As prepared for delivery
Keeping Transatlantic Trade & Investment on a Sustainable Footing
11th Transatlantic Business Conference
Next Steps: Cooperation & Prosperity in the Transatlantic Marketplace
Frankfurt/Main, October 26, 2017
CDA Kent Logsdon
Thank you, Olaf Gersemann.
Bernhard Mattes, President AmCham Germany
Dieter Kempf, President, BDI
Ladies and gentlemen,
It is a privilege to represent the U.S. Embassy here at the 11th Transatlantic Business Conference.
The Transatlantic Business Conference has become an important event on the transatlantic calendar. I commend the AmCham, the BDI, and all those who, over the past 11 years, have worked not only to expand the reach of this event, but also its relevancy. This conference is keeping us all attuned to the challenges and the opportunities we face.
The first Transatlantic Business Conference was inspired in large part by the commitment and leadership demonstrated by Germany during the German EU and G8 presidencies in 2007. In that context, the first Transatlantic Business Conference addressed a number of global initiatives on the part of the transatlantic community to combat terrorism, foster development in Africa, control the spread of disease, and also of course, to promote global security and prosperity.
Eleven years later, after a period of financial crisis, the outbreak of Ebola, the rise of ISIS, the refugee crisis, cyber threats, transatlantic cooperation has shown its durability and its strength. And as President Trump said at his first meeting with Chancellor Merkel last March, the U.S.-German alliance is more than ever before a symbol of strength to the world.
Our two countries share a deep and fundamental friendship. More broadly speaking, the transatlantic relationship, and in particular the strength of our business partnerships, form an essential pillar of our mutual prosperity. The very size, however, of our commercial relationship and the magnitude of the opportunities before us underscore the need for us to work more closely together – and also to address honestly and openly the conditions required to ensure the long-term sustainability of transatlantic trade and investment and our mutual prosperity.
Cross-border investment in business and technology continues to grow at a healthy pace. There are many extraordinary examples of that on both sides of the Atlantic; such as, IBM’s new Global Government Industry Lab at the Watson Industry of Things Innovation Center in Munich, which I helped to open, and a new Innovation Center at Motorola’s TETRA Center of Excellence in Berlin. Daimler-Benz recently announced an additional USD 1 billion investment in electric car manufacturing in Alabama. Volvo is expanding its investment in South Carolina. U.S. companies continue to look for investment opportunities in Europe; and vice versa. This includes not just the big multinationals, but also the Mittelstand, the small and medium-sized businesses, that are the backbone of our economies.
Combined U.S.-German investment stock levels in 2016 were close to $480 billion. Germany is the fourth largest source of inward investment in the United States; and our sixth largest trading partner.
Our Embassy and Consulates General advocate on behalf of U.S. companies to increase their market share; and help them identify trade opportunities, find local business partners, launch a company, promote their products and services, get market research reports, and protect their Intellectual Property Rights. We provide a range of services and programs to help American companies export goods and services to Germany; and we focus our policy efforts in areas where there should be opportunities for U.S. companies and where we hope to reduce our bilateral trade deficit.
Our SelectUSA program supports German companies interested in investing in the United States. U.S. affiliates of German-owned firms support close to 700,000 direct jobs, nearly half of which are in manufacturing. As Commerce Secretary Wilbur Ross said at the Unity Day celebration at the German Embassy in Washington, “Many German brands are so recognizable in the United States that many Americans think they are U.S. brands.” Likewise, German subsidiaries of American companies have created nearly 700,000 jobs in Germany. This is all great news for communities – and for jobs.
But given the enormous rate of technological change we are experiencing – and that you will be addressing during this conference – it is also clear that R&D cooperation is a vital part of the impact that transatlantic investment has on our economies and our societies. I mentioned the new labs that IBM and Motorola recently opened here in Germany, but there are obviously many more examples. That too, is good for communities and good for jobs –in the short and the long term.
In the future, success in innovation will require an ever increasing ‘flow through’ of ideas to share the burden when it comes to testing and evaluating successful business models. The United States and Germany maintain a strong comparative advantage in fostering this kind of innovation. High-quality, innovative, and forward-leaning technologies are at the heart of the 21st century German-American business relationship. We have the technology. We have the human capital skills. And we have the industrial base not only to capitalize on new opportunities, but also to address the very real challenges we face.
The flow of ideas requires the flow of people, and the U.S. Mission in Germany remains committed to a fast and efficient visa application process. Most German citizens can still travel to the United States for business visa-free, but next day appointments are nearly always available for those who do need work visas. In the past year, we adjudicated almost 104,000 visa applications, over half of which included a “B-1” business visa component. Frankfurt with 6,000 cases per year is our largest “E” Treaty Trader and Investor visa post in Europe.
The United States and Europe were natural partners during the first industrial revolution in the 19th century. We led the way in the first phases of the digital revolution in the 20th century; and our mutual efforts to address the challenges and opportunities of the unfolding digital revolution of the 21st century will strengthen our relationship and the goals we share for global prosperity and stability. Both the private and the public sectors have roles to play.
Last year, the European Union and the United States held its 14th Information Society dialogue. This is part of an ongoing cooperation on digital economy issues. Our goal was to reinforce public sector commitment for R&D efforts on next-generation Internet technologies and private-sector development. We supported data-driven innovation through shared information and development of international standards through industry-led, transparent, consensus-driven, market-responsive processes. We must continue to work together to implement policies that address the broad impact of the flow of data across national borders. We need to address privacy and liability, as well as interoperability and intellectual property protection.
For a number of years, we have seen support for free trade eroding among electorates. This holds true on both sides of the Atlantic. In the United States, there has been a growing feeling that the system that has developed in recent years is not quite fair to American workers and manufacturing; and that changes need to be made.
The digitalization of the economy does indeed represent a significant challenge for workers; and many feel that they have been left behind. It is important that we approach these structural problems. This was one of the issues that President Trump and Chancellor Merkel discussed with German and U.S. CEOs at the White House last March.
But there are also structural issues in the world trading system that need to be addressed. As USTR Robert Lighthizer recently pointed out a conference at the Center for Strategic and International Studies, many markets are neither ‘free nor fair.’ And he continued, “Americans can compete successfully with anyone in the world in almost all sectors if the conditions are fair.” Some governments, however, try to determine outcomes through subsidies, market limitations, regulatory restrictions, and other similar strategies.
In his remarks at CSIS, Lighthizer pointed to the example of China. The sheer scale of their coordinated efforts, he said, to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets both in China and throughout the world is in his words, an “unprecedented threat to the world trading system.’ Without a doubt, there is no policy difference between Germany and the United States on this point. We both want and need efficient markets. The question is how best to achieve them.
The USTR and Commerce Department are currently evaluating all of our trade agreements to determine how well they are working. The basic function of a free-trade agreement is to grant preferential treatment to a trading partner in return for an approximately equal amount of preferential treatment in their market. Periodically, it is reasonable to take a step back and look at whether what we received and what we paid is roughly equivalent. Trade deficits are one way to measure those transactions. They do indeed matter! When the numbers and other factors indicate a disequilibrium, we need to renegotiate. Tax rates, regulations, and other macroeconomic factors have a large part in arriving at these numbers, but the rules of trade also determine outcomes. One example: the U.S. has a 2 ½ percent tariff on automobiles. Other developed countries, including in the EU, have a 10 percent tariff. This is the kind of issue we, as friends and partners, need to address.
We see numerous other examples where, over the years, trade agreements have diminished what we bargained for or imposed obligations that we do not believe we agreed to. But as I said at the beginning of my remarks, our partnership is an essential pillar of our mutual prosperity. We both want to do more business together so that our economies can grow even stronger.
Bernhard Mattes, Eveline Metzen, my colleagues and I [and again that includes our incoming Ambassador, Richard Grenell,] look forward to reading the resolutions and recommendations regarding cooperation in the transatlantic marketplace that you come up with during this conference.
On that note, I would like to conclude by saying that the success of American companies here in Germany would not be possible without the support and cooperation of our German hosts. That partnership is essential and much appreciated by all the American companies that do business here. And as Germany works to form a new government, we want you to know that the commitment of the United States to our commercial relationships with Germany and the European Union remain strong and steadfast.