Relationships and Cooperation between Czechia and Germany as a

INVESTORS IN MSK Relationships and Cooperation between Czechia and Germany as a Dialog between Modern Sovereign States The Chairman of the Editorial Board for POSITIV magazine, Radúz Mácha, talked to the ex-minister of Industry and Trade, Karel Havlíček, about relations between Czechia and Germany, mainly in the field of economic relations. Germany has the world’s fourth largest economy, making it the Czech Republic’s largest business partner and a key foreign market target for our exports. From Czechia’s point of view, trade balance between the countries has been active for a long time now. Can we still improve upon these very positive results? In the structuring of our exports to Germany, for example? Germany has been Czech Republic’s largest and most important business partner since the country’s creation. In 1993, Germany contributed to 29% of domestic exports, and twenty-seven years later, it is now 32.7%. In 2016, Czechia managed to climb the ranks to reach the top ten of Germany’s biggest business partners and it has held that position ever since. The activity of the trade balance between the two countries has been important to the balance within Czechia since 1998, positively affecting payment balances within the country. The commodity structure of Czech exports into Germany has gradually experienced great change. The proportion of exported machines and means of transport has increased (from around 46% in 1999 to 61% in 2020) and, within that same time span, the proportion of exported sorted market products decreased from 25% to 14%. This lowered percentage share involved products such as base metal and iron constructions or wired products, that is to say, commodities with lower added value. It is more than apparent that global economic changes will have an effect on the structure of domestic export to Germany. It is all dependent on our economy’s ability to adapt. We can definitely expect changes to take place faster than they did previously, meaning those that react the fastest will reap the largest benefit. It will be a great challenge not only for the domestic economy but also globally. Germany has begun to put into effect crucial processes involving modernization and economy greening, which are manifesting themselves in the forms of digitization (Industry 4.0 strategy, artificial intelligence, the internet of things, e-commerce), and changes in the politics of energetics (Energiewende), which involves the support of electricity production via renewable means and a shift away from nuclear power and coal by 2038. What does this mean for us? The new coalition deal, called ‘Courage towards further progress—alliance for freedom, equality and sustainability’, is what will dictate the direction of further development of the German economy. The be all, end all of this will be digitization which, among other things, assumes statewide subsidized fibre optic coverage for homes and the standardization of 5G mobile communications. Investments will also be focused on climate protection. The German economy belongs among the world’s strongest and it also has great global connections. The Czech economy is obviously very closely linked to Germany’s. That is why it is important to keep up with changes and trends happening within the borders of our Western neighbour and to make use of the economic potential held by one of the engines of the global economy. Small and midrange businesses, supported by supranational companies and concerns, form the backbone of the German economy. Should this model serve as inspiration for us? Small and midrange businesses are generally considered to be the backbone of any economy. In Germany, they represent 99.5% of local companies, 97.1% of German exporters and they provide more than half of the jobs. These businesses serve as the driving force in innovation, technology, and economy for our Western neighbour. They possess great flexibility in reacting to market changes, production adaptation and are therefore able to quickly innovate products, services and technological solutions. Comparing Germany, in other words, an economic giant, with Czechia, a mediumweight economy, is not very easy. Furthermore, our economy saw essentially no development under market conditions in the second half of the 20th century. Therefore, if we are to take inspiration from Germany, I think it should be in the outstanding functionality of their economic system. As ex-Minister of Industry and Trade, what are your hopes regarding economic relations between Czechia and Germany? I view the neighboring relations between Czechia and Germany as a dialogue between modern sovereign states that express mutual interest to cooperate and develop. I am not concerned about the relations between our countries, though election results always play a role in this. As for the future economic development of the Czech Republic, we have great goals in mind regarding our branding as ‘The Czech Republic: The Country for the Future’, part of which is the support of scientific and technological development aimed at maintaining our competitiveness. We would like to continue on our path of cooperation with our economically powerful neighbor and deepen our business ties. This means, for example, conducting joint projects within Industry 4.0, the implementation of AI into the production process and the strengthening of ecological aspects in production. Mr Havlíček, thank you for the interview. Text: redakce Foto: archiv Karla Havlíčka POSITIV 4/2021 ǀ 45