CDU urges protectionism reaction

The German government should retaliate when other states’ protectionist policies threaten its economic interests, according to a draft policy paper by the Christian Democratic Union, the party of Chancellor Angela Merkel.

Publication of the document on Tuesday is likely to be seen as a shot across the bow of Nicolas Sarkozy, the newly elected French president, who has a record of “dirigiste” interference in Franco-German business decisions.

“The economic ideas of Sarkozy and the timing of the French election did play a role in how we worded this,” a senior CDU official said, alluding to Mr Sarkozy’s campaign calls for French industry to be protected from global competition.

The 94-page draft platform spells out the CDU’s positions on a range of issues, from demography to foreign policy. Although is is largely pro-market in its economic chapters, it betrays growing concern among pro-market liberals that Germany’s ­economic openness has left it vulnerable to mounting protectionist tendencies elsewhere.

“Our economic policy convictions are increasingly conflicting with the actions of states that seek to push through their national economic and strategic goals through active interference,” states the paper, which is only the third so-called “fundamental programme” written by the CDU since 1978.

It adds that where there is no competitive level playing field and where German interests “in areas of central strategic significance” are under threat “it can belegitimate to force through the protection of these interests through state intervention”.

While the paper does not specify the nature of retaliatory measures, CDU officials suggest that these could include seeking preferential access to certain markets for German manufacturers through bilateral trade deals.

“We should not allow our openness and beliefs to become competitive disadvantages,” a CDU spokesman said. Germany has among the lowest barriers to foreign direct investment in the world, with virtually no restriction on foreign purchases of sensible assets.

“Protectionism is on the rise everywhere in the world and it is an existential threat for us,” Michael Fuchs, a senior CDU legislator, told the FT. “I, a majority in the CDU, think the government should, as ultima ratio, be able to take protectionist measures in cases where irreparable damage is being caused.”

CDU leaders, led by Ronald Pofalla, secretary-general, and, with the backing of Ms Merkel, are understood to have drafted the passage as Paris was getting closely involved in the restructuring of EADS, the embattled European consortium, earlier this year.

The episode followed earlier disputes between the two countries, starting with the 2004 merger of Franco-German Aventis with Sanofi-Synthélabo, engineered by Mr Sarkozy as finance minister, and his short-circuiting of a bid by Germany’s Siemens on rival Alstom.

The finely calibrated policy platform is the latest step in a debate that was sparked in the CDU by Ms Merkel’s disappointing result at the general election of 2005.

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