Harvard Alumni Club Lunch
Thank you, Jobst-Hinrich von Bülow. It is a pleasure to join this meeting of the Rhein-Ruhr chapter of the Harvard Alumni Club.
This year, we will be opening a new chapter in the unique story of postwar German-American cooperation. When we moved from Bonn to Berlin in 1999, we moved into temporary quarters. This spring we will be moving into our new embassy, returning to our pre-World War II location on Pariser Platz beside the Brandenburg Gate. I think of this as the closing of a cycle that extended back to the time when we were enemies at war, through the long Cold War years of division, the process of unification to the state where we are today as global partners. Our new Embassy is not just another building. It demonstrates the commitment of the United States to partnership with the nation of Germany and the people of this country.
The Grand Opening of the Embassy will be part of our official 4th of July celebration in Berlin. But all across Germany and throughout the year, we will be celebrating our partnership with a series of programs that will underscore the same fundamental theme – the enduring strength of the German-American relationship, government to government, and people to people.
People like yourselves who have attended university in the United States are part of the continuously important networks of transatlantic and global connections. Americans who go overseas to study or work describe their lives as being forever changed. I hear that comment as well from people here in Germany. Exchange is a two-way street. We want more Americans to study and travel abroad; and we welcome German students to our institutions.
Germany sends 8,000 students to participate in high school exchange programs every year. That's more than any other country. With our Windows on America program that started right here in Duesseldorf, we are adding young Germans from immigrant backgrounds to that pool.
Over 8,500 German students studied at American universities in 2005/06. That puts Germany in our top ten. Germany is also one of the leading destinations for American students. In 2005: 6,858 American students studied here. That was an increase of close to 5% over the previous year.
Those kinds of connections are important -- not only on the personal level. The relationships that are established become woven into the increasing integration and cohesion of our societies and our economies. That is one of the defining features of the global economic landscape.
Globalization is happening faster and reaching deeper between Europe and America than between any other two continents. The economic relationship between the United States and Europe is the closest between any two continents in history -- and these ties are accelerating. The United States and Europe have not drifted apart since the end of the Cold War. They have become more intertwined and more interdependent.
Close to 190,000 American citizens live in Germany -- 30,000 in the North Rhine-Westphalia area.
Counting all branches of our military and Pentagon civilian employees, the U.S. has 72,723 Americans stationed in Germany. We estimate that the total economic impact of this presence across 11 sites in Germany is $3.5 billion a year.
The United States is Germany’s second largest trading partner and top investment destination. Bilateral investment exceeds 230 billion Euros. 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 – good jobs -- in both our countries.
Over sixty percent of U.S. corporate research and development conducted outside the United States is conducted in Europe. R&D expenditures by U.S. foreign affiliates are greatest in the UK and here in Germany.
Despite the fact that transatlantic markets are among the most open in the world and are deeply integrated through dense flows of investment, barriers still exist. Recognizing the importance of our economic relationship, Chancellor Merkel initiated the Transatlantic Economic Initiative to reduce and remove these barriers. At the U.S.-EU Summit in Washington last April, the United States and the EU agreed to a Framework for Advancing Transatlantic Economic Integration. The German Federation of Industries estimates that by reducing regulatory barriers on both sides of the Atlantic, we could gain up to 3 percent growth in GDP. When you consider that the U.S and the EU account for roughly 60% of global GDP and 40% of global trade, 3 percent growth represents very significant potential gains.
As a former businessman, I am sure the Chancellor is right on the mark. 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.
The financial turmoil of recent months has shown once how closely our two economies are linked. Two thirds of American investors own securities of European issuers and other non-U.S. companies. That's a 30% increase from just five years ago. During that same period, European trading in U.S. securities has truly exploded, reflecting a worldwide trend. As we meet here this morning, foreign trading in U.S. securities is over $33 trillion. That's more than twice the GDP of the entire European Union. The pace of events in the world's capital markets over the last few years has made the rational integration of markets, and hence global regulatory cooperation, the most pressing issue for both investor protection and healthy capital formation in the early 21st century. Today's globally active investors are faced with the challenge of making investment decisions based on business and financial information that's often not comparable across borders. Global securities trading and global capital formation are, however, on the rise — because markets, issuers, and investors are demanding it.
The United States and Europe are working together to lower the barriers to the efficient operation of the world's capital markets and rationalize different regulatory approaches. That is to be expected when you consider that America and Europe represent 70% of the world's capital market. 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 and national security. We must ensure, however, that our economies remain open to foreign investment.
As Germany debates these issues, I very much welcome efforts to keep the German investment regime one of the most open in the world. In the United States, 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 this is critical for job creation, economic growth, and a robust economy.
The related challenges of energy security and climate change are also critical to the economies of our two countries. We very much admire Germany's leadership and technological innovations in this field. We 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.
The mutual tasks facing both our countries are enormous, truly global in scope. They are matched in scale only by the enormity of their importance. Historic decisions led to the development of a Europe, whole, free and at peace. Vision, leadership, sacrifice and American support accompanied those decisions. Remember the spirit in which NATO and what was to become the European Union were born. Germany is the heart and soul of those institutions. It was around Germany’s renewal that they were formed.
Today we face new challenges. I have focused on some of the economic issues. Germany and America also, of course, still have very important, common security goals. The alliance that never fired a shot in the Cold War is learning on the job as we face new challenges. I am convinced however that the bottom line is what each of us as individuals in our various functions do every day to make the transatlantic partnership stronger. On behalf of the Embassy and, of course, as a member of your extended Harvard alumni network, let me say that I am proud to be your partner.
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Diplomatic Mission to Germany
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Updated: June 2008