Rising Protectionism in Europe

The new French government will be faced with high support for socioeconomic protectionism among the French.

In surveys, most French people still believe that free trade contributes to high consumer prices and about 10% unemployment.

Rising support for protectionist opposition parties and the Trump administration’s policies will maintain pressure on economic reformists in Europe. In Germany and the Netherlands, countries that traditionally supported more open economies, economic and cultural protectionism is on the rise, too.

In Germany, the issue of protection from state-owned and partly state-owned companies came to the fore last year with Chinese home appliance maker Midea buying German robot maker Kuka.

In October 2016, the German Economy Ministry produced a paper foreseeing wide-reaching rights for the national government to prohibit unwanted takeover of high-tech companies.

Debates on ways to review key foreign investment transactions will continue. The protection of key strategic sectors is one concern. Another is fair competition with state-subsidized foreign companies.

The so-called “reciprocitarians” in Germany want to reduce the impact of non-reciprocated access to foreign markets for investment and bids in government procurement.

Even Dutch politicians, in one of Europe’s more liberal economies, are changing their tune. Dutch Finance Minister Jeroen Dijsselbloem said in March that the government should set up a panel with the power to block takeovers by foreign companies that were contrary to the national interest.

Dijsselbloem said 11 of the 25 largest Dutch companies with a stock market listing lacked sufficient takeover protection.

Earlier in 2017, Belgium's Bpost dropped its pursuit of the Dutch postal company PostNL under pressure from Dutch economic affairs minister, Henk Kamp.

Some Dutch companies, who have grown by gaining acquisitions abroad, are less comfortable with the new trend. However, others support some form of protectionism.

In April, credit insurer Atradius and sector lobby group Evofenedex published a poll among nearly 6,000 Dutch exporters. More than 80% of the exporters felt that protectionism would continue to expand in 2017 and have an impact on their business.

About 57% said local producers should be protected against foreign competition through limits on imports and export subsidies.

Dr. Heinrich Matthee is a political analyst for companies and a guest researcher of the Amsterdam Center for Middle Eastern Studies.