Germany’s account surplus, the country’s export to import ratio, reached 19.7 billion Euros this September, a ratio which leads the world. This surplus effectively means that Germany’s exports grossly exceed the imports flowing into the country. The European Commission has now elected to undertake an extensive review of this economic imbalance to determine whether it is harming the European economy. While Germany’s surplus is a significant factor in the country’s global economic success, detractors argue that this fiscal policy prevents other Member States from increasing imports to the EU’s richest market. The US Treasury echoed this sentiment when it recently argued that Germany’s account surplus hinders Eurozone growth. Meanwhile, German officials contend that the benefit of increased German demand on imports would have minimal benefits for the European economies that were hardest hit by the Eurozone crisis.
Despite Germany’s contrary opinion, it is likely that an increase in German demand for imports would have a positive overall effect on the Community economy. Indeed, Germany’s export focused fiscal policy clearly deprives other Member States from increasing imports into the country. Moreover, the policy poses a potential violation to Germany’s commitment to “work for the sustainable development of Europe based on balanced economic growth and price stability, [and] a highly competitive social market economy” under TEU Article 3. The Commission would be prudent to be thoughtful in its approach toward the Germany issue because the prospect of asking Germany to reduce its account surplus inherently contradicts the EU’s policy of encouraging Member States to aim for trade surpluses. However, as the Community’s largest market, Germany is vital to a healthy European economy. Accordingly, the Commission could strive for evenhanded measures which increase Member State access to the German market while also having minimal intrusive effects on Germany’s right to control its internal fiscal policy.
