Axel Springer CEO calls for tariff-free democratic trade club against China and Russia

To avoid being undermined by autocracies such as Russia and China, democracies should trade freely amongst themselves, while imposing stiff tariffs against countries that don’t have the same environmental or human rights standards, the head of German media company Axel Springer proposed.

Speaking to POLITICO’s Anne McElvoy in her new Power Play podcast, Mathias Döpfner, CEO of Axel Springer — POLITICO’s parent company — called for the creation of a two-speed world trade system that would be shaped by countries’ political regimes.

Only transatlantic democracies that abide by a set of minimal standards — which include respecting the rule of law and human rights or setting targets for carbon dioxide emissions — should be allowed in the free world’s duty-free trade club, Döpfner said.

These democracies would still be able to trade with “autocratic or dictatorial systems, but then these countries have to pay tariffs,” the media executive continued, arguing that such a system would “strengthen democracies.”

“It is like a good tax reform, it may have some short-term costs, but the midterm and long-term benefits are much, much bigger,” he added.

One of the core goals of this newly created free-trade club would be to level the playing field in relations with Beijing. In Döpfner’s eyes, a robust response from Washington and Europe would have to move beyond the piecemeal cases of the past.

The EU’s current approach is to tackle issues individually through probes, such as Brussels’ clean cars investigation.

Europe wants to ban polluting cars by 2035, but the bloc’s electric batteries industry remains largely underdeveloped, whereas China is home to a sizeable, and efficient, electric car industry — giving it a competitive advantage over the EU.

Brussels has recently announced the opening of an investigation into Chinese subsidies for electric cars — a probe which could lead to a full-on tariff war between the two blocs.

This ad hoc approach doesn’t go far enough, according to the Axel Springer CEO, who advocates a wholesale rethink of the democratic front against China.

“We need something where democratic economies unite, define their interests, and in a way collectively achieve a completely different negotiation power, and with that bring China to the table on different terms,” he said.