The Cornerstones of a Strong Transatlantic Economic Relationship

© Fotolia/p_gangler

With the accession of Donald Trump to the Presidency, uncertainty is increasingly weighing on German businesses. Yet relations with the United States remain an important pillar of the German economy. German industry has identified 10 cornerstones that have high priority in ensuring the stability and sustainability of transatlantic economic relations.

The economic relationship between the European Union (EU) and the United States is one of the most important pillars of the world economy: the transatlantic market accounts for 46 per cent of global gross domestic product, around one-third of global trade and more than half of the stock of foreign direct investment.

The United States is a major partner for German companies in particular: in 2015 it was the most important export market for German goods. There are around 4,700 companies in the United States in which German capital is involved; they provide around 670,000 jobs in that country and invest more than US$7 billion locally each year in research and development (source: U.S. Department of Commerce, figures for 2015). At the same time, German technology imports and innovation play an important role in the success of the U.S. manufacturing industry. For large companies, access to the U.S. market is as important as it is for small and medium-sized industrial firms. Moreover, as the largest economy in the world, the United States has a decisive influence on the overall dynamics of the global economy.

Since the U.S. elections in November 2016, uncertainty has been weighing on German businesses. For its part, German industry has identified 10 cornerstones that have high priority in ensuring the stability and sustainability of transatlantic economic relations:

  1. The EU and the United States should play an active role in shaping globalisation and work closely together to develop global rules and standards.
  2. The current access for Germany companies to the U.S. market must be maintained. This applies to goods, services, and investments. Punitive tariffs of any kind or the introduction of new ‟Buy American” rules or new local content requirements would damage transatlantic economic relations.
  3. Negotiations on the Transatlantic Trade and Investment Partnership (TTIP) and on the dismantling of barriers to trade and investment should be resumed in the near future. At the same time, the U.S. government and the EU Commission must abide by their commitments to ensure high standards under the TTIP.
  4. The North American Free Trade Agreement (NAFTA) is similarly of great importance for German companies in the North American market as well as for global value chains; for this reason, it must not be fundamentally called into question.
  5. As a business location, the United States benefits from qualified workers from Germany. This means that their mobility must be maintained and guaranteed – for example, through the Visa Waiver Program, the H-1B visa and the J-1 visa.
  6. The EU and the United States should further strengthen the World Trade Organization (WTO), a proven and frequently used forum for further developing and enforcing global trade regulations and for resolving trade disputes. The EU and the United States should help ensure that negotiations on outstanding issues in the Doha Round are rapidly concluded. The WTO agenda should include new trade topics so that its rules reflect the latest developments. The enforcement of existing trade regulations must be in harmony with WTO rules and must not be used as a pretext for new protectionist measures.
  7. Tax incentives for investments in U.S. infrastructure can create new opportunities in the United States for German companies. But at the same time, the long-term sustainability of running a deficit and accumulating public debt must not be overlooked. Moreover, the strong engagement of the EU and the United States at the level of the OECD and the implementation of the BEPS project is important for a global consensus on international tax law.
  8. In line with their joint responsibility for climate protection, the EU and the United States should implement the Paris climate agreement in coordination with the other signatory states. The aim of global climate protection must be to create a level playing field for climate policy in order to prevent unfair competition and at the same time remain open for different technological approaches.
  9. The EU and the United States must ensure that they closely coordinate and take similar steps over economic sanctions. This applies, among other things, to enforcing the nuclear deal with Iran (JCPOA).
  10. The United States should abide by international standards in the area of banking and financial market regulation. Fundamentally renouncing the reform of global financial market regulation pursued since the 2009 G20 summit in Pittsburgh would be very problematic. At the same time, it could be expedient to make minor changes to the highly complex financial market regulation of the United States.