abstention in the vote on the EU Supply Chain Act is not just a missed opportunity. The mercantilist approach to German foreign trade policy is once again evident: for many decades, the top priority of foreign policy appears to have been to support the economic interests of German companies. When will German politicians finally understand that in times of increasing geopolitical conflicts, a united Europe with a more value-oriented foreign policy is essential – also for its own economic interests?

The adoption of a convincing EU supply chain law that is not the toothless tiger that the FDP and business associations want to make it would not only protect important values, but also Germany’s long-term economic interests.



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