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After Merkel: the battle for the soul of the Christian Democratic Union



It is a Friday evening in Berlin and three middle-aged, dark-suited men are setting out their vision for the future of Germany — the last debate in a withering 10-month campaign for the leadership of the country’s most powerful political party.

Friedrich Merz, a millionaire businessman, says he will “dare to make a fresh start, and renew Germany and the EU”. Armin Laschet, governor of one of Germany’s biggest regions, says he wants to modernise his country for the 2020s and fix “all the deficiencies” exposed by the coronavirus pandemic. Norbert Röttgen, an MP and foreign policy expert, says he is not part of any camp — “I stand for all . . . for the modern centre.”

The tone is polite and low-key. All three seem to agree on almost everything — battling climate change, for example, and strengthening Europe.

The three candidates for the CDU party leadership, left to right, Norbert Röttgen, Armin Laschet and Friedrich Merz take part in the last televised debate of the campaign © Michael Kappeler/DPA/Avalon

But appearances can be deceptive. Below the surface a fierce battle is raging for the soul of the Christian Democratic Union, a party that has governed Germany for 50 of the past 70 years and this year will stake its claim to a further four years in power. And with the leadership election only three days away, the outcome is still too close to call — one recent poll put Mr Merz on 29 per cent and Mr Laschet and Mr Röttgen both on 25 per cent.

Much is at stake. Under Angela Merkel, chancellor for the past 16 years, Germany has been Europe’s anchor, an island of stability in often stormy waters. But Saturday’s election, at a digital party conference in Berlin, could usher in a new era of uncertainty — especially if Mr Merz wins. An old rival of Ms Merkel, he is more sceptical about closer European integration than others in his party and speaks of the need for Germany to do more to “safeguard its interests” in the EU, and “learn the language of power”. A Merz victory could have far-reaching consequences for Europe and beyond.

The election comes at an anxious time for the CDU, too, as it braces itself for Bundestag elections in September that will see Ms Merkel shuffle off the political stage. “Merkel exasperated a lot of people in her party, but in the end she was the reason it kept winning election after election,” says Frank Stauss, one of Germany’s most experienced campaign managers. “With Merkel there was continuity. Now she’s about to leave there is real fear in the CDU at developments no one can foresee.”

Chart showing voting intention in the German elections

The contest has crystallised awkward questions about what kind of party the CDU wants to be. In her years as chancellor, Ms Merkel steered it towards the centre ground of German politics, often in the teeth of dogged resistance from conservatives. She abolished compulsory military service, ordered the closure of Germany’s nuclear power stations, introduced gay marriage and a national minimum wage and vastly increased childcare for working families. And then, at the height of the European migration crisis, she famously welcomed more than a million refugees into Germany.

But in the process she scrambled the German political landscape. “The CDU just stole the policies of the Social Democrats [SPD] and the Greens,” says Andreas Rödder, a historian at Mainz University. “It was like a big jellyfish . . . that sucked the air out of the other parties.”

Under Ms Merkel’s leadership it turned into a well-oiled election-winning machine, able to appeal to environmentally-conscious urban liberals as well as rightwingers. “But the price it has paid for Merkel’s success is that it has lost its programmatic identity,” Mr Rödder says.

Migrants arrive in Germany in 2015. Chancellor Angela Merkel welcomed more than a million refugees into Germany at the height of European migration crisis © Christof Stache/AFP/Getty

He cites the example of schwarze Null” or “black zero”, Ms Merkel’s commitment to sound public finances and balanced budgets, which was abandoned last year as the government ramped up spending to tackle the pandemic. “It was the last thing you could say the CDU really stood for, and now that’s gone, too.”

‘Five people’ in the race

Complicating the CDU’s predicament is the protracted vacuum at the top of the party. Ms Merkel stood down as leader in 2018 and her anointed successor Annegret Kramp-Karrenbauer won the election that year to replace her, narrowly beating Mr Merz. But she announced her resignation in February last year after failing to stamp her authority on the party.

Messrs Laschet, Merz and Röttgen quickly threw their hat in the ring to succeed her. For months, many in Germany assumed that whoever won that race would then become the CDU’s candidate for chancellor in September’s poll. A decision on who is to run is expected in the spring, after consultations between the CDU and its Bavarian sister party, the CSU.

But in a sign of how febrile and unpredictable German politics has become, the future CDU leader is now no longer seen as a shoo-in for chancellor-candidate. Other contenders are waiting in the wings — such as the ambitious health minister, Jens Spahn. German media have reported in recent days that he sounded out CDU grandees at Christmas about standing for Germany’s top job, even though he is supposed to be Mr Laschet’s running mate.

Angela Merkel speaks during a debate in the Bundestag. She has kept to the centre ground of German politics but in the process has scrambled the country’s political landscape © John MacDougall/AFP/Getty

Mr Spahn has denied the reports. But mistrust of his intentions is pervasive. “Spahn has been campaigning for himself, not Laschet, and a lot of people in the party are unhappy,” says one CDU official.

Then there is Markus Söder, prime minister of Bavaria and leader of the CSU, who, like Mr Spahn, has grown in stature in the course of the corona crisis. Speculation is rife in Berlin that he also entertains an interest in running as the CDU/CSU’s joint candidate for Ms Merkel’s job — though he insists in public that his “place is in Bavaria”.

“The race for chancellor is basically a contest between five people, not three, though only three are on the CDU ballot,” says the party official.

Courting conservatives

Of those five, none represents a more decisive break with the Merkel era than Mr Merz. A brilliant orator who was opposition leader in the Bundestag before being squeezed out of the job by Ms Merkel in 2002, he quit politics seven years later to pursue a career in business, rising to become chairman of BlackRock Germany.

He has pledged to win back conservative voters who, despairing of Ms Merkel’s liberal policies, defected to the far-right Alternative for Germany — or stopped voting altogether.

His aim, he says, is to provide “a political home to all those people of goodwill, traditional conservatives” and “bring them back to the centre”. It was the only way, he said, to stop such people “self-radicalising” and “suddenly ending up on the far-left or far-right”.

The strategy includes seizing on key AfD issues such as immigration. During a discussion in December about Germany’s welfare state, he said the country would have “1m fewer people living on benefits if we hadn’t had the immigration influx of 2015-16”.

He also likes to talk tough on law and order. In the debate last week he said police should confiscate the assets of criminal clans. “If these guys have to get out of their souped-up cars and walk, that hurts them more than a prison sentence,” he said.

Such language has made him a hero to the CDU rank-and-file. But large parts of the CDU establishment see him as irascible, uncontrollable and too thin-skinned. And there is widespread scepticism about his plan to tilt the party rightward. Some experts think he would lose far more centrist voters to the Greens and SPD than he would gain from the AfD. That could lead to a Merz-led CDU losing the next election to a coalition of the Greens, SPD and the far-left Die Linke party.

“You win elections in Germany in the centre, not on the fringes,” says the CDU official.

Olaf Scholz, the popular finance minister, right, is the SPD’s candidate for chancellor © Michael Sohn/AP

Some younger, more liberal CDU politicians have a genuine horror of Mr Merz. “He won’t win a flowerpot in my city,” says one female activist in the party.

It’s different in the SPD: they would love to see Mr Merz, a man who owns two private planes, go head-to-head against their candidate for chancellor, the popular finance minister Olaf Scholz. “Merz is a classic representative of the West German CDU of the 1980s and 90s,” says Nils Schmid, a senior SPD MP. “He’s the antithesis of Scholz.” The BlackRock connection also makes him vulnerable. “[Its] business model isn’t popular with German voters.”

AfD and SPD lawmakers in the Brandenburg state parliament. The two parties could squeeze the CDU’s national vote from right and left respectively © Patrick Pleul/DPA Picture Alliance/Avalon

Some in the Laschet camp think recent events in the US could also harm Mr Merz’s chances. “I’m not saying Merz is a German Trump — far from it,” says one of Mr Laschet’s allies. “But America has shown us what happens when an establishment party veers to the right. It can quickly escalate out of control.”

A Merkel heir

With the CDU still in shock over the riots in Washington, it might, he says, be more inclined to elect a more moderate, unifying figure as its leader — someone like Mr Laschet.

An affable, easy-going Rhinelander, who has run North Rhine-Westphalia, Germany’s most populous state, since 2017, Mr Laschet positions himself as Ms Merkel’s natural heir — a man who will keep the CDU together and maintain its current, centrist course.

“It’s important to me that we don’t choose a rupture with Angela Merkel, but rather continuity,” he told reporters recently. “The CDU must convey the idea that the 16 years when [she] was chancellor were good years, and that we stand by her policies.”

But it’s been a rocky path for Mr Laschet. When he announced his candidacy in February, he was seen as the frontrunner, especially after he recruited Mr Spahn, popular with the CDU’s young conservatives, as his deputy. But his unsteady performance amid the coronavirus crisis, where he has came across as hesitant and indecisive, especially in comparison with the tough-talking Mr Söder in Bavaria, cost him support.

Angela Merkel with French president Emmanuel Macron. Her approval ratings in Germany have soared amid widespread admiration for her cool, unruffled leadership © John MacDougall/AFP/Getty

Recently, however, he has been edging up the polls — a shift that could, according to one member of the Laschet camp, reflect views on Ms Merkel. Her approval ratings have soared even as Germany has entered a second lockdown, amid widespread admiration for her cool, unruffled style of crisis management. Mr Laschet, who is the closest to Ms Merkel of the three candidates, has benefited from that, he says. “People no longer want such an abrupt break with the Merkel era, which is exactly what Merz seems to represent,” he adds.

It is a factor Mr Laschet played up in last Friday’s debate. “The government is hugely popular right now because people trust us, trust the chancellor, trust the federal government and trust the prime ministers of the regions to get us through this crisis,” he said.

Renewal ticket

But as the face of the liberal camp, Mr Laschet faces an unexpectedly strong challenge from the third candidate — Norbert Röttgen, chairman of the Bundestag’s foreign affairs committee. His leadership bid was seen as somewhat quixotic back in February. But he has won more support, especially among younger activists attracted to his message of renewal.

It’s an extraordinary comeback. Mr Röttgen’s career seemed to be over in 2012 when he lost in elections in North Rhine-Westphalia to the SPD, and Ms Merkel subsequently sacked him as environment minister. But he painstakingly rebuilt his career, carving out a niche as the CDU’s pre-eminent spokesman on foreign affairs. He has emerged as one of the country’s most outspoken critics of China — a line Mr Merz has also taken — and a vocal proponent of excluding Chinese telecommunications company Huawei from Germany’s 5G network.

The telegenic Mr Röttgen has also positioned himself as a liberal moderniser who will shift the CDU’s focus to issues young people care about most, such as Europe and climate change. “We can’t be satisfied that we are only No 1 with the over-60s,” he said in a TV debate in December.

With a quirky campaign on social media, featuring Spotify playlists and photos of koalas, he has attracted an army of young volunteers. “Of all the three candidates, he has the most creative brains working for him,” says one woman member of “Team Röttgen”. “He makes the other two look really old-school.”

Mr Röttgen’s poll performance keeps improving. But experts point out that a lot of the polls are meaningless. What matters is the voting preferences of the 1,001 delegates — functionaries, ministers and elected officials. They will take part in the CDU’s digital party conference on January 15-16 and elect the new leader: and they may be more inclined to vote for the man widely seen as the establishment candidate, Mr Laschet.

“The delegates will vote for whoever is best placed to help them keep their jobs,” says the CDU official.

Observers say that there is another advantage to a vote for Mr Laschet: it gives the CDU more options when it comes to the more important choice of CDU/CSU candidate for chancellor. If his poll ratings fail to recover even if he wins the election, Mr Laschet may agree to let someone else — say Mr Söder — run for chancellor. Mr Merz, many experts believe, would never agree to such an arrangement.

In Friday’s debate, the three candidates made some of their last pitches of the campaign. A relaxed, urbane Mr Röttgen boasted of how his campaign had “galvanised so many young people” — even those who don’t vote CDU. “I want everyone to get involved with me in this project,” he said. Mr Merz said he sought an “ecological renewal” of Germany’s economic model and a “new contract with the younger generation . . . so they have the same opportunities as their parents.”

Mr Laschet said he should be rewarded for his deft management of the pandemic, having shown that “we can take responsibility and make tough decisions”. He had also shown, in North Rhine-Westphalia, that he can win elections, balance out competing interests and govern one of Germany’s biggest states — a veiled swipe both at Mr Röttgen’s electoral defeat in 2012 and Mr Merz’s lack of experience in government.

Germany is holding its breath. On Saturday, after the CDU delegates have finally voted, it will find out whether its most important party has chosen a smooth transition into a new, post-Merkel era — or an abrupt change of route to a destination unknown.

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European Commission upgrades economic forecasts




The European Commission has sharply raised its economic forecasts for the coming two years, as an accelerating vaccination campaign helps the eurozone recover from the historic blow delivered by the pandemic.

The euro area will expand by 4.3 per cent this year and 4.4 per cent in 2022, Brussels said on Wednesday, compared with previous forecasts for 3.8 per cent growth in both years. As a result, all member states are now expected to regain their pre-crisis output levels by the end of next year, following a historic 6.6 per cent slump in 2020.

The stronger outlook was driven by the rising vaccination rates and the prospect of lockdowns easing across the region, as well as improving export demand driven by a global rebound. Brussels for the first time fully factored in the impact of the €800bn Next Generation EU economic relaunch package, which is expected to begin paying out in the second half of the year.

“The shadow of Covid-19 is beginning to lift from Europe’s economy,” said Paolo Gentiloni, the EU’s economics commissioner. “After a weak start to the year, we project strong growth in both 2021 and 2022. Unprecedented fiscal support has been — and remains — essential in helping Europe’s workers and companies to weather the storm.”

Europe slid into a double-dip recession early this year amid renewed lockdowns and a shaky start to the vaccination effort. However, evidence has been mounting more recently that the economy has “moved up a gear”, according to the commission, which cited improved business and consumer sentiment surveys.

Further easing of containment measures combined with the early payouts from the recovery fund should mean economies would accelerate in the third quarter — including those with big tourism sectors, which should benefit from the return to “quasi-normality of social activities over the summer”, according to the commission.

Stronger global growth, driven in part by the US stimulus packages and improved growth in China, will also help lift the EU’s export sector and contribute to the recovery. The broader EU economy will grow 4.2 per cent in 2021 and 4.4 per cent in 2022, according to the forecast, also an upgrade from the February outlook. The bloc’s unemployment rate will hit 7.6 per cent this year before heading back down to 7 per cent in 2021.

Spain, which was the hardest-hit EU economy last year, losing more than a tenth of its output, will grow 5.9 per cent in 2021 and 6.8 per cent in 2022, according to the new outlook. Italy is set to expand by 4.2 per cent this year and 4.4 per cent next.

Germany, which suffered a much smaller 2020 contraction, could grow 3.4 per cent in 2021 and 4.1 per cent in 2022. France is tipped to expand by 5.7 per cent this year and 4.2 per cent next.

The outlook next year will be supported by the highest public investment levels as a share of gross domestic product in more than a decade. That will be driven in part by the Next Generation EU package, which is meant to start paying out in the summer once member states get their recovery plans signed off by the commission.

In total, the six-year programme should pay out about €140bn of grants over the two years covered by the commission’s forecasts. That should deliver a 1.2 per cent of GDP uplift, according to the outlook.

The crisis will still continue to exert a massive strain on public finances, however, with the overall eurozone deficit set to rise to 8 per cent of GDP this year. That is predicted to halve next year to 4 per cent, but the legacy of the vast government spending programmes will still loom large. The overall euro area public debt-to-GDP ratio will remain above 100 per cent this year and next, the commission said.

EU member states face a tense debate later this year over how to rapidly pare back their stimulus programmes and whether to reform the bloc’s fiscal rules, which are set to remain suspended until 2023.

Among the risks to the outlook, the commission said, was the possibility that governments would decide to start paring back their economic support packages too soon, undermining the recovery. The continued effectiveness of vaccines and the evolution of the pandemic will also play a critical role in determining whether the EU’s upgraded forecast proves justified.

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No, ‘hyperinflation’ is not here




There’s a lot of concern out there about inflation right now. Including, unsurprisingly, here in Germany. And where not just talking about the Bund yield. This is this morning’s hot take from state broadcaster ZDF:

For non-German speakers, the headline reads ‘Fear of hyperinflation’.

The article is not entirely unreasonable, focusing on the pressures we’ve seen build up in producer prices over the course of the pandemic. As markets this morning are all too aware ahead of an important US print Wednesday, we are likely to see broader consumer price inflation surge in the coming months.

We’re betting that it’ll be a temporary blip. Round about this time last year, the West Texas Intermediate oil contract went sub zero. Twelve months on, we were always likely to see some dramatic CPI readings simply as a result of the slump in price pressures that happened when the pandemic first struck.

To boot, take away stimulus cheques and furlough schemes, and the labour market on either side of the Atlantic is nowhere near strong enough to trigger the sort of wage-price spiral that saw inflation surge into the double digits in the US and UK in the 1970s. Even in Germany, where manufacturing unions are still relatively strong, companies like Volkswagen say they don’t need to pay their workers more. Those are workers who did not get a pay rise in 2020, nor will they get one this year either — though they will see a 2.8 per cent bump from 2019 levels in 2022.

But our main point is this: Even if the price pressures seen in supply chains do spread more widely, and even if higher CPI readings do endure, raising the spectre of hyperinflation — which conjures up the cash-in-wheelbarrows images witnessed in the 1920s to many here — is completely overblown.

The article itself notes that hyperinflation is a phenomenon where prices shoot up by more than 50 per cent. We’re nowhere near that sort of situation — even over the next few months inflation readings are likely to remain in the single digits. To suggest otherwise is nothing short of scaremongering.

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The EU is trailing China’s trade distortions all round the world




This article is an on-site version of our Trade Secrets newsletter. Sign up here to get the complete newsletter sent straight to your inbox every Monday to Thursday.

Hello from Brussels, and welcome to the first edition of the new and improved Trade Secrets.

We’re still feeling the reverberations from the US’s announcement last week supporting, in principle, a patent waiver for Covid-19 vaccines at the World Trade Organization. The EU’s incredibly indignant that it’s been outspun and made to look like the bad guy, and is letting everyone know about it. The problem is that, being the EU, it’s unable to convey a quite simple and entirely reasonable message — it’s fine to talk about patents, but tech transfer and exports are the main thing — without a bit of a cacophony and strange references to Anglo-Saxons.

The babble managed to overshadow some quite big news at the EU-India summit over the weekend. As the Financial Times predicted last week, Brussels and Delhi launched (or technically renewed) talks on a trade deal, plus ambitious notions about co-operating on digital connectivity, geopolitics and so on, plus an investment treaty of the kind that’s gone down so well since the EU signed it with China. Speaking of which, today’s main piece is on the EU’s determined campaign to create legal tools to take on Chinese trade distortions, complicated by the fact that the problem keeps changing shape.

Charted Waters takes a look at trade flows over the past decade.

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New answers to the ever-changing China question

There’s been a finely tuned humming heard around Brussels over the past few years, like a high-performance engine being run at speed. It’s the legal brains of the European Commission designing new “autonomous” (unilateral) tools to counter what the EU regards as the unfair trade and investment distortions produced by Chinese state capitalism. (They don’t say China, but that’s what they mean.)

Whether you support the campaign’s underlying philosophy — free-traders are sceptical about it — the process is impressive to watch. Frankly, we wouldn’t want the lawyers of the trade and competition directorates after us. The latest contrivance was wheeled out of the hangar last week, in the form of a subsidies instrument to be used against state-supported foreign companies operating in the EU.

Assuming it gets adopted, and depending on how it’s used, it’s a big deal, bringing competition tools to bear on international trade. Essentially, it extends the reach of the EU’s state aid regime abroad where foreign handouts distort the European market. It can be applied to market competition, mergers and acquisitions, and public procurement. 

The anti-subsidy tool is the latest in the following list of China-unfriendly initiatives implemented or proposed by the EU over the past five or so years. If you’re taking notes: sharpening up trade defence instruments (anti-dumping and anti-subsidy duties); allowing those duties to be used against companies subsidised by the Chinese government but exporting from another country; tightening up screening of inward foreign direct investment (FDI) for national security reasons; developing an anti-coercion tool (aimed more at Donald Trump’s administration, to be fair) to use against foreign governments acting illegally; producing a toolbox for member states to manage risky entities (Huawei) from 5G networks; banning imports made with forced labour; and requiring European companies to exercise “due diligence” in eliminating labour and environmental abuses from their supply chains. Quite a list.

You have to admire the commission’s stamina and ingenuity, finding ways to tackle one alleged distortion after the other. You’d also think that, what with China and the EU becoming ever closer trading partners, Brussels’ stance would somewhat rattle Beijing. But it’s hard to conclude that the EU’s tools, along with a bunch of similar actions by the US and other countries, have pushed the Chinese growth model towards a market economy. In fact, President Xi Jinping’s going the other way, with a “dual circulation” growth strategy, one of the aims of which is to use heavy government intervention to build up high-tech capacity in China in an insulated domestic market.

Why? Well, some of the explanations are political. These tools are housed in the commission, but some require EU member state acquiescence to create and/or use. Powers over national security FDI and 5G screening, for example, reside at national level: China can pick off individual countries with carrots and sticks. 

Some explanations are institutional. The ability to use anti-dumping and anti-subsidy duties against Chinese companies based in third countries has been tried just a few times (glass fibre fabric and reinforcements from Egypt and steel from Indonesia and India) and only partially succeeded. Antidumping lawyers grumble that the commission makes it too hard to bring new cases.

Some are practical. The subsidy instrument will involve complex investigations, trying to apply existing EU state aid disciplines to the myriad opaque ways that China hands out money to its companies. The thresholds for action also have to be set high enough not to deter benign investments, especially since a foreign business attempting to acquire a company in the EU may also have to file separate national FDI notifications.

But one of the hardest issues is that the creation of the instruments generally lags behind the evolution of the Chinese trade and growth model by a few years. While Europe’s trade defence tools were being strengthened against exports from China, Beijing was instead building industrial capacity abroad through the Belt and Road Initiative. Then, just as the EU started to apply those duties against Chinese companies outside China, Beijing was rethinking the Belt and Road Initiative and reducing its foreign exposure. The subsidy tool arrives several years after Chinese FDI into the EU started falling and many European governments became disenchanted with China. You can very plausibly argue the EU now needs more rather than less Chinese FDI.

As the EU-China Comprehensive Agreement on Investment shows, China is less interested in getting market access in the EU than securing European inward investment in intellectual property-intensive sectors such as electric vehicles, and we can guess what for. The agreement has provisions to prevent forced technology transfer, and the EU has brought cases on the issue at the WTO, but winning dispute settlement cases rather than wielding a unilateral tool is a slow and uncertain business.

This isn’t a counsel of despair: there are still plenty of Chinese exports and investment in the EU that can be regulated, assuming that’s a good idea. But the EU’s critiques of the latest phase of Chinese development — dominating advanced markets through huge government support and weaponising trade for geopolitical ends — will be even harder to address than the previous ones. And that’s before we get to the question of human rights.

We’ll take a deeper look at the EU’s anti-subsidy initiative in future newsletters: there’s a lot to examine. For now, we’ll just say that there’s been a lot of painstaking legal engineering going on, but the devices that result are already looking a little dated.

Charted waters

This is about as big a picture on global trade as you can get. The data, from the CPB Netherlands Bureau for Economic Policy Analysis, track trade flows over the past ten years and show two things.

Line chart of 2010=100 showing World trade has recovered from the pandemic, but not Trump

First, the good news (for those of you who are fans of globalisation at least). The recovery from the early months of the pandemic has been remarkable, with flows now at their pre-Covid mark.

This is a point that we don’t think is made often enough. While semiconductor chip shortages and high shipping costs often make headlines (including, we confess, in Trade Secrets), global manufacturing and logistics should be given an awful lot of credit for ensuring that the rebound seen over the past three quarters has been so strong.

The bad news is that broader geopolitical tensions were clearly affecting flows in the run-up to the pandemic. We don’t see those tensions dissipating soon, so expect growth to stutter even if we manage to get Covid under control. Claire Jones

Trade links

Welcome to our new Trade Links section, a round-up of the best content we’ve come across over the past few days.

Today’s must-read comes from the European Centre for International Political Economy and covers the trade implications of the radical shift in technology turning manufacturing giants, such as Volkswagen, into software developers. It’s well written and has some great charts that help support the case that, when it comes to trade and technology, the future is now. 

We’d highly recommend this FT piece, which takes an in-depth look at why the Serum Institute of India, the world’s top vaccine maker, is struggling. One of the reasons being that it’s at the sharp end of the vaccine trade wars. Also worth a look is this Big Read from Andrew Hill, explaining why the UK’s services sector is taking a big hit from Brexit. This is a massive deal. And — as Lionel Barber, formerly of this parish, notes — it is a story too few are talking about given that services makes up a whopping 80 per cent of UK output. Expect this to change, and the services sector’s woes to rise in prominence, as economies on both sides of the Channel begin to reopen. 

This morning’s edition of the FT’s excellent Europe Express newsletter focuses on the transatlantic spat over the vaccine waiver, which Mehreen Khan concludes will do little to help poorer countries in desperate need of more jabs. For those of you interested in European policy and politics beyond trade, sign up here for a daily guide to what’s driving the European agenda, available for premium subscribers Monday to Friday at 7am CET. Nikkei Asian Review looks at ($ — subscription needed) why bureaucratic timidity led to the withering of Japan’s pharmaceuticals industry, leaving it reliant on foreign countries for vaccine supplies. For fans of the chip story (who isn’t?), Nikkei has dug into how Korean electronics group Samsung lost its lead to Taiwanese chipmaker TSMC. 

Elsewhere, the International Economic Law and Policy Blog asks what if the US can’t create consensus around a vaccine waiver. (There are some interesting recommendations for further reading in the comments too.) This week’s Economist delves into the topic ($) of vaccine donations. While Covax has made almost 50m vaccination donations, this is well short of its target. One of the reasons for that being the tragedy unfolding in India. China, meanwhile, has doled out 13.4m doses to 45 different countries, and India more than 10m vaccines. Alan Beattie and Claire Jones 

Any recommendations on articles to include in Trade Links? Send your tips here.

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