Free competition and free trade – the end of an era?

Image: Markus Antonius Scheffler
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By ALESSANDRO OCTAVIANI*

In central countries, the years of neoliberalism and Jurassic mental models of free trade and free competition are behind

“You vitriolic, patriotic, slam fight, bright light\ Feeling pretty psyched\ … It's the end of the world as we know it” (REM).

The explanation of protectionist legal contents and of “national economic security” issued by the main economies of the world, aiming at remodeling their basic order referring to free competition and free trade, is a routine fact of the last decade.

Germany provides one such example, mainly because it stood out, throughout Angela Merkel's reign, as one of the citadels of the rhetorical agglomeration of "austerity + free trade + free competition" (the more than 15.000 German state-owned companies are not included in the list). in this amalgam because they are too real for the maintenance of ideology…).

The recent reformatting of its legal discipline in the energy sector is remarkable. After the consistent escalation of NATO and the European Union towards the ruins of the former USSR, absorbing geoeconomic and geopolitical spaces under the Western aegis, Russia triggered the reaction that theorists of “offensive realism”, such as John Mearsheimer, in his influential The tragedy of great power politics, predicted: a war that seeks to limit such advancement, which could migrate to increasing pressures on energy supplies and attacks against critical infrastructure.

The current German energy infrastructure was strategically shaped by the Merkel period, having as its maximum symbol the construction of the system's gas pipelines. Nord Stream. The configuration of the energy sector had (i) as a premise a friendly relationship with Russia and (ii) as a utopia the assumption that free trade and free competition would create (gradually, but inexorably) an institutional convergence between national strategies development and legal systems.[I] Overcoming this rhetorical moment, the new doctrine of Germany and the European Union (threatened by the buyer position exercised by China, by the detention of big techs by the US and energy dependence on Russia) refers to the term “strategic autonomy”, for decades ridiculed and sidelined by the liberal thinking that the OECD and the well-thinking centers pushed to the unsuspecting consumers of peripheral jurisdictions, among which Brazil .[ii]

Demonstrating that, for the Germans, free competition and free trade are mutable concepts and steeped in pragmatism that must always keep their country at the top, the government of Olaf Scholz nationalized the German subsidiaries of the Russian state oil company rosneft, taking control of the refineries and legally subjecting them to the German Federal Network Agency, regulatory authority for the German energy market, a fact qualified by the Minister of Economy as “fundamental to guarantee the security of its national energy supply chain”, ruling out free trade in an area sensitive to national economic security: “The trust management will counter the threat to the security of energy supply".[iii]

This is not an isolated act. There is method to Germanic sanity. The conjunction of Außenwirtschaftsgesetz, foreign trade and payments law, with the Außenwirtschaftsverordnung, its implementing regulation, organizes structures and conduct in accordance with the dictates of national security and the country’s external interests, opening up a huge rhetorical range for the imposition of restrictions and obligations in order to “guarantee the essential interests of German security and members of the European Union ”, aimed at “preventing disturbances in the peaceful coexistence of nations” or “in the country’s international relations”, and to “implement decisions of the European Council” or “impose economic sanctions within the scope of the common European defense policy”.

Subject to such restrictions and obligations are, in particular, non-residents of the European Union who attempt to acquire companies or merely shareholdings in German companies that may threaten, from any flank, the essential interests of their national economic security. In the same way, the current laws regulating behavior in markets “of relevant collective interest”, such as the administrative norms for defining critical infrastructures, provide several hypotheses for administrative and judicial control of foreign investments that “represent a possible risk to national security”, intended to protect entire sectors of the German economy from foreign competition.

As you can see, one of the current German economic impulses is the old and well-known economic nationalism. The erosion of liberal rhetoric at the center of the legal discipline of the most relevant economy in Europe reveals what, even in Brazil, we find it difficult to assume: in central countries, the years of neoliberalism and Jurassic mental models of free trade and free competition are left behind. back. “Strategic competition”, “strategic autonomy”, “policies against external vulnerability”, “policies against dependency”, “local production chains”, “national economic security” and other similar expressions arrived. It's the end of the world as we know it, as announced by REM's classic Só “the dancer who doesn't have one”, would answer Chico and Edu Lobo.

* Alessandro Octaviani he is a professor of economic law at the USP Law School and a former member of CADE's Tribunal. Author, among other books, of Studies, opinions and votes on economic law (Ed. Singular).

 

Notes


[I] Among many examples, cf. REUTERS. Merkel defends nuclear power exit despite climate challenges. Available in:https://www.reuters.com/business/energy/exclusive-merkel-defends-nuclear-power-exit-despite-climate-challenges-2021-11-17/>. BBC. Nord Stream gas pipeline opened by Merkel and Medvedev. Available in:https://www.bbc.com/news/world-europe-15637244>.

[ii] FOREIGN POLICY. Scholz and Macron Have a Perilous Ambition for Europe. Available in:https://foreignpolicy.com/2022/09/08/european-strategic-autonomy-eu-security-macron-scholz-ukraine-defense-nato/>.

[iii] THE ECONOMIST. Germany's government seizes Russian energy assets. Available in:https://www.economist.com/business/2022/09/22/germanys-government-seizes-russian-energy-assets>.

AL JAZEERA. Germany seizes Russian oil firm Rosneft's refineries. Available in:https://www.aljazeera.com/news/2022/9/16/germany-seizes-russian-oil-firm-rosnefts-refineries>.

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