Coalition Seeks Paradigm Shift in Foreign Trade Policy

On 9 April 2025, the CDU/CSU and SPD unveiled their coalition agreement, setting the stage for significant reforms in foreign trade law. Their agenda aims for a paradigm shift, focusing on expediting application procedures and integrating strategic considerations more robustly into investment reviews and arms export decisions.

A Move Away from Export Licences?

A cornerstone of the proposed reform is a fundamental change in the export licensing regime. The coalition plans to replace the current comprehensive export assessments with a system of spot checks, reinforced by severe penalties for violations. The coalition claims this would eliminate the need for prior export licences.

Reforming the Foreign Trade and Payments Act: Investment Screening & Arms Exports

The prospective coalition partners plan to amend the Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG) to simplify and expedite investment screening processes and arms export approvals. The overarching goal is to more effectively prevent investments that run counter to Germany's strategic interests.

A previously debated separation of investment screening law into a standalone law seems to be off the table. Similarly, the coalition partners do not seek to pursue the previous government’s plans for a dedicated law governing exports of military goods. Instead, the coalition envisions a strategic arms exports policy, aiming to provide greater reliability and predictability for German industry and its international customers.

Welcome Initiatives, but Implementation Is Key

Reflecting an increasingly complex geopolitical landscape, the coalition agreement includes several approaches for refining foreign trade law. However, on critical issues like investment screening and sanctions enforcement against Russia, the coalition agreement contains little that is new. Naturally, the agreed proposals remain vague at this point.

The focus on foreign trade law is a welcome development, especially for industries dealing with protracted delays in processing of their licence applications.

However, it is unlikely that export licensing requirements will actually be abolished completely. Anyone hoping for this (“prior export licensing would no longer be required”) is likely to be disappointed: both EU and international law require Germany to make certain exports dependent on prior licensing. However, the coalition seems willing to do away with the practice of customs officials requesting a no-objection certificate for exports not requiring a licence. This alone would be a considerable relief for exporting companies.

In conclusion, while the coalition's initiatives represent a step in the right direction, their practical execution will determine whether these ambitious goals can be translated into tangible benefits for Germany’s economy and foreign trade landscape.

 

This article is published as part of our Election Insights. All Election Insights and more information on the election and its impact on industry and the economy can be found on our Election Hub (here).