Political economy of German international trade
In terms of German international trade it has to be distinguished between internal trade, i. e. trade with other EU countries and external trade, i. e. trade with non-EU countries. 3. 8 External import The external trade of all EU member states is regulated by a collection of laws called the Common Customs Tariff (CCT). Among others, it stipulates the trade policy instruments used by the European Commission: In the EU tariffs are usually calculated ad-valorem, whereby the average duty rate on imports is 4. 2% (World Trade Report 2005 p. 308). However, the duty rates vary for different products, depending on their type and country of origin.
Concerning their type, for example the average duty for chemicals (which pharmaceuticals are part of) was 4. 5%. Raw materials or components, which are not available in the EU, enjoy lower duty rates. For example tariff on wood was 1. 1%. Concerning the imports origin, the EU has bilateral agreements with some states and also groups of states. For instance there is a free trade agreement with Switzerland or the European Economic Area. Moreover, the EU operates a number of unilateral preferential schemes such as the Generalised System of Preferences or Everything But Arms.
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The EU can temporarily confine imports of goods, which seriously hurt its domestic producers. This can be in form of quotas or special tariffs. 3. 8. 5 Voluntary export restrains The European Commission also negotiates voluntary export restrains (VER). A recent example includes Chinese VER on their textile. 3. 9 Internal “imports” As both Germany and the Czech Republic are EU members for trade between them the internal trade regulation applies. Between EU members states there is a Custom Union which effectively means that there are restrictions on neither imports nor exports. 3. 10 Internal and external export
Compared to imports, there is more discretion for each EU member state to coordinate its export activities. It is not necessary to make a distinction between internal and external trade because the instruments used are similar. On the other hand, it is obvious that export to non-EU countries requires much more effort. Germany has a very sophisticated and supportive system to enhance its exports. It consists of a number of governmental and non-governmental institutions. The three main once are embassies and consulates, German Office for Foreign Trade and the German Chamber of Commerce Abroad.
The system is coordinated by the Federal Ministry of Economics and Technology. There are very many instruments offered by these institutions for example: Risk guaranties such as export credit guaranties, interest-free credits, representation on trade fairs, market analysis, consultancy concerning all the different aspects of the target country (low, taxes etc. ), educational and trade partner matching events. There is also a dedicated on-line portal (iXPOS) for exports where all the relevant data for their country of interest can be found. In the Czech Republic there is a very similar system in place to support export. 3. 11 Sub-conclusion
Because of the free movement of goods between EU member states, the support for exports from the Czech Trade the option to trade with Germany seems very conducive. Germany has good figures of external as well as internal trade. As far as the tariffs are concerned, Chemical and Photographic Supplies has round 4. 5% tariff, which is an important component in the Pharmaceutical Industry. Although the products that are found less in the European Union countries have less tariff like 1. 1% of wood as these countries lack raw materials. All measures have been taken to ensure that no exploitation of the domestic market takes place in any scenario.
The low-rate selling of non-European Union Countries in European Union countries is an action against law. All regulations are imposed to ensure the safeguard of domestic users and industries as excessive export and export of those products that might hurt the country is a matter of concern for the relevant authorities. Hence, ensuring through all means that in the process of improving international standing, the domestic market does not suffer. As far as the foreign trade a relation of Germany and Czech Republic is concerned, they share an extremely productive bond that is beneficial for their respective economies.
“As reported by the Federal Statistical Office, foreign trade between the Czech Republic and Germany has shown a very dynamic development over the last few years. German exports to the Czech Republic in 2004 were more than three and a half times the amount of 1993 and imports from the Czech Republic rose even more than five-fold over that period. ” (Foreign trade with the Czech Republic: The differences between Czech and German foreign trade results, 2005). The increase in trade between the two countries is an evident sign of strong relationship that is beneficial for both parties.