February 7, 2017 / 2:41 PM / 6 months ago

Germany says will use G20 presidency to fight protectionism

BERLIN (Reuters) - Protectionism is the wrong answer to the challenges facing the world, and Germany must fight to safeguard free trade, which guarantees wealth and prosperity for all, the German government, industry groups and unions said on Tuesday.

U.S. President Donald Trump's declarations in favour of protectionism have alarmed politicians and managers in Europe's biggest economy, which derives nearly half its economic output from exports.

The United States has become Germany's most important single trading partner, taking nearly 10 percent of its overall exports and propelling Germany's record-high trade surplus.

In a joint statement published in Berlin, Economy Minister Brigitte Zypries, IG Metall union head Joerg Hofmann and BDI industry association president Dieter Kempf said prosperity depended on open markets and open societies, and not only in Germany.

"Striving for political and economic protectionism is the wrong way," they said, without directly mentioning Trump.

Now more than ever, Germany and its European partners must make the case for an open and fair trading system, the group said. They urged Germany to use the G20 presidency to combat political intervention aimed at supporting national industries.

Germany wants to deal with the new U.S. administration with a mixture of self-confidence and readiness to talk, Zypries said at an industry conference in Berlin.

"We will not break our principles," Zypries said. But if the United States is serious about protectionist measures, "then one must counter them", she said.

That echoed comments by Chancellor Angela Merkel on Monday, when she said she opposed unilaterally imposing tariffs on imports, but Germany would have to decide how to respond if the United States should take such steps.

THREATS

Trump has threatened German car companies with a border tax of 35 percent on vehicles imported to the United States, arguing that would make them create more jobs on American soil.

Trump's top trade adviser has also accused Germany of using a "grossly undervalued" euro to gain advantage over the United States and its own EU partners - a claim rebutted by Merkel, who has said the European Central Bank is in charge of the euro.

The head of the BGA trade association, Anton Boerner, said on Tuesday that Trump's first actions in office were "alarming" and that his protectionist threats posed a risk to both the U.S. and German economies.

"There is much at stake for us due to the close economic links between our country and the United States," Boerner said. Trump's protectionist tendencies were one item on a long list of trade-related risks, including Britain's decision to leave the European Union and the development of the euro zone debt crisis, he said.

Therefore, there is a "big question mark" over BGA's export growth forecast of 2.5 percent in 2017, Boerner said. It sees exports reaching a record of 1.235 billion euros this year.

The Federal Statistics Office on Thursday will publish trade data for December and with it for 2016 as a whole. Analysts expect that Germany's trade surplus will again hit a record high, despite weaker demand from major trading partners.

Additional reporting by Gernot Heller, editing by Larry King; Writing by Michael Nienaber

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