The Transatlantic Marketplace – Challenges and Opportunities Beyond 2008
Frankfurt am Main, November 7, 2008
Ambassador William R. Timken, Jr.
As prepared for delivery.
It is a great pleasure to open the second annual Transatlantic Marketplace conference. I was here last year for the inaugural conference and I hope that this tradition will be carried on by my successor.
The next year will be a time of transition with a new administration in Washington but I am confident that the President-elect will continue to work closely with Europe and in particular Germany. An increasingly globalized and multi-polar world holds major challenges and opportunities for all of us. A multi-stakeholder approach to tackling global problems is essential. How successfully we deal with them will determine the shape of the international order and the global security and prosperity in the years ahead. President Bush and Chancellor Merkel have offered constructive leadership in addressing the challenges that face both our two countries. Their language of common purpose – of a strong Europe in partnership with America – is the reality of our cooperation today and it will be tomorrow under our new President.
During the past year, we celebrated that partnership in a very special way. Many of you attended the July 4 Grand Opening of our new U.S. Embassy in Berlin. We were honored to welcome Chancellor Merkel and former President George H. W. Bush to our Embassy Grand Opening. All of us were especially moved by the words of President Bush whose commitment to support German reunification so potently expressed the special bond between our two nations.
Many of the companies represented here supported our festivities. I would like to personally thank you for that support. It is symbolic of the transatlantic business community’s commitment to our partnership – which I see as the underlying theme of this conference series.
A year ago, we focused on the opportunities for regulatory reform presented by Chancellor Merkel’s Transatlantic Economic Initiative. More than one out of every two dollars – or Euros – of all goods and services in the world are produced by our two economies. We are each other’s largest markets and each other’s largest investors.
In the past year, at the Embassy and our five Consulates, as a complement to the work of the Transatlantic Economic Council, we have been focusing our attention on documenting the breadth and depth of the investment and trade connections between Germany, Europe's largest economy, and the United States. AmCham and the BDI have supported us in these efforts, providing us with very valuable indicators that measure the levels of connectivity between our two countries.
On November 12 in Berlin, thanks to BDI and AmCham, we will release a 30-page report in Berlin, which will make public much of the data we have collected. We will also set up an embassy website where these previously little known facts will be on display. Today I have provided in English and German a small pamphlet, which provides a glimpse.
What I can tell you, our economic connection is truly the glue of our bilateral relation but it is grossly underappreciated.
Thank you, Fred and Juergen, for your cooperation.
In the new global economy, investment flows affect jobs the most. FDI investment between the two economies fuels two-way growth and is the most significant factor leading to our more integrated economic relationship. Recent Bundesbank data indicates that the U.S. was the largest investor in Germany in 2006 and accounts for 11.5 percent of Germany's foreign direct investment. U.S. assets in Germany are in fact greater than total U.S. assets in all of South America.
All told, U.S. foreign direct investment in Germany has more than quadrupled, while German direct investment in the U.S. is roughly seven times what it was when the Berlin Wall fell. The combined assets held by German firms in the U.S., and by American firms in Germany, total over 1 trillion dollars. The United States is in fact now German businesses' #1 investment target. German investment in the American Southeast alone is now greater than all of European investment in China.
On the trade side, German-U.S. trade represents almost a quarter of total U.S. trade with all 27 EU member states. Germany sends approximately 60 percent more exports to the U.S. than the second largest European exporter. Germany also trades more with the United States than it does with China and India put together. This decade-long export success in the U.S. market is reflected by its substantial export surplus of $45 billion in 2007.
The underlying message is this: the greater the trade and investment between the United States and Germany, the greater the level of foreign affiliate sales and profits. That translates into increased prosperity and, most important, more jobs in both of our countries.
I also recall the BDI projections of three percentage point increases in trade if the transatlantic economic initiative succeeds.
That is why, after serving for over three years as the American Ambassador to Germany, I can say with conviction that transatlantic economic connections shape our relationship as much as, if not more than any diplomatic demarches and military exercises. In the 21st century, private initiative is the glue for our partnership.
It is also true, however, that increased economic integration allows opportunities, as well as financial difficulties, to spread rapidly across borders -- as we have seen over the past several weeks. The recent fluctuations in the financial markets and the freezing of credit markets are having a tangible impact on the everyday lives of citizens all around the world. It shows just how connected and interdependent world economies are.
There will undoubtedly be much analysis of the current crisis in the months and years ahead. When we emerge from this period – and we will emerge from it – the task for the new administration in Washington and for America’s international partners will be to ensure that as the balance is restored between risk and reward in the marketplace, a balance is also struck between smart regulation and market discipline. The process of restoring global financial stability will not be easy, and it will not happen overnight.
I am heartened by Congressional action, the work of the U.S. Administration, the diligent efforts of the European governments, and the effective international coordination, led by the EU and the U.S.
G-20 leaders meet next week in Washington as part of the global effort to achieve these goals. This Summit is just one step in what will be an ongoing process.
Collectively, we need to rebuild confidence in our markets so that capital can flow again to help spur global growth. Both the American and German economies are resilient. They will remain as leading engines of global economic growth – and the best places in the world to do business.
Meanwhile, the job for business is to keep doing what business does best – creating wealth, making products that strengthen our economy and enhance the quality of people’s lives.
While the importance of U.S. German trade and investment is broadly recognized--though the breadth and depth is often underestimated--the vital R&D links between the U.S. and Germany are less well known. Increasingly they are becoming key drivers of innovation and scientific break-through. This conducive environment has led to particularly fruitful R&D cooperation in the field of wind and solar energy, and Germany and the U.S. are top trading partners for advanced technologies in biotech, the life sciences, and advanced materials.
A strong and long tradition of scientific exchange programs and foundations further supports joint R&D efforts. One of the most lasting cross-cultural connections is built by researchers and students visiting the United States. Exchanges between the United States and Germany are the highest in Europe and rank among the most popular in the world.
Some 30,000 German and American high school and university students study in each other’s countries annually for an entire academic year. Even more German students participate in short-term exchange programs. Numerous partnerships, both public and private, sustain and add momentum to bi-national exchange programs. Both the German Fulbright Commission and the German American Partnership Program are the largest government-supported exchange programs of their type worldwide. But while government supported exchanges are important, the number, variety, and impact of private programs – arranged through institutional and sister city partnerships, German-American clubs, sports and cultural groups, not to mention spin-offs from business affiliations and commercial initiatives – are far greater.
America’s role in rebuilding and defending West Germany after the war led to what in some ways amounted to the largest exchange program in history. Soldiers, not students, formed new contacts and created chances for cross-pollination. Over 15 million Americans have been stationed in Germany since the 1940s, including military families and their dependents. Today business plays that role.
U.S. corporate affiliates in Germany have become in recent years increasingly more focused on their responsibility to German society. According to a recent survey by the AmCham in Germany, over 40 percent of U.S businesses in Germany are active in educational, environmental or other community-based activities at the local, regional and national level. This follows the historic commitments of the private sector in the United States to be responsible for solutions to society’s shortfalls.
In short, trade and investment create jobs and prosperity, but alone those indicators do not tell the full story. I have talked about this before, but this will be the last opportunity for me to speak with many of you. As is normal after a presidential election, Sue and I will soon be returning to the United States.
We are very pleased to be back in Frankfurt for what may be our last occasion as the official representative of the people of the United States.
We want to thank the people of Hesse for their great hospitality and friendship. We have visited much of this state which has such historic and close relations with our country. You are truly friends of America.
I hope you will all speak up louder and stronger in public forums promoting the real value of our bilateral partnership to the economic well being of the German people. It is not well understood!
Vielen Dank!
