A New Agenda for Transatlantic Relations

Times Square, New York City © timdavidcollection/Fotolia

Germany and the United States are close political and economic partners – despite any political tensions with the current Administration. Berlin and Washington must continue the dialogue. This applies not only to the bilateral relationship, it is also a fundamental precondition for cooperating within the WTO and engaging China on critical trade issues.

Not only is the United States of America Germany’s central political partner outside of the European Union; economic relations with the United States are also of significant importance. According to Germany’s Federal Statistical Office, the United States has been the single biggest market for German merchandise exports since 2015. Moreover, German and U.S. companies are among the most important foreign investors in each other’s markets. Thus, relations with the United States are a cornerstone for job creation and prosperity in Germany.

Transatlantic Trade and Investment: Facts and Figures

  • In 2017, the value of German merchandise exports to the United States amounted to 111.5 billion euros, accounting for 8.7 percent of all German exports (Federal Statistical Office, Germany).
  • Also in 2017, the United States ranked fourth in Germany’s merchandise imports, following China, the Netherlands, and France. Germany imported goods worth 61.1 billion euros from the United States.
  • German investors have purchased assets worth 373 billion U.S. dollars in the United States (U.S. data on 2016 investments). Germany is the fourth most important foreign investor in the United States.
  • German companies employ some 674,000 people in the United States. That makes Germany the fourth most important foreign employer in the United States, after the United Kingdom, Japan, and France.
  • U.S. companies like Ford, General Electric, McDonald’s, and Hewlett Packard have a strong presence on the German market. In 2016, Germany was the fifth largest market for U.S. merchandise exports. In 2015, U.S. investors held shares in 2,807 companies in Germany and thereby assumed responsibility for 646,000 jobs in Germany (Bundesbank).
  • In 2016, the EU and the United States combined generated 47 percent of global GDP and accounted for 59.2 percent of global outward foreign direct investment (FDI) stock (UNCTAD).

A Sign of Détente in Transatlantic Trade

Both sides benefit from strong economic ties. Since U.S. President Donald Trump took office, however, the transatlantic partnership has come into troubled waters. Trump has repeatedly criticized Germany for its export surplus. While the EU had initially been exempted from U.S. tariffs on steel and aluminium, those tariffs are now also levied on imports from the EU (since June 2018). The EU has responded with rebalancing duties. Moreover, President Trump threatened to impose further tariffs on car imports.

The meeting between Trump and the EU Commission President Juncker seems to have averted a further escalation of the trade conflict. More significantly, the United States and the EU want to reduce transatlantic trade barriers. The parties agreed not to impose further tariffs while negotiations are ongoing. They want to work on a solution regarding U.S. tariffs on steel and aluminum and the EU’s retaliatory tariffs.

Words Must Be Turned into Deeds

Still, the agreement leaves many questions unanswered. A joint working group is going to work out the details and pave the way for substantial negotiations. BDI has developed a constructive agenda for improving transatlantic economic relations and proposes the following eight-point-plan for the coming negotiations:

  1. The EU and United States must maintain a close dialogue.
  2. No tariffs should be imposed under the guise of national security.
  3. Every step must be taken in accordance with WTO rules.
  4. Barriers to transatlantic trade should be removed.
  5. The EU and the United States should quickly and ambitiously examine whether there is sufficient common ground for a trade agreement.
  6. A new agreement has to meet the requirements of a modern trading partnership. According to WTO law, the agreement should liberalize substantially all trade. Hence, a mere tariff agreement with the United States would not suffice. Non-tariff trade barriers (NTBs) should be an integral part of talks and public procurement should be considered.
  7. In their common effort to strengthen the multilateral trading order, the EU and the United State should agree on an agenda that modernises the WTO’s rules and enhances its mechanisms for monitoring and enforcement.
  8. The EU, the United States, and Japan should take joint action towards a new agenda for engaging with China.

The Deutschlandjahr Promotes Exchange

In order to strengthen transatlantic exchange – not simply between governments, but on a civil-society level –, a Deutschlandjahr will be hosted in the United States. Under the motto of “Wunderbar together”, the initiative will last from October 2018 to October 2019. The Deutschlandjahr is funded by the German Foreign Office, implemented by the Goethe-Institut, and supported by the Federation of German Industries.