Wallenberg warns against using Covid as excuse for protectionism

EU politicians are using the Covid-19 pandemic as an excuse for protectionism in areas such as vaccine production and face masks, according to one of Europe’s leading industrialists.

Jacob Wallenberg, the Swedish business leader whose family controls large stakes in companies from AstraZeneca and Ericsson to ABB and Nasdaq, told the Financial Times that vaccines had worked well as they were dealt with at “a truly international level”, while most face masks came from China.

To use this as “an excuse for reshoring goes too far”, he said. “When I listen to politicians I hear about the concept of reshoring, the concept that Europe should do more things at home. My concern is that you end up with more protectionist tendencies.”

The European Commission and leading politicians have argued that the EU should have “open strategic autonomy” in certain sectors and areas of trade to ensure the region has independent supply chains.

Speaking as head of the committee on trade and market access for the European Round Table for Industry — a group of 60 leading chief executives and chairpersons from across the continent — Wallenberg cautioned that this strategy risked creating barriers to global supply chains, which had actually helped Europe navigate the pandemic.

“There has been discussion on starting to produce vaccines in every country, including my own,” said the Swedish industrialist. “I think the fact that vaccines were dealt with at a truly international level is the reason we got vaccines as fast as we did. There, the avoidance of autonomy has been very important.”

France’s decision early in the pandemic to seize millions of face masks being shipped to the rest of the EU by Mölnlycke, which is owned by the Wallenberg family’s holding company, perturbed both the industrialist and the Swedish government.

In May the European Commission unveiled an update to its industrial strategy, calling for action to address vulnerabilities in the supply chain identified during the pandemic. The commission identified 137 products in the most sensitive ecosystems — such as raw materials, batteries, pharmaceutical ingredients, hydrogen, semiconductors and cloud technologies — where the EU was highly dependent on imports from third countries, in particular on China.

In a report to be published on Monday, the European Round Table warns that any intervention to boost the resilience of European supply chains — even on critical goods — “should be the exception, not the rule”. 

It called for more openness in European supply chains, and for greater engagement with industry on relations with China, despite growing tensions over the crackdown in Hong Kong and human rights abuses in Xinjiang. 

Earlier this year, the Wallenberg family’s interests were caught up in a row over Sweden’s ban on Huawei’s access to 5G networks.

Wallenberg, who had publicly criticised the Swedish ban on Huawei, said the only way forward was to “find common ground” with China. As the world’s second-largest economy, China was “a very important partner of ours”, he said. “The alternative, to stop doing this . . . is a dramatic shift of the world.”

Nevertheless, he added that the EU needed to be ready to defend its companies against unfair practices. ” I think it’s important that the EU has a strong posture and that it stands up for that,” he said.

Wallenberg welcomed European initiatives to screen foreign investments more closely.

“I think it’s very appropriate that we have tools of that nature in place. I think it’s a matter of making sure that you can apply level playing field principles,” he said. “If we end up in a situation where this doesn’t work . . . of course there have to be consequences.”

The European Round Table has called on Brussels to form a dedicated unit to manage the China relationship. 

He stressed that while the US remained a key strategic partner, Europe should not “copy and paste” the more aggressive stance taken by Washington with regard to relations with China. Europe had to “stand on its own feet”, he said.

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