Federation of German Industry (BDI) U.S.-German Roundtable
Thank you, Jürgen Thumann, for sponsoring this roundtable. You are a good friend of the United States. I have enjoyed working with you during my time in Germany. I am delighted that you will become Co-Chairman of the Transatlantic Business Dialogue this summer. The Federation of German Industry has been one of the driving forces behind the Transatlantic Economic Council. This will be an excellent way to advance our mutual goals.
I am happy that Commissioner Verheugen and so many other distinguished guests are here tonight, including several members of the U.S. Congress, to discuss one of the most important aspects of the relationship between our two countries -- trade and investment. The United States is Germany’s second largest trading partner and top investment destination. More than 6,500 companies on both sides of the Atlantic fuel our trade and investment. Together, these firms provide more than 1.5 million jobs in both our countries. Our bilateral investment exceeds 230 billion euros. The good news is that these numbers continue increasing rapidly.
I am especially proud to speak to you tonight in Dresden as the United States is the biggest foreign investor in the eastern German states. Unemployment in those States is one of Germany's biggest problems. I am proud to say Americans are leading the effort to solve it. More than one-third of all U.S. companies in Germany have operations in the eastern region, with investments totaling more than $20 billion. New and established companies like Oracle, Goodyear, AMD, Gillette, e-Bay, IBM, Cisco Systems, and Motorola account for over 25,000 jobs – and that number is rising. Meanwhile, German firms are pouring further investment into the U.S. We welcome it.
During the Cold War, the bilateral relationship was defined by our mutual security concerns, namely, defending Germany against a Soviet bloc invasion. Germany and America still have very important, common security goals. Both our countries are under attack by fundamental terrorists. As a result, more and more our security cooperation is centered in third countries, such as the struggle to keep Afghanistan free, to work together to combat terrorism, and to halt the spread of weapons of mass destruction.
NATO, for example, is facing the greatest challenge in its 59-year history in Afghanistan. The mission is a live fire one, forcing adaptation in military and development tactics and strategy. There have been significant successes in the past year for the Afghans and their 40 international security partners, including Germany and all members of NATO. This year and the next three to five years will, however, be crucial for the people of Afghanistan and for the NATO alliance. The Afghanistan mission is an investment in our collective security; but it is also the catalyst for the 21st-century transformation of our democratic alliance.
We are also working closely on the issue of Iran and the best way to deter Iran from obtaining nuclear arms. Let there be no doubt, that Germany and America absolutely agree that Iran must fulfill its international obligations and suspend uranium enrichment. Both nations agree that a nuclear armed Iran is unacceptable.
Iran may have suspended its weaponization for the time being, but its efforts to enrich uranium are entirely inconsistent with peaceful uses of nuclear energy. Secretary Rice met January 21 in Berlin with Minister Steinmeier and representatives of the Permanent Five UN Security Council Members. We expect the Security Council to approve a third round of sanctions in the coming weeks that should further pressure Iran to come clean about its nuclear activities and meet the international community's demands so face to face negotiations can begin. We all want the people of Iran to enjoy the opportunities that come with acceptance by the world of nations.
Germany and the United States agree that now is not the time for business as usual with Iran. I understand that curtailing business ties has been painful for German firms just as it has for American companies over the years. We would all prefer it if Iran were reliably peaceful and transparent, but we cannot ignore the threat it poses to the world. There are a lot of false rumors about U.S. business involvement in Iran. We permit only humanitarian trade with Iran (all based on licensing), and we prosecute violations of our strict sanctions regime. We live up to our word. We commend the German government for its efforts as well. If you think you know of instances where these policies are being violated, please bring them to our attention. We will investigate accordingly. In fact, just recently we have undertaken a new investigation of an American firm based on information we received from your government.
Germany's leadership under Chancellor Merkel has been critical to advancing our mutual security interests; however, her commitment and understanding of the transatlantic economic relationship is also exceptional.
The financial turmoil of recent months has shown once again how closely our two economies are linked. As I said earlier, this will continue to grow. The Embassy has been tracking economic signals closely since September, and we actively engage with German policymakers as we monitor the banking sector and market conditions in Germany. Our economy has a solid foundation, but the U.S. is going through a period of economic uncertainty due to slowing growth, rising prices, a sagging housing market and volatile financial markets. Personally I believe concern about the U.S. economy in 2008 is now overly pessimistic. The actions of the Federal Reserve, the President and the Congress will have an important effect. Growth will be slower, but there will be growth. The same applies to Germany. The annual growth forecast was just reduced from 2.5% last year to 1.7% for this year. But the fundamentals look healthy, the economy keeps growing and German business remains optimistic.
During times of uncertainty, one often observes a protectionist backlash. We have seen it rise on both sides of the Atlantic in recent years as people worry about jobs. We must ensure, however, that our economies remain open to foreign investment as well as foreign goods. As Germany debates these issues, I very much welcome BDI's efforts to keep the German investment regime like the United States, one of the most open in the world. We have done the same in creating the Committee on Foreign Investment in the United States or CFIUS to protect our national security while keeping America open to investment. The U.S. remains committed to an open and inviting investment climate. We recognize that that this is critical for job creation, economic growth, and a robust economy.
The related challenges of energy security and climate change are critical to the economies of our two countries. We very much admire Germany's leadership and technological innovations in this field and will continue working with Germany to develop clean technologies. We also have much in common when it comes to addressing climate change. We agree that the developing nations must contribute to a solution the entire international community can support. We agree that we should engage the private sector in finding new clean technologies to reduce greenhouse gases.
In conclusion, I would like to thank the BDI for providing a forum for discussion of these and other critical issues. I would also like to again commend Chancellor Merkel for her commitment to achieve results on the issues that matter most to the transatlantic business community. It's exceptional to have a leader of a major Western democracy who understands and can forcefully articulate what standards and regulations mean to your bottom line. Chancellor Merkel is that leader.
Ladies and Gentlemen, it has been an honor to join you in this special occasion, and thank you for your kind attention.
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Updated: June 2008