Trade Regulations and Tariffs: Germany presents few formal barriers to U.S. trade or investment interests (with the exception of the EU Common Agricultural Policy). Germany’s regulations and bureaucratic procedures, however, can prove an impenetrable maze, reducing the enthusiasm of U.S. exporters. While not discriminatory in the classic sense, government regulation is often complex and may offer a degree of protection to already-established local suppliers. Safety or environmental standards, not inherently discriminatory but sometimes zealously applied, can complicate access to the market for U.S. products. American companies interested in exporting to Germany should make sure they know precisely which standards apply to their product, and should obtain timely testing and certification.
      The European Union’s (EU) attempts to harmonize the various product safety requirements of its member states have complicated the issue. The EU harmonization of safety requirements and related standards is being implemented for industrial products through EU directives. During a transition period, national requirements must be met. After the transition period, the Europe-wide “CE” mark supersedes all other compliance certificates, as long as the products are covered by a EU-directive.
Foreign Investment: The German government and industry actively encourage foreign investment in Germany. Foreign companies generally face the same or similar investment problems as domestic firms, such as high marginal income tax rates, inflexible labor laws, and burdensome regulations. German law treats foreign firms in the same way as it does German firms.
      The 1956 U.S.-FRG Treaty of Friendship, Commerce and Navigation offers U.S. investors national treatment. No special nationality requirements on directors or shareholders exist, nor do investors need to register investment intent with any government entity. The 1956 Treaty provides for the free movement of capital between the U.S. and Germany.
      Germany also subscribes to the OECD Code on Capital Movements and Invisible Transactions (CMIT). While Germany’s foreign economic law contains a provision for the imposition of restrictions on private direct investment flows in either direction for reasons of foreign policy, foreign exchange, or national security, no such restrictions have ever been imposed. In such a theoretical case, the federal government would first consult with the Bundesbank and the governments of the federal states. There is no broad authority to screen or block foreign direct investment.
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Free Trade Zones: There are no free trade zones or free ports in Germany.
Trade Finance and Payment Methods: Germany has an essentially non-discriminatory, well-developed financial services infrastructure. Germany’s universal banking system allows the country’s more than 45,000 bank offices not only to take deposits and make loans to customers, but also to trade in securities. German banks exert substantial influence on industry. There is current discussion on whether or not the banks’ influence should be diminished, but given the overall conservative nature of the financial system and its successes in the past it is unlikely that profound changes will result. Private banks control roughly 30 percent of the market, while publicly owned savings banks controlled by state and local governments account for 50 percent of banking turnover, and cooperative banks make up the balance. All three types of banks offer essentially the same, full range of services to their customers. Specialist banks provide guarantees to small and medium-sized businesses, finance projects in disadvantaged regions in Germany, and guarantee exports to developing countries.
GDP (Purchasing power parity) = $1.864 trillion (1999)
GDP Growth: 1.5 per cent in 1999, projected to be 3 per cent in 2000 and 2001.
Per Capita GDP (Purchasing power parity) = $22,700 (1999)
Inflation: 0.8 per cent (1999)
Trade Balance: $23 billion surplus.
Trade with RI: Germany is Rhode Island’s 8th largest trading partner, with $29.3 million in exports in 1998.
Exports: $610 billion in 1999; machinery, vehicles, chemicals, foodstuffs, textile and metals. Export trading partners: EU (56.4%), U.S. (9.4%), Japan (1.9%).
Imports: $587 billion; food, petroleum products, manufactured goods, electrical products, automobiles, apparel. Import trading partners: EU (53.7%), U.S. (8.3%), Japan (5%).
Best Prospects for Exports: Pharmaceuticals, telecommunications services, computer software, electronic components, management consulting, medical equipment and supplies, franchising, computer and peripheral equipment, automotive parts and services, computer services, sporting goods, electronics industry production and test equipment, scientific and laboratory instruments, air conditioning and refrigeration equipment, travel and tourism, telecommunications equipment.
Location: Central Europe, bordering the Baltic Sea and the North Sea, between the Netherlands and Poland, south of Denmark.
Geographic Area: 357,000 sq. km. (137,821 sq. mi.), slightly smaller than Montana.
Climate: Temperate, with cool, cloudy, wet winters and summers.
Major Cities: Berlin (Capital), Hamburg, Munich, Cologne, Frankfurt, Essen, Dortmund, Stuttgart, Dusseldorf, Bremen, Hannover.
Population: 83 million (July 2000 estimate), growth rate 0.29%.
Ethnic groups: Primarily German; Danish minority in the north, Sorbian (Slavic) minority in the east, Turkish, Serbo-Croatian, Italian, Russian, Greek, Polish, Spanish.
Language: German
Time Zone: Germany is six hours ahead of U.S. Eastern Time.
Type of Government: Federal republic
Head of State: Chancellor Gerhard Schroeder
Currency: 1 deutsche mark (DM) = 100 pfennige
Exchange Rate: Deutsche mark = 2.321 per $1 U.S,; Euro per $1 U.S. = .843 on October 30, 2000. The Euro will replace the deutsche mark in 2002.
Current Economic and Political Conditions: The current government is committed to maintaining economic growth, promoting German competitiveness, and encouraging development of eastern Germany. Despite some structural reforms implemented by the former Kohl government, many German experts recognize the need for more reforms in the areas of business taxation, mandatory pension and health system. Labor market rigidity and persistent high levels of unemployment, rising government debt as a result of international competition, a graying population, and continued transfers to eastern Germany are among the problems the Schroeder government has to address. The Federal Budget 2000 and the other parts of the “Future Program 2000” provides a good start in making German industry more competitive through the reduction of business taxes and labor costs.
      The German economy is the third largest in the world, accounting for a third of the European GDP. It is the United States’ largest European trading partner and fifth largest global trading partner. Germany experienced an economic slowdown in 1999, the result of the financial crisis in Russia, Asia and South America. A recovery of German export markets, improvement in private consumption and a robust investment in equipment will be the main factors behind the projected rebound to 3% annual growth through 2000 and 2001. German labor market conditions remain problematic, especially in eastern Germany. In 1999, the unemployment rate was 10.5%. This average masks a stark variation between western Germany’s 7.7 percent unemployment and the 17.3 percent in eastern Germany.
John H. Chafee Center for International Business and World Trade Center, Bryant College
Raymond W. Fogarty, Director
Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416
E-Mail: postoffice@itdn.net
Web site: http://www.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123
E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsuhashi, International Trade Specialist
Telephone: (401) 528-5104
E-Mail: kyatsuha@mail.doc.gov
U.S. Small Business Administration
Marilyn Bogue, International Trade Officer
Telephone: 528-4585
E-Mail: marilyn.bogue@sba.gov
Embassy of the Federal Republic of Germany
4645 Reservoir Road, NW
Washington, DC 20007-1198
Telephone: (202) 298-4000
Fax: (202) 298-4249
General Consul of the Federal Republic of Germany, Boston
3 Copley Place, Suite 500
Boston, MA 02116
Telephone: (617) 536-4414 or (617) 536-8172
Fax: (617) 536-8573
E-Mail: boston@germanconsulate.org
United States Embassy in Germany
Neustaedtische Kirchstrasse 4-5
10117 Berlin
Telephone: 49-30-832-9233
Fax: 49-30-8305-1215
German-American Chamber of Commerce
40 West 57th Street, 31st Floor
New York, NY 10019-4092
Telephone: (212) 974-8830
Fax: (212) 974-8867
E-Mail: gacny@compuserve.com
