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On behalf of the VDMA, the Global Trade Alert Team of the University of St. Gallen, Switzerland, examined the international situation, which goes far beyond classic export barriers such as customs duties and non-tariff trade barriers.


The study shows that mechanical engineering companies


from Germany are increasingly competing with those that receive comprehensive export promotion in their home countries. This is particularly true for the most important export markets of the German mechanical and plant engineering industry: China, USA, Russian Federation and the EU states. In some cases, between 70 and 100 per cent of their machinery exports compete with subsidised products. Export promotion is therefore an important factor in the trade context and is becoming increasingly important in many competing countries. The study also


shows that technical


regulations in markets such as Brazil, China and the USA make market access more difficult and drive up costs for foreign suppliers. Added to this is the uncertainty of how these regulations will be implemented. High import duties of more than eight per cent are still in force in Brazil, China and India. Germany and the EU are also not model examples when it comes to free trade. The main obstacles for foreign machinery suppliers are technical regulations and export promotion. Trade barriers of all kinds exist above all with countries that have no free trade agreements with the EU, as the study results clearly show. In these cases, there is also the risk that the trade barriers will be maintained, or new ones added without proper dialogue on facilitation. The VDMA therefore demands that EU policy-makers actively seek contact to countries with high import duties and other trade policy countermeasures and work for solutions. The study has also clearly revealed a shortcoming of the EU: the monitoring of trade policy measures of third countries. In principle, the EU Commission should monitor the trade policy measures of the most important trading partners more closely, especially when free trade agreements already exist. For example, once the free trade agreement with the EU came into force, South Korea established new trade barriers in the form of technical regulations for machinery – an adversary step, because a free world needs free trade.


PWM: The pandemic appears to have intensified corporate reluctance to invest. How has this affected


the ventilation industry in the first half of this year? Conversely, what is the second half looking like? VDMA: Good order books have so far helped companies in the general ventilation industry through the difficult Covid-19 period.


Production is still well utilised


in


many companies. However, the decline in orders is also noticeable and it is likely that the impact on production will increase in three to six months. Consequently, the second half of the year is likely to be weaker than the first in the Air-handling Technology sector. Incoming orders in the sector declined by 24 per cent


in real terms in April 2020 compared with April 2019. Since incoming orders were still slightly positive in the first quarter (plus two per cent), this resulted in a total drop in orders of four per cent for the first four months. The picture is similar for turnover. In the first quarter, turnover decreased by four per cent, and for the second quarter, companies even expect a decline of nine per cent overall. With regards to the second half of the year, there are uncertainties and a wide variety of prospects in the industry. In summary, total sales for 2020 are currently expected to fall around eight per cent compared to 2019 for Air-handling Technology sector.


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