What is the damage to world trade

World trade - TTIP : Sanctions damage the port economy

The German port industry has an immanent interest in world trade. Cars, grain, food, coal, wind turbines, wood, machines, chemical products, fireworks or toys: international trade is mainly carried out by ship and thus via ports. Free trade agreements and sanctions are therefore of immediate importance. The role of port companies goes even further.

The more than 190 German seaport companies at 20 locations from Emden via Bremerhaven, Hamburg and Rostock to Ueckermünde serve around 120,000 ships per year. The companies handle around 300 million tons of goods of all kinds - including over 3.7 million cars and trucks, almost 16 million containers, 24 million tons of grain, animal feed and oilseeds, and 38 million tons of coal, natural gas and crude oil. German seaports handle more than two thirds of German seaward foreign trade.

German and European trade and foreign policy thus have a direct impact on the port business. Everything that promotes trade - and this includes free trade agreements such as TTIP - benefits the seaport companies. Anything that restricts trade - including sanctions - is disadvantageous.

The sanctions against Russia are having a bad effect on the port business

Take Russia as an example: In response to the "actions of Russia that are destabilizing the situation in Ukraine", the European Union has issued an arms embargo and trade restrictions for dual-use goods and equipment for the energy sector. In addition, access to the capital market of the European Union was restricted. In return, Russia issued an import ban on agricultural goods and food from the EU. Meat, fish, milk and dairy products, vegetables, fruits and nuts, sausages, food preparations and finished products are no longer allowed to be imported from the EU. That may sound like small parts. But: In addition to chemical products, machines and equipment, food and beverages are among the most important German exports to Russia.

It is easy to see in the ports that the sanctions and countermeasures are taking effect. In the container segment alone, around a third less was handled in Russian traffic in the first half of 2015 than in the same period of the previous year. There have also been significant declines in freight ferry traffic on the Baltic Sea. The exact effects of the sanctions and countermeasures cannot be isolated. Even before that, the Russian economy was in a downtrend, fueled by the drop in the price of oil. The German government wanted to take advantage of this development, which insisted that “the sanctions would take effect quickly in view of the poor situation in the Russian economy.” For the seaports, trade restrictions on traffic to Russia are a key issue alongside the economic development of China and the USA.

Decision-makers usually consciously accept the costs of sanctions, because the alternatives to sanctions are often not feasible. When the sanctions against Russia were tightened, Federal Minister of Economics Gabriel said: "We must not allow war and civil war to get bigger and bigger on this continent out of fear of economic consequences".

Politicians have to weigh up this issue. The task of business here is to provide as specific information as possible on the costs for this consideration, to ensure a uniform, i.e. competition-neutral application of European or international sanctions and also to address the unwanted effects of the sanctions. When, for example, a few years ago, due to problematic presidential elections in the Ivory Coast, targeted sanctions were imposed on Ivorian ports from one day to the next, German merchant ships were stranded there for the time being. Due to the sanctions, the shipping companies were no longer allowed to pay the tugs and pilots necessary for the departure. Only after a few days, political readjustments and high costs for the shipping companies were the ships able to leave the port.

Politicians must also weigh up the costs and benefits of free trade agreements. Modern free trade agreements usually stimulate trade to the benefit of all parties involved, otherwise they would not be concluded. In this respect, the port industry welcomes such agreements.

The role of the German port industry goes even further: it is not only a service provider for Germany as a business location, but also provides its handling and logistics services abroad and markets modern port technologies internationally. It is in competition with providers from China, Singapore and the United Arab Emirates, for example. When negotiating intergovernmental agreements, issues such as freedom of establishment, free movement of capital, mobility of employees and the dismantling of other bureaucratic obstacles as well as clear rules for state participation in the port business are of great relevance for German port operators.

The maritime economy lives from and in globalization. With well-trained and experienced employees and high-tech, seaport companies ensure efficient supply chains, at home and internationally. Politicians must ensure adequate transport links to the economic centers and balanced framework conditions - in all areas. Free trade and investment agreements can make an important contribution to both. Sanctions also offer a set of political instruments, the costs of which must also be weighed up. Whether globalization, free trade agreements or sanctions, the question always remains the same: What better alternatives are there?

L. Daniel Hosseus is General Manager of the Central Association of German Seaport Companies (ZDS).

To home page