Economic Relations Between Germany and Canada

Head Table Guests

David Agnew, Executive Director, Digital 4Sight and Director, The Empire Club of Canada; Laura Stagi, OAC Student, North Toronto Collegiate Institute; The Rev. Vic Reigel, Honorary Assistant, Christ Church, Brampton; Uwe Harnack, President and CEO, Canadian German Chamber of Industry and Commerce; Christiane GeisslerKuss, German Consul General, Federal Republic of Germany; Matthew Thenganatt, Director of Finance and Treasurer, BASF Canada Inc.; His Worship Sam Billich, Justice of the Peace, Province of Ontario and Director, The Empire Club of Canada; Yvan Allaire, Ph.D., Executive Vice-President and Member of the Board, Bombardier Inc.; and Hershell E. Ezrin, CEO, GPC International and Chairman, Canadian German Chamber of Industry and Commerce.

Introduction by Catherine Steele

It is my privilege to welcome our guest speaker, Dr. Werner Muller Minister of Economics and Technology for Germany.

We are pleased to have Dr. Muller with us here today to learn more about Germany and how it is meeting the challenges of the future, particularly in light of the economic slowdown now being experienced by many sectors.

A major contributor to the European economy and community, Germany has undergone some significant changes in the last decade. Who can forget the television footage about the crumbling of the wall?

Political changes aside, the European Economic Union has also had an impact on trade, industry and the European economic landscape.

Dr. Muller was appointed Federal Minister of Economics and Technology in October 1998. A former professor of economic mathematics and linguistics, he has also worked as Head of Market Research at RWE AG, Executive Manager at E.on and Director of Energy, Sales and Purchases for E.on Electricity. He also served as Advisor to Gerhard Schroder, Minister and President of Lower Saxony.

Ladies and gentlemen, please welcome Dr. Muller to The Empire Club of Canada.

Werner Miller

Ladies and gentlemen: it is a great pleasure to be with you here in Toronto today and to have this opportunity to speak to you. I find it very exciting to experience this special combination of North American and European lifestyles and thinking which makes Canada so unique. It is impressive to see how close our countries have stayed in the centuries since Giovanni Cabato (alias John Cabot) landed in Newfoundland in 1597.

Political and economic relations between Canada and Europe are very sound. This year marks the twenty-fifth anniversary of the EU-Canada Framework Agreement on Commercial and Economic Co-operation. It has created the basis for closer economic contacts and joint ventures by our companies.

Germany has gained much from this economic cooperation. Since German reunification, Canadian investors have invested almost C$4 billion in Germany, particularly in the eastern part of the country.

Inevitably, there have been some differences of opinion between Europe and Canada during the 25 years. Let me just mention words like ""fisheries"" ""hormone-treated meat"" or ""Eiswein."" Despite this, the agreement has proved its worth as a framework for transatlantic co-operation.

And if the media tend to focus more on the more spectacular relations with other major countries, we should be happy about that and leave the headlines to others. We all know that ""No news is good news.""

Ladies and gentlemen, The International Herald Tribune recently had the following headline: ""Europe's Star Brightens as America's Dims."" And The Wall Street Journal asked: ""Will this be the European decade?"" The headlines show that something has changed in Europe. Germany and Europe are now looking more optimistically to the future.

Last year, the German economy enjoyed 3-per-cent growth-more than twice the rate of the previous year and the previous decade. And our biggest problem, the labour market situation, has eased significantly. But just as important as the figures are the forces driving the upswing: domestic demand and investment are recovering, and exports remain at record levels. That shows the high level of competitiveness of German products on the world markets. And it shows that two years of reforms by the German government are bearing fruit.

We are going through a process of comprehensive structural reforms which will make Germany a much more attractive place to do business.

Let me highlight a few points:

1. The consolidation of public finances. We aim to have a balanced budget by 2006 for the first time since 1973. The budget consolidation creates scope to invest in the future.

2. The Tax-Reform 2000 is resulting in net relief for individuals and companies of roughly 50 billion euros up to 2005. That is the greatest tax cut in the history of the Federal Republic of Germany.

3. The pension reform we have adopted will bring long-term stability to pension contributions and thus limit the burden on companies.

4. In energy policy, we have taken a fresh approach: for example, our orderly phase-out of nuclear power, and our promotion of viable and environmentally friendly new forms of energy.

5. Since the change in government, innovation and technology policy has been a priority. The words ""the German economy"" probably make most of you think of cars. But the information and communications technology sector is now almost as large. The financing conditions for young technology-based firms in Germany are some of the best in Europe. We are confident that we shall maintain this impressive dynamism and that we can create 750,000 new jobs in the information and communication sector by 2010.

6. We are boosting major areas of infrastructure with billions of marks of investment in higher education and in the railways.

I think that we can be quite proud of what we have achieved after two years of reforms in Germany. Germany is more attractive for investment than ever. And this view is shared by the German business community.

The upswing will continue this year in Germany and Europe. Both Germany and the EU are expecting a further sharp rise in output of between 2.5 and 3 per cent this year. So Europe has a good chance of becoming-for the first time in a long time--a major driving force in the world economy this year. That has now become particularly important since the previous locomotive of the world economy, the United States, is taking a ""breather.""

What is the future of the transatlantic relationship? For me as Economics Minister, the priority is on continuing global trade liberalisation. This issue was one of the focuses of my talks in Ottawa. Together with its EU partners, Germany is sticking to its goal of getting a new comprehensive WTO round going as soon as possible. Opening markets and removing barriers to trade are the objectives which unite German and Canadian firms.

However, increasing globalisation also raises the question of the coherence of trade policy with investment, competition and environmental policy, with health and consumer protection, and with minimum labour standards and social standards. That is why Germany-and the EU as a whole-is aiming at a strategy for the new WTO round which takes these aspects into account.

However, the time available before the next WTO ministerial conference in Qatar in November is disappearing fast. One thing is clear: we cannot afford another Seattle-style failure in Qatar! That would do lasting damage to the W70.

Many developing countries are still not convinced of the advantages they themselves would derive from a new round. We need to build more confidence here. We need to explain that the industrial countries are not aiming to use issues like environmental or social standards to introduce any protectionism. And we need to signal a willingness to open our markets, particularly in those areas in which the developing countries are most competitive.

In order to bring the various interests together and form a consensus, all sides need to show great flexibility. Here, we are also looking to Canada and to the new U.S. administration.

There is no alternative to continued liberalisation and a strengthening of the WTO rules. Despite this, there have been various signs recently that people are concentrating their efforts on the creation of regional free trade. That is the logical consequence of the problems in the multilateral process since Seattle.

A few years ago, there was also talk of an EU-Canada free-trade zone. Like its partners in North America, the EU has taken numerous regional initiatives. They stretch like a ""patchwork"" around the globe. They have helped to reduce market barriers between member states; in many cases, they have also made it possible for common ground to be found in other policy areas. In this way, regional approaches can support the creation of multilateral rules.

However, one also has to be aware of the danger: an undermining of the multilateral trading system of the WTO. So it is my belief that the multilateral route offered by the WTO is the right path. Here, the patchwork can be woven into a beautiful ""Oriental carpet.""

That is not to say that we should not also be working to remove bilateral trade barriers. The EU-Canada Joint Action Plan of 1996 and the EU-Canada Trade Initiative provide the right framework for this.

I hope I have shown clearly that we attach great importance to relations between Germany, the EU and Canada. We are on the same wavelength, and we share similar interests in many areas.

But government is only one of the players. Business also has its part to play in transatlantic relations. Business people see some things from a different perspective. So we have to rely on your input.

I shall therefore end with an appeal to you, the business community. Take the effort to tell us your suggestions of how we can improve our economic relations. If you don't get involved, you cannot complain if your wishes are ignored. And even if the wheels of government sometimes run a little more slowly, you can be sure that we will take your contributions seriously.

Thank you.

The appreciation of the meeting was expressed by Hershell E. Ezrin, CEO, GPC International and Chairman, Canadian German Chamber of Industry and Commerce.