It is a pleasure to visit Hamburg. I would like to thank the Hamburg chapter of the American Chamber of Commerce for inviting me to speak today.

First of all, it gives me the opportunity to thank the people of Hamburg and the Hamburg business community for the many gestures of support to help those in the region affected by Hurricane Katrina.

The Hamburger Abendblatt raised  120,000 through their special initiative “Help for Friends.” Many individuals and organizations contributed. The contributions from young people and schools were especially heartwarming.

Another example was the offer of Houston offices and workplaces for dislocated American businesses through a unique “Company, Be Our Guest!” relief project sponsored by the Hamburg Chamber of Commerce and their members.

EADS, independently and in cooperation with European governments and private agencies, provided cash donations, operated helicopter rescue missions, deployed the Airbus mega-freighter Beluga to ship relief supplies and delivered a self-contained mobile hospital unit.

Hamburg bakers raised relief funds for victims of the hurricane through their bake sales.

The Citizen Association of Wilhelmsburg collected   4,000 to invite several children from the New Orleans region to stay with families in Hamburg. After the 1962 flood in Hamburg, Louisiana citizens collected money for flood victims in Wihelmsburg. Back then, ten Wilhelmsburg high school students were invited to Louisiana, where they stayed with American families for 8 weeks. One of those students, Mr. Hans-Ulrich Seumenicht, is now the chairman of the association.

These are just a few of the initiatives that Hamburg citizens launched after Hurricane Katrina. They are indicative of the strength of our long-term relationship based upon the humanity and compassion that unites all of us. Thank you very much, Hamburg.

America very much appreciates what Hamburg and Germany has done for the victims of Katrina, yet we are faced with another humanitarian crisis on the other side of the globe in Pakistan. The U.S. Government has just increased its pledge to over $100 million in relief aid and is calling on other countries to expand their assistance and generosity during that country’s time of dire need. I don’t need to recount the tragic situation that we are all witnessing on television, but there is a clear urgency involved with the Himalyan winter approaching. I urge all of you to support such efforts to the greatest extend you can.

I am very pleased to visit Hamburg because of its proud history. Yesterday, we had a glimpse of your vibrant industrial harbor. It is clear that trading is still in this city’s lifeblood. It is also obvious that, long ago Hamburg’s citizens recognized that the best way to prosperity and innovation was to allow the free flow of ideas and trade. That is surely one of the reasons George Washington established one of the first Consulates General here over 200 years ago!

Today I would like to talk with you about prosperity and innovation in the 21st century and about the German-American relationship today, more specifically the economic aspects of the relationship.

Let me digress a little. As CEO of the Timken Company, I knew that manufacturing as a component of the economy was misunderstood and under-appreciated by many, but it really came home to me during the year I served as chairman of the National Association of Manufacturers. It was at that time that I started to spend a few minutes at the beginning of every speech I gave with a reality check to highlight the strengths of manufacturing in America.

Now, as Ambassador of the United States to Germany, I conduct a similar reality check on the German-American relationship. Since our arrival in late August, I have had the opportunity to meet many Germans - of all ages, political persuasions and occupations. I have met with government Ministers - past, present, and future - with CEOs, engineers, bankers, soldiers, teachers, students, artists, members of the media, and many others. My impression from these meetings is that the German-American relationship is far stronger, more vital, and more positive than many perceive it to be. President Bush's visit to Mainz in February was a clear sign of the importance he attaches to the German-American partnership. Together the United States and Germany are working to advance freedom and democratic reform, promote prosperity and development, and to counter terrorism and nuclear proliferation around the world. Germany is a vital partner that we rely on and trust.

Our two countries form one of the strongest economic relationships in the world. Our two-way trade well exceeds 100 billion dollars. Germany is America’s fifth largest trading partner, and the United States is Germany’s second largest. Our bilateral investment relations are extensive. As but one example, AMD’s recent expansion in Sachsen is valued at over $2.5 billion. Numerous U.S. corporate household names have invested heavily in production facilities and sales outlets here and become established parts of the German economic landscape. Our common interests are clear; because, as we all know, economics is not a zero-sum game.

But more than that, given the size of our economies, both the United States and Germany have a special responsibility to contribute to global growth. Transatlantic trade and investment fuels the engines of the world's economy. Trade is one of the most certain paths to lasting prosperity for people around the world. By all historical standards, the period since World War II has witnessed unmatched economic and social progress.

We need to find ways to integrate more of the world into the international economy, to expand and strengthen the economic interdependence of nations. We need to do a better job in ensuring that more nations and more citizens of the world fully participate in globalization. We need to foster globalization, not fear its growth.

At the forthcoming discussions of the Doha round, we have clear opportunities in the agricultural sector but such understandings will require bold and decisive action. At stake is the expansion of world trade and the promotion of economic growth. According to the World Bank, the elimination of trade barriers especially for agricultural products would benefit the world’s economy by nearly $300 billion over the next ten years. Two-thirds of such income gains would go to middle and low-income countries.

Through the elimination of trade distorting and expensive agricultural subsidies, countries such as Germany and the great trading city of Hamburg would benefit through the stimulation of worldwide demand and rising standards of living. Thus both developed and developing countries would gain. However, it will take German leadership to pave the way within the EU for lower tariff barriers for farm goods. Equally, German leadership, in partnership with the United States, will be essential to a successful agreement on agriculture at the next Doha round discussions. Addressing this key component of our trading system will go a long way to restoring Germany to its proper role as a driver of regional and global economic growth.

As I noted, globalization presents opportunities, and it certainly presents significant challenges. As we open world markets, we must insure an orderly expansion that provides all participants with a fair trading system, protects intellectual property, and lastly, allows an environment of innovation to flourish.

So what does that mean? As you all know, from a business point of view, rapid change is a fact of life. Productivity increases are a prerequisite. Market-oriented new product development is essential along with quality improvements. Innovation is the key source of competitive advantage. And innovation in the United States is working.

Our pro-growth policies have made substantial impact on the US economy. In the last 5 years, real disposable personal income has grown by nearly $1,900 per capita. Home ownership has reached an all-time high. More minorities own a home today in America than ever before in our nation's history. Productivity is growing at the fastest rate in nearly 40 years. Over the past 28 months, America's entrepreneurs have created more than 4.2 million new jobs. The unemployment rate is 5.1 percent. That's lower than the average rate of the 1970s, 1980s, and 1990s. These policies have helped us achieve a growth rate of 3.6 percent over the past year, more than three times that of Europe and nearly twice that of Japan. And our unemployment rate is roughly half of the unemployment rates in Germany and France.

Here in Germany, we know that labor policies and issues connected to pharmaceuticals, biotechnology, chemicals, energy and the environment have generated much discussion and debate. We look forward to the new coalition addressing these issues decisively but with the emphasis on innovation in mind. Certainly, these and many other areas are ripe for U.S.-German cooperation. Our two countries have and continue to make tremendous contributions. After all, Germany and the United States face similar issues and we have much to learn from each other. We need only look to such areas as the development of energy efficient automobiles and the impact that can have on our world today.

I believe very strongly that German and U.S. business can play an important role in such processes. As President Bush has said, the role of government as regards the economy is to foster an economic environment that encourages entrepreneurship; to create an environment in which people can feel comfortable risking capital and realizing dreams. Government does not create wealth.

Allow me to give you one example of corporate risk taken from my former company. At the Timken Company in the late 1970s, we were the leading producer of bearing steels in the world. As part of our business, we produced significant amounts of steel and in 1980, we noticed that despite our successes, our competitors were catching up.

We decided we would invest in a steel mill that enhanced our ability to make steel but we chose to develop such technologies ourselves. It was a high-risk, bet-the-farm strategy. At one point, it almost looked as if we would lose the farm. But it worked. This type of innovation enabled us to produce steel that was remarkably 10 times better. This in turn gave us steel products unmatched in the world and enhanced our bearing products.

Forgive me for giving you a Timken example but it is the company I know best. German technology is, of course, world-renowned and I have had many personal, very rewarding experiences with German engineers and scientists. I am very interested in learning more about this great country and the tremendous resources that it holds. Where we can combine entrepreneurial talent with policies that nurture and promote innovation, we will create a strong economic dynamic that we all seek.

Since we are in Hamburg, I would like to close on a nautical note. I remember a passage from Rudyard Kipling’s poem about a race between sailing ships from Asia to Europe in the 1800s. The first ship that reached England would capture the markets for spices and teas from the Orient. The leading captain boasted, “they copied all they could follow, but they couldn’t copy my mind, I left them sweating and stealing a month and a half behind.”

Ladies and gentlemen, the future is in our hands. What is in our minds?