Handelsblatt Exclusive

Internal Finance Ministry Doc Rejects U.S. Criticism of German Trade Surplus

Finance Minister Schaeuble
German Finance Minister Wolfgang Schäuble, picture source: dpa

The German government has rejected criticism of its trade surplus as “bizarre” and warned against protectionist policies in an internal finance ministry document obtained by Handelsblatt.

Germany’s trade surplus is the consequence of a healthy business environment fostered by sound fiscal policies and a skilled, flexible labor market, according to the document.

“Blaming a country that has embraced these tasks and benefits from a strongly competitive corporate sector would be bizarre,” the document’s authors wrote. The document was written in English.

U.S. President Donald Trump’s trade adviser, Peter Navarro, has accused Germany of using an undervalued euro to exploit the United States and generate a large trade surplus. Germany generated a surplus of 8.7 percent of gross domestic product in 2016, which the finance ministry projects will drop to 7.8 percent through 2018.

The finance ministry document rejected Mr. Navarro’s criticism, saying German-U.S. trade relations are based on rules set by the World Trade Organization.

“Under these rules, Germany does not pursue distortive macroeconomic or trade policies that discriminate against U.S. (or any other country’s) exports,” the document’s authors wrote.

The finance ministry also warned against protectionist trade policies. Mr. Trump has threatened to impose tariffs on German car imports from Mexico and renegotiate trade deals such as NAFTA.

“Protectionism or deliberately weakening strong players cannot be a sustainable growth model for any country,” the document’s authors wrote.

The Finance Ministry encouraged the Trump administration to recognize the “special relationship” between the United States and Germany. Trans-Atlantic trade conflicts would only alienate the Germany people and fuel the rise of extreme left-wing and right-wing parties in Europe, according to the document.

“They would be in the interest of those who want a socialist or closed Europe and would weaken the German position as an anchor of stability in Europe,” the document’s authors wrote.

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