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Rebooting the trans-Atlantic relationship

Merkel's recomputing. Source: DPA

Relations with the United States under the leadership of President Donald Trump pose a challenge for German foreign policy. German Foreign Minister Sigmar Gabriel has called for a “readjustment” of German policy towards the US that would involve greater independence from Washington. According to Mr. Gabriel, the US no longer perceives the world as a global community.

Therefore the desire to find a new basis for the relationship with the US may be a necessary and correct political course. Our trans-Atlantic ties are undergoing radical change. There is no going back to the old days, but it does continue to be based on common values and decades of friendship with shared historical achievements. A political “readjustment” must therefore consider the opportunities offered by a close trans-Atlantic partnership and should not simply lead to turning away from it. This is true on both sides of the pond.

A decisive factor in the restructuring of Germany’s and Europe’s relationship with the US must be to continue to provide good and reliable underlying economic conditions. The two things are not mutually exclusive. It is quite possible to have a constructively critical political relationship with the US while maintaining a strong economic framework. This requires, for example, strengthening acceptance of the World Trade Organization, eliminating blockades and convincing Washington to cooperate constructively in the WTO.

In meetings with Americans, it quickly becomes clear that we are not that far apart from each other after all.

The US is the world’s leading economic power and an attractive investment location – especially for German companies. President Trump wants to strengthen the US economy through tax cuts, lower energy costs, infrastructure measures and deregulation. These are all general conditions that enhance the appeal of the US as a place to do business. However, this is also accompanied by a turnaround in trade policy, with the aim of reducing the US foreign trade deficit.

This overriding objective also dominates the tax reform initiated by Congress. Although the Senate and the House of Representatives still have to agree on the final bill, many Europeans rightly criticize the stamp of protectionism and the distortion of competition in both versions.

The proposed tax reform is also potentially detrimental to the relationship between Berlin and Washington. However, German companies do see the possibility of benefiting from the tax reform in the US market, because they offer the expertise in engineering and mechanical engineering the US needs to modernize its infrastructure. Around 3,700 subsidiaries of German companies provide about 700,000 US jobs, which ultimately strengthens the economy in Germany. Conversely, around 2,200 US companies provide about 700,000 jobs in Germany. Our member companies consider economic relations between the two countries to be stable. Almost 60 percent of trans-Atlantic companies have not changed their investment plans. Still, there is uncertainty, with more than 30 percent holding back on new investments.

I led a number of discussions with an AmCham Germany delegation in Washington in November. The fact is that there are a number of players who are promoting protectionism and isolation. But they are still outnumbered by those who strongly support the close partnership with Germany and Europe. Our contacts in US government agencies are experienced in trans-Atlantic affairs, especially with regard to business and trade.

From the point of view of industry, I argue that we must uphold the idea of free trade. It is important that we take a positive view of globalization and digitalization and cooperate with the US in determining what they look like. We must continue to develop the commonalities from which we have benefited for decades. This may occur within a different political relationship, but it must be grounded in a fertile, constructive trans-Atlantic framework. In meetings with Americans, it quickly becomes clear that we are not that far apart from each other after all.

Politicians can “readjust” the relationship. We argue that free trade and a good environment for the trans-Atlantic economy must remain fundamental elements of our relationship. This also requires dialogue between politics and business. After all, the economy can clearly reflect what contributions it makes on both sides of the Atlantic, but also in which areas greater cooperation is necessary. We must not forget the benefits of our relationships. They are of crucial importance for us all, from business owners to employees.

To contact the author: gastautor@handelsblatt.com

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