May 23rd, 2017

CSGG: 5/23 – German Minister of Economic Affairs and Energy

A Conversation with Her Excellency Brigitte Zypries, German Federal Minister of Economic Affairs and Energy
In partnership with the Embassy of the Federal Republic of Germany.

Executive Summary

The Congressional Study Group on Germany (CSGG) was honored to welcome Her Excellency Brigitte Zypries, German Federal Minister for Economic Affairs and Energy to Washington, DC for a discussion with current Members of Congress, former Members of Congress, non-profit and international business leaders. The conversation included a wide-range of topics from the Border Adjustment Tax to the future of renewable energy. The diverse range of attendees fostered a lively bipartisan conversation.

As the fourth-largest foreign investor in the US, German legislators and businesses have strong interests in the future of the current trade negotiations. A topic of importance for the group was the future of The Transatlantic Trade and Investment Partnership (T-TIP). The aim of this trade agreement — the negotiations for which are currently on hold — is to promote transatlantic trade and multilateral growth by cutting down on specific regulations, increasing market access, and creating world trade standards.

Proponents of T-TIP argue that it allows the US and Germany to set their standards and values for trade instead of following the lesser standards set by other countries. While a percentage of the Germans populace disfavor T-TIP, it is largely favored by the German government and governments of other EU member states. Unfortunately, since negotiations have been tabled since the fall of 2016, the future of T-TIP is largely unknown. Importantly, though President Donald Trump has expressed a preference for bilateral trade agreements, Germany can only enter into trade negotiations and agreements multilaterally as a member of the European Union.

Germany is also worried about the Boarder Adjustment Tax (BAT) proposed by Speaker of the House Paul Ryan. The BAT is a high import tax for foreign manufacturers that its proponents argue would discourage the import of foreign goods and protect US jobs. German government officials generally advocate against implementing the BAT. As Germany is the third-largest foreign employer in the US, German officials believe it would significantly hinder the economic relationship between the US and Germany.

German officials cite BMW’s investments in the US as an example of how the tax would negatively impact the US economy. BMW North America invests over $1 billion in jobs and manufacturing annually. Under a tariff scheme that included the BAT, BMW would be less likely to make such a large investment due to the decreased cash flow.

Members of Congress expressed concern with the future of the European Union especially as they have recognized similar movements in the US. While German delegates understand these concerns (as Germany has seen the rise of the populist party. AfD), anti-globalization sentiments are surprisingly low in Germany. With German bureaucracy under attack by populist parties, German delegates explain that not only is there low resentment for bureaucracy in Germany, but there is a high approval rate of the European Union. With current polling, 90% of Germans support the EU; even during the Euro Crisis, Germans still favored the EU by 70-80%.

Noting the German populace’s approval for the EU even during times of crisis, Members of Congress wondered how Germans were reacting to the large amount of refugees and why Chancellor Merkel accepted so many refugees. Germany first opened its borders to refugees in order to alleviate the large number of refugees that were immigrating to Austria —which was the first and largest wave of refugee immigrants in Europe. While these humanitarian refugees were not taken in to fuel Germany’s economy, Germany also took in a number of economic refugees in order to train them to join a diminishing skilled-labor work force. Integration efforts have in large part been successful due to the support of the German people. Critics of Ms. Merkel’s policy argue that Germany may lose its traditions, languages and values due to an increase in immigration. Yet proponents see Germany as a melting pot ­­—similar to the US — and as long as all of the people in the country speak the language of their constitution, their values would not be lost.

Germany’s accomplishments with their expanding energy portfolio were also discussed. Becoming energy independent has become one of Germany’s highest priorities in order to become more competitive in a global marketplace. Germany acknowledged fears that they have become dependent on Russia for natural gas by explaining how their government does not rely on any one region for energy. They consume gas products from several diverse regions such as Norway- and in the past two decades, they have become incredibly energy independent. Germany’s renewable energy sector is among the most successful worldwide as Germany gets 30% of their energy from renewable sources, which is a stark increase from 2001 where only 1% of their energy was drawn from renewable resources. One way Germany has been able to create more renewable energy is by adapting the Competitive Bidding Model. As of 2017, government funding for renewable energy will be replaced by this new model where the government offers to subsidize renewable plants to those investors and businesses offering the lowest price for the electricity their installation will produce.

The roundtable concluded with all the participants agreeing that while they may have differences, both sides share many of the same fundamental values that foster a strong bilateral relationship on either side of the Atlantic.

Written by Julia Fanzeres

About Minister Zypries

Brigitte Zypries has headed the Federal Ministry for Economic Affairs and Energy since 27 January 2017. She was born in Kassel in 1953 and served as Federal Minister of Justice from 2002 to 2009. From December 2013 to the end of January 2017 she was Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy, and has acted as the Federal Government Coordinator of German Aerospace Policy since January 2014. (Source: https://www.bundesregierung.de/Webs/Breg/EN/FederalGovernment/Cabinet/BrigitteZypries/_node.html)

=