Protectionist measures to backfire, EU should lead free trade push - Wacker chief

13 March 2018 12:14 Source:ICIS News

MUNICH, Germany (ICIS)--Wacker Chemie’s CEO on Tuesday made an emphatic defence of global free trade following the US President’s tariffs imposed on steel and aluminium, which Rudolf Staudigl said could backfire in coming months if other countries were to respond in kind.

The  Munich-headquartered producer chief was speaking at a press conference following the presentation of Wacker’s full-year results earlier in the day.

Staudigl said that potential trade barriers were the biggest “geopolitical risk” the world would have to face this year and next, a bigger risk than Brexit, he said, although he admitted that in some areas the departure of the UK from the EU was a “disaster”.

The European chemical trade group Cefic said on 2 March it was fearing the tariffs could mean the start of trade wars, while its US counterpart the American Chemistry Council (ACC) had said before that the tariffs on steel and aluminium could harm the chemical industry's growth prospects.

The company’s CFO, Tobias Ohler, added that for the moment the US corporation tax reform approved at the end of 2017 would have not effects on Wacker’s financials.

Asked whether the lack of a government in Germany since the elections held in 2017 had affected the economy in the country, Staudigl mirrored comments from this counterpart at German chemical major BASF, who said on 27 February that at times the lack of new regulation is good for the economy.

Staudigl has always been a firm supporter of free trade. Following the latest actions coming from the US, he used Tuesday’s press conference to demand the EU take the lead on open markets.

“This topic [tariffs on steel, aluminium] is of course the result of promises made during the campaign. In a couple of weeks, things should have calmed down a little bit again, but still we see this increase in protectionism throughout the world [and] we are concerned,” said Staudigl.

“Protectionism will never produce the expected results. This is why it’s better to meet at a negotiation table and find a solution, rather than using [social media platform] Twitter to state your positions. Europe should take the lead in pushing for free and unrestrained global trade.”

The CEO went on to say that if Europe wants to be at the forefront of technological innovations which will mark industrial progress in coming decades, it would be in its own interest to remain focused on free trade.

Related to research and development (R&D) activities, the CEO said that the UK’s departure from the EU, planned for March 2019, was a “disaster” for the many projects UK and EU academics were jointly working on.

Moreover, the departure of the UK from the 28-country bloc would meant the exit of a free trade-supporter, and could embolden more protectionist tendencies.

“I’m afraid the call for more protectionism in continental Europe is going to increase, and that is a big problem,” he added.

In Germany, however, he welcomed subsidies for R&D which have been agreed by the two largest parties coming out from the September 2017 general election, the CDU and the SPD, which are set to form another ‘grand coalition’.

“We have been calling for this for a long time [and] we expect something to reach us [Wacker’s R&D projects]. Because we compete worldwide, we hear again and again how much China is investing in R&D and everything they have planned with China 2025 [strategy],” said the CEO.

“We have to take this very seriously.”

Picture source: Jonathan Lopez/ICIS

By Jonathan Lopez