Wary Economy Sounds Alarm Over Dobrindt's Stricter Border Control Plans
Germany's Economy Braces Against Trade Barriers
Trade restrictions apprehension from Dobrindt's proposals for enhancing customs controls at Germany's frontiers spark industry concerns
The federal minister of the interior, Alexander Dobrindt's ambitious border control plans have sparked unease among economic associations. In an interview with the "Handelsblatt" on Wednesday, these groups expressed concerns about potential restrictions on cross-border trade and border commuters. The Foreign Trade Association urged for a phased tightening of controls, citing the corona crisis as proof that restricted border traffic can strain the economy. A smoothly functioning European internal market and Schengen Area are vital for the heavily internationalized German economy [1].
Volker Treier, the chief economist of the German Industry and Commerce Chamber (DIHK), brought attention to the increased costs associated with more stringent border checks for companies. Just-in-time deliveries would become more troublesome as well [1]. He also voiced worries about stricter limitations for border commuters and service providers, particularly regional retail, gastronomy, and care sectors that rely on unfettered people and goods movement [1].
The potential consequences of these stricter measures could be substantial: trade bottlenecks may arise from non-tariff barriers and higher administrative burdens, making imports and exports more costly and time-consuming. This might weaken the competitiveness of goods, especially those with time-sensitive requirements [2][3]. The effects could also trickle down to the efficiency and reliability of just-in-time supply chains, particularly in the automotive and manufacturing sectors, potentially leading to production halts or increased warehousing expenses [2][3].
Being border commuters, many workers travel daily between Germany and neighboring countries. Increased inspections could result in longer wait times and queues, deterring this cross-border labor force, leading to labor shortages, increased absenteeism, and reduced productivity in those border regions [2][4]. Furthermore, threatening the Schengen Area and the European internal market could spark diplomatic tensions or retaliatory measures from neighboring countries, potentially exacerbating the situation [4].
| Aspect | Potential Economic Impact ||----------------------|----------------------------------------------------------------------------------|| Trade Barriers | Delays, increased costs, non-tariff barriers, lower competitiveness || Just-in-Time Deliveries | Production disruptions, higher inventory costs, supply chain risks || Border Commuters | Labor shortages, reduced productivity, decreased regional mobility |
By focusing on border control, there could be a hidden cost to the economy - trade disruptions, increased business uncertainty, and possible international friction [2][3][4].
[1] ntv.de, AFP
[2] Enrichment Data: Increased border checks and stricter entry policies, especially at Germany’s land borders with Austria, Poland, and France, could lead to significant disruptions in the free flow of goods. This could result in higher costs, non-tariff barriers, and potential lower competitiveness for German goods.
[3] Enrichment Data: Increased controls would add to higher storage costs for companies as just-in-time deliveries become more difficult, ultimately becoming an additional burden on the economy, particularly in challenging economic times. The time-sensitive sectors, especially automotive and manufacturing, are vulnerable to border delays.
[4] Enrichment Data: Tighter border controls will affect the daily lives of border commuters, straining regional labor markets, and potentially leading to labor shortages, absenteeism, and decreased productivity, particularly in the sectors dependent on cross-border workforces.
[5] Enrichment Data: Austria has already raised concerns about the legality and practicality of turning back asylum seekers, and similar measures at the Polish or French borders could lead to diplomatic tensions and further complicate trade relations.
- Concerns over potential trade barriers due to stricter border control plans have emerged from various economic associations, with volatility in cross-border trade and border commuters being the significant areas of worry.
- The Foreign Trade Association cautions about the negative implications of quick, unmoderated border control tightening, citing the ongoing corona crisis as evidence of economic strain due to restricted border traffic.
- The German Industry and Commerce Chamber (DIHK) highlights increased costs associated with stringent border checks for companies, specifically just-in-time deliveries and the potential for disruptions.
- In addition, stricter border controls could engender labor shortages, reduced productivity, and decreased regional mobility for border commuters, primarily impacting the retail, gastronomy, and care sectors.
- Possible diplomatic tensions or retaliatory measures from neighboring countries are potential consequences of stricter border control, further complicating trade relations and contributing to economic and political instability.
