France and Germany could turn towards more protectionist policies

Article

Following the election of Donald Trump and the United Kingdom’s Brexit vote in 2016, other political dates looming in 2017 could lead to increased protectionism, which would affect the road transport sector…

Road haulage – the spectre of isolationism

Brexit and Donald Trump, these two electoral thunderbolts with an international reach are similar in that they have both led the two countries concerned towards greater protectionism, even isolationism. There is no partisan subjectivity in this assertion: leaving a common market is, by definition, distancing oneself. Regarding the measures recommended by Donald Trump, they are clearly of this nature: building a wall, renegotiating NAFTA, corrective measures aimed at forcing national companies to relocate – there is no lack of examples. The next two major political dates in Europe – the elections in France (presidential and legislative, in the spring) and in Germany (federal, in the summer) – give reason to believe that these two countries could in some way become more introspective as well.

The Eurosceptics are indeed steadily gaining ground there, beginning with populist groupings, the far-right leading the way with the Front National in France and the AfD in Germany. Whether they win or not, these parties are at least in a position to have an impact on future policies in their countries and in Europe. They will necessarily have an impact on the work of road hauliers. There is an intrinsic reason: most European companies work across at least two countries or face competition from foreign companies in their own country. In short, these companies are particularly sensitive to the consequences of cross-border economic policies.

Minimum wage in road haulage: 9 countries in favour, 3 countries not in favour.

Minimum wage in road haulage: 9 countries in favour, 3 countries not in favour.

Countries are getting ready

In fact, countries have not waited for the electoral outcomes of the two European powerhouses to begin making significant moves. Nine European countries (Germany, Austria, Belgium, Denmark, France, Italy, Luxembourg, Norway and Sweden) launched the Alliance du routier (road haulage alliance) at the end of January. Their goal is to harmonise regulations, whilst strengthening control in road haulage. The immediate reaction of Eastern European countries, implicitly targeted by the initiative, was an open letter in mid-February addressed to Violeta Bulc, the European Commissioner for Transport.

Violeta Bulc, the European Commissioner for Transport, has the delicate task of reconciling the desires of countries that are on opposite sides on the question of the minimum wage, credit: Sipa.

Violeta Bulc, the European Commissioner for Transport, has the delicate task of reconciling the desires of countries that are on opposite sides on the question of the minimum wage, credit: Sipa.

“The fight against so-called social dumping is nothing other than an act of protectionism that damages the single market and reduces competition”, writes Latvian MEP Richard Sulik, vice-chairman of the European Conservatives and Reformists (ECR) group and a member of the transport and tourism commission. Supported by 58 MEPs, with Latvians as well as Slovaks and Bulgarians belonging to his group, the MEP castigates in particular the mandatory minimum wage for foreign drivers that France and Germany have put in place. “These countries are protecting their domestic markets against hauliers from other member states [of the EU – ed.], which goes against the free circulation of goods and the freedom to provide services. The European Commission’s inability to act is no guarantee of its objectivity”, scolds the MEP.

A vicious circle

Why all this commotion? You don’t need to be a rocket scientist to guess why. Hating uncertainty, the economic community is always looking to reassure itself on its future and particularly to try to put in place clear frameworks. They have therefore done what is necessary for their political representatives to draw up rules that they hope will protect them if the European Union were to change certain procedures tomorrow… even if one of its main cornerstones were to be removed. Pure science fiction? The prospect of “Frexit” (France leaving the European Union) is nevertheless being considered very seriously by observers, including the highly rigorous rating agency Moody’s. The paradox is clearly that economic communities are getting ready on both sides to offset potential defection from the European Union and increased protectionism or, at the very least, difficulties in trade exchange. However, in doing so, they sustain the fear of a weakening of the common market and so a mistrust in Europe.

It is a vicious circle that could cost the haulage sector dear, as it could other economic sectors, in the very short term. Red tape, taxes, unfair competition in certain areas, dumping and increased protectionist measures are seldom good news for companies at a time of globalisation and even less so for those that are operating in several countries.

REACT! 0

0 comment

To read also…