Robert Habeck: 'We are sometimes far too afraid to talk about our expectations'

What are your goals for this 18th APK?

This APK focuses specifically on India. I would like to solve a few market access problems – always in dialogue between the companies and my trade minister colleagues – as well as contribute to improving the overall framework conditions between Europe and India, including trade agreements.

One current issue is the supposedly close relationship between India and Russia, as demonstrated at the BRICS summit. How selective can Germany be about the values of its partners?

India buys Russian oil at dumping prices. There are clear indications that European sanctions could be circumvented through India. I keep raising this issue. India is withdrawing into one position and wants to be good friends with all sides. It wants good relations with Ukraine, Russia, Iran as well as with the EU, the USA and Israel. Of course, that is not the European view.

India, in turn, emphasizes that the country has had long-standing problems with China while we have traded with China. From their point of view, this is incomprehensible. As I see it, we can detach India from Russia to a certain extent through our continuous work. The military relations between India and Russia have historically been close, but India is also trying to reduce dependencies in the defense sector. We aim to win India over as a stronger partner for Europe.

You already mentioned the free trade agreement discussed during the government consultations. What is the status there?

The European Commission and India are negotiating the free trade agreement. The trade agreements are made at the European level. But, of course, Germany is heavily involved here. The Mercosur agreement, for example, also hinges on France. If we are smart about it, we have to find a way that allows Europe to take a more pragmatic approach. But both sides have to make compromises.

In my view, the easiest way to achieve this is to concentrate on areas that are less politically problematic, primarily industrial goods. In other words, excluding areas such as agriculture. Then we have to see how well that develops going forward. But that is not the tradition of European trade agreements; in recent decades we have consistently signed comprehensive agreements for all sectors. Nevertheless, I am in favor of it.

There are several declarations that have been prepared between the ministries and have been signed today. In my area, for example, it's about cooperation in the hydrogen sector. But it's also about skilled labor and research.

How do you assess the importance of India for de-risking, including our relationship with China?

With its growth rates, India can potentially compensate for parts of China's business in the Asian region over the next 10 to 15 years. But that is a medium-term forecast. Along with the USA, China is our largest trading partner outside the EU, India is in 22nd place.

I'm not sure whether what happened in China, which as the world's workbench became a major manufacturer for the world, will happen again. At that time, the upswing in German trade with China resulted from a globalized world. A lot was relocated to China because it was cheaper. It was assumed that all goods, all products, all batteries, all pharmaceutical precursors would still be sent back to Europe. And I don't think anyone is assuming that anymore; recent crises have shown us the vulnerability of supply chains. However, India has enormous potential that will develop in the long term.

Tensions in East Asia are on the rise. North Korea is sending soldiers to Russia, China is lashing out at Taiwan and the Philippines. Against this backdrop, how satisfied are you with the German economy's de-risking efforts? Investments in China are still very high, and de-risking seems to be interpreted differently by companies than was probably intended by Germany's China strategy.

De-risking does not mean de-coupling. Our companies should continue to do business with China and continue to invest there – but reduce their dependence on just one market. This applies to both companies and our state. And because diversification is so important, we are here today at the Asia-Pacific Conference of German Business in India. But yes, we have to take de-risking seriously, even the German political debate does not always reflect what is happening in the world around us. The semiconductor debate is a very good example of this. The fact that Intel and Wolfspeed are postponing their chip projects for the time being is not good news. But it is often accompanied by a sound of schadenfreude.

And we are incredibly dependent on semiconductors. They come from Taiwan and South Korea in particular. Reports suggest that North Korea has just sent troops to Russia, and the whole region is on high alert anyway. This is highly dangerous. So is the conflict between China and Taiwan. Even a blockade or a situation like Covid-19 can make us painfully aware of this dangerous dependency.

The sense of urgency is sometimes masked by an 'it will somehow work out' attitude. That is why we, as an economy as a whole and Europe as an economic area, must take completely different measures to protect the economy, the security, and the robustness of our economy, as well as our own values and interests. This can be achieved with economic, political, and European unity, as well as with more decisive efforts such as a free trade agreement with India to reduce the risk potential in this dangerous world.

While the EU debated and negotiated tariffs on electric cars from China, China threatened to take retaliatory measures, and the tariff decision immediately led to a tit-for-tat response – it hit spirits. How do you think trade between Germany and China will develop? Is the tone getting rougher and rougher, or do you think it could improve again?

For 30 years, we have built up or let run relations with China, including our dependence. It will take years to loosen that up a bit. It is neither desirable nor my goal to completely detach ourselves from China. That would also be politically wrong because China can play a role as a player in solving crises. The climate crisis can only be solved with China. And also geopolitically: China is cooperating with Russia, but there is no complete solidarity there either, and we have no interest in seeing it happen. It cannot be in Germany's and Europe's interest for China, Russia, North Korea and Iran to form a solid bloc.

What do you propose here?

We must significantly increase the EU's resilience and ability to act using completely different measures and means than we have done in recent decades. At the same time, we must remain in dialogue with China. My personal experience in talks with Chinese counterparts is that weakness is not appreciated at all. If China has the impression that Europe is divided, that threats are working, then China can divide Europe.

We are sometimes far too afraid to talk about our expectations. We don't do the things that are a matter of course for China towards European companies. For far too long, we have allowed Chinese companies to invest in European infrastructure without scrutiny. That is impossible in China. China has very strict regulations on which products must be produced in China before they can be sold locally. This is something we are only just learning to think about.