Merz calls for deregulation, stronger single market and faster trade deals

At the European Industry Summit in Antwerp on February 11, German Federal Chancellor Friedrich Merz outlined a policy agenda aimed at strengthening Europe’s industrial competitiveness in what he described as a “new geo-economic” and “new geo-political reality”. His remarks are likely to resonate across energy-intensive sectors such as steel, which are facing pressure from high costs, global overcapacity and shifting trade policies.

Merz argued that Europe’s position in an increasingly polarized global economy will depend primarily on its economic strength. “Only an economically powerful Europe will be a sovereign Europe,” he said, pointing to a widening growth gap with the United States and China. Citing long-term trends, he noted that over the past two decades China grew by around 8% per year, the US by 2%, and the EU by only 1%.

Against this backdrop, Merz said Europe needs to move from diagnosis to implementation, referring to the recent reports by Mario Draghi and Enrico Letta on European competitiveness. An EU competitiveness agenda is expected to be discussed by leaders in the coming weeks, with initial decisions targeted for the March European Council.

Deregulation and faster permitting

For industrial sectors, including steel, Merz’s strongest emphasis was on cutting red tape and accelerating investment. He warned that “over-regulation in this European Union … hampers our economic growth” and called for what he described as a “true deregulation mindset”. In his view, incremental changes are not enough: “We need to systematically review the whole set of existing EU legislation.”

He contrasted Europe’s slow approval processes with the pace of investment elsewhere, noting that China can build large-scale energy projects in months, while in the EU “it takes years just for the project to get approved”. To address this, Merz proposed a more radical approach to permitting, suggesting that projects not processed within a defined timeframe should be considered automatically approved.

For steelmakers and their suppliers, this message is particularly relevant in areas such as energy infrastructure, decarbonisation projects and new production facilities, where long approval timelines remain a major bottleneck.

Single market still fragmented

Merz also highlighted structural weaknesses in the EU single market, which remains fragmented despite decades of integration. Referring to figures from the Letta report, he said internal barriers effectively act “as a 45 percent tariff on goods and a 110 percent tariff on services”.

He warned that this fragmentation is increasingly being felt by companies, adding that trade within the single market has recently declined. To address this, he reiterated support for the creation of a so-called “28th regime” – a single European set of business rules – to simplify operations, particularly for innovative and fast-growing industries.

He also pointed to specific areas of relevance for heavy industry: the need for a better integrated European energy market to bring down power prices, simpler rules for digital and AI-driven business models, and an update of EU merger policy. “Europe doesn’t need European Champions, it needs Global Champions,” Merz said, arguing that competition policy must reflect the new geopolitical reality and allow European companies to compete with US and Chinese rivals.

Trade policy: faster, but not naïve

On trade, Merz reaffirmed Europe’s commitment to openness, while stressing the need for speed and strategic realism. He welcomed recent EU free-trade agreements but warned against excessively long negotiations, saying: “It should never again take us 26 years to get a trade deal – as it did with Mercosur. The world will not wait for us.”

At the same time, he underlined that Europe should not be seen as defenceless. “We are neither naïve nor defenceless,” he said, referring to the EU’s readiness to respond to unfair trade practices and potential tariff اقدامات from major partners.

For globally exposed sectors such as steel, this balance between openness and trade defence is a key issue, particularly in the context of overcapacity, shifting trade flows and instruments such as CBAM and safeguard measures.

Merz also suggested a more flexible approach to industrial policy preferences, arguing that “made in Europe” could be too narrow and proposing instead a “made with Europe” concept, especially for strategic sectors.

Source and Photo: German Government