German-American Executive Summit Remarks by Thomas J. Donohue

U.S. Chamberof Commerce
May 20, 2003

INTRODUCTION

Good morning, ladies and gentlemen. Welcome to the Chamber of Commerce of the United States. I'm Tom Donohue, president and CEO of the Chamber, and I'm quite pleased to open the first German-American Executive Summit.

I'd like to extend a special welcome to our friends from the Federation of German Industries, or BDI, and the German Chambers of Commerce, or DIHK.

They have been gracious hosts during my trips to Germany, and I'm pleased to reciprocate that hospitality today.

It is also my great pleasure to welcome back at the Chamber Ambassador Ischinger without whose enthusiasm this event would not have been possible.

A special welcome also goes out to those of you visiting the U.S. Chamber for the first time.

The Chamber is a 91-year-old institution, and this building has served as a central rallying point for the U.S. business community since 1925. We hosted 3,000 meetings here last year alone.

The room we're gathered in is rich in symbolism and history.

The Hall of Flags takes its name after the overhead banners of twelve great explorers who blazed the first paths of trade and planted the first seeds of commercial and industrial growth in the New World.

These flags remind us that the transatlantic relationship has been around for a long, long time!

Dozens of foreign heads of state and several U.S. presidents— including every one since Gerald Ford—have delivered addresses in this room.

President George W. Bush stood at this podium just two weeks ago to build support for his tax cut package, which I'll talk about in just a minute.

Meetings like today's provide evidence that the relationship between the German and U.S. business communities is fundamentally strong—and growing stronger.

Some of you may have been here in March for a meeting sponsored by the Chamber and the Drager Foundation, during which German and U.S. business and government leaders rolled up their sleeves to work out technical barriers to trade between our two countries.

Today's summit is much more than just a continuation of that process. It reflects our mutual understanding that although government sets the parameters of our economic relationship, it's leadership at the very top levels of the private sector that shapes and drives it.

U.S.-GERMAN RELATIONSHIP

I'd like to briefly share with you my own perspective on the U.S.-German relationship as it enters into a new phase—one of increasing economic integration and interdependence brought on by the far and deep reach of globalization.

The German and U.S. economic systems have become practically joined at the hip by extraordinary growth in transatlantic trade, foreign affiliates, mergers and acquisitions, and direct investment.

As a result, many of you who represent U.S. companies are members of German boards—and vice versa.

For years, the U.S. considered Germany a "trading" partner only in the strictest terms. But today, the well over $100 billion in trade between the U.S. and Germany reveals only a small fraction of our overall economic relationship.

Other figures provide a more revealing picture of our economic integration and mutual dependence.

For example, German companies provide more than one million jobs in this country, and sales by German affiliates in the U.S. are more than four times greater than German exports to the U.S.

On the flip side, U.S. affiliates employ 800,000 workers in Germany, and the manufacturing workforce of those companies is double that of U.S. affiliates in China.

The growing economic integration of Germany and the U.S. means that both of our countries have a vital interest in the way the other taxes, governs, and regulates people and businesses.

Let me give you a specific example that illustrates this reality. Following passage of the Sarbanes-Oxley corporate governance legislation last year, I felt compelled to make a transatlantic trip to discuss with European business leaders the impact of that legislation on their firms. And by the way, we will hear from Senator Sarbanes later today.

We published a white paper that analyzed the effects of new accounting rules and regulations on foreign-owned companies.

And in my meetings with BDI, I pledged that the Chamber would work to address the concerns of German companies about the new law and regulations.

As you know, many of those concerns have now been addressed.

I can assure our German friends that the Chamber and the U.S. executives here today fully understand that the economic, regulatory, tax, and legal climate in our country has an enormous impact on Germany and on your companies.

And what happens in Germany and the EU has a tremendous impact on us. So together we must pursue a vigorous agenda to reignite strong and vibrant economic growth in the U.S. and Germany.

U.S. ECONOMIC CONDITIONS

Let me say a few words about what we are trying to do here.

Our economy, though fundamentally strong, is still not performing to its potential.

Business investment is declining, consumer spending is beginning to slow, and we're shedding jobs.

The stock market, though picking up some in recent weeks, is not up to par, and that poses problems for millions of workers at or near retirement.

The U.S. Chamber's comprehensive public policy agenda is a blend of proposals that would stimulate the economy in the short term while also creating the right environment for long-term growth.

Our most immediate priority is passage of a tax cut package—a package big enough and bold enough to encourage business investment and create new jobs.

We have a saying here that watching the legislative process in our Congress is like watching sausage being made.

Well, the sausage making process is well under way on this tax cut package.

The House version of the tax bill was passed with a provision that would discriminate against investors who earned dividends from foreign-owned companies.

The tax rate on dividends would be cut for owners of domestic shares, but not for foreign shares, creating an unfair, two-tier system.

I want you to know that the Chamber, working with many business allies, vigorously protested this provision, and we have been assured it will be stripped from the tax bill before final passage. And we will work hard to make sure that happens.

The bills passed by the House and Senate are quite different in detail, but not in principle.

I am confident that the package emerging from a House-Senate conference committee will quickly put substantial cash in the hands of American consumers.

It will substantially reduce taxes on dividends and capital gains, and provide helpful incentives for business investment.

As Congress completes its work, the Chamber will vigorously fend off efforts by budget writers to pay for tax cuts by levying new taxes and fees on businesses.

One of our main concerns in this area is the proposed repeal of the tax exemptions for Americans working abroad. As our friends in AmCham Germany know, we are doing everything possible to avert this disastrous proposal.

We are telling legislators in the strongest possible terms that if you want the private sector to create jobs, it makes absolutely no sense to cut taxes with one hand, and then wipe out all the benefits by raising them with the other.

The Chamber is also leading efforts to restore fairness and predictability to our legal system.

Mounting liability from frivolous class action lawsuits is bankrupting companies, discouraging innovation, depressing wages, and forcing job losses. We are involved with reform efforts on the federal level, the state level, and in our courts of law.

We are also discussing with many counterparts in Europe ways to prevent class action suits from jumping across the Atlantic.

The development of a comprehensive energy strategy based on greater domestic production and conservation is another critical ingredient for U.S. economic growth.

So, too, is increased investment in—and protection of—our critical infrastructure, which encompasses everything from our water system and power grids to our information systems and transportation network. The Chamber is hard at work on each of these issues.

Finally, the Chamber and the American business community are working to advance a vigorous and ambitious trade agenda—pushing for Free Trade Agreements around the world… a Free Trade Area of the Americas Agreement in the Western Hemisphere…and a successful round of multilateral talks in the Doha Round.

I think there is great interest in a new comprehensive deal between us and the European Union, and the people in this room can help make it happen.

There is much that the American and German business communities can and should do together to strengthen the rules-based global trading system, open up markets, and equip developing nations with the capacity to become full participants in the global economy.

BIG PICTURE CHALLENGES

Germany faces challenges similar to those in the U.S., and we will hear later from German Minister of Economic Affairs and Labor, Wolfgang Clement, on how they may be addressed.

But as both countries attempt to spur economic growth this year and next, let's also advance a dialogue on those common challenges that will define our relationship and our global economic leadership for decades to come.

How do we find, train, and retain the workers of tomorrow?

How do we pay for the health care and retirement needs of our aging populations?

How do we increase security without compromising our principles of freedom, mobility, free trade and immigration?

The recent terrorist attack in Saudi Arabia shows that we can't afford to let our guard down any more than we can afford to seal our borders and cut off the flow of people, goods and capital.

These are complex issues, and the answers are not all yet obvious or clearly defined. But we do know that greater economic growth spurred by foreign trade and investment will help us meet these challenges and create more prosperous societies.

As Europe's largest economy, Germany will continue to be an attractive destination for U.S. exports, capital, and labor.

Despite occasional trade disputes and political tension between our countries over the war in Iraq, the business communities in Germany and U.S. understand the simple fact that our economic relationship is strong—but could be stronger.

We are eager to work with you over the course of today's summit to identify practical ways to bolster our commercial ties.

CHAMBER-GERMAN INITIATIVES

Based on preliminary discussions with our German partners, the Chamber is exploring two specific initiatives that I would like to share with you.

First, the Chamber has started discussions with the German Institute for Standards, DIN, on the possibility of establishing a clearinghouse in Washington for companies wanting to learn more about how to do business in Germany.

This Center would help American entrepreneurs obtain easy-to-understand information from the premier standard-setting body in Europe on European standards, how they emerge, how they are applied, and how they can be challenged.

Second, I've discussed with my friend Dr. Rogowski and the Federation of German Industries the possibility of opening an office in Berlin.

This office would work with the 37 or so international organizations scattered around Europe that write international trade and investment rules.

This partnership between BDI and the Chamber would greatly increase the influence the transatlantic business community has on these rule-making bodies.

CONCLUSION

These proposals illustrate the central role the U.S. and German business communities are expected to play in not only strengthening the transatlantic relationship, but also the global trading system as a whole.

Let me speak very directly. It is no secret that many Americans—including me—were disappointed by the attitudes and comments of some members of the German government and the public in those tension-filled months leading up to the war in Iraq.

Many Americans may not realize, however, that when lives were on the line, Germany was in fact helpful in many ways.

It would be too simplistic to say that such frictions on the geopolitical stage do not matter. They do. It would be naïve to say that nothing our governments do could disrupt our vital commercial links. They can.

That is why the leaders in this room must work together to create a new vision of transatlantic relations.

We must deepen our ties, strengthen our bonds, increase our dialogue, and talk to our governments and our citizens—and not just to each other.

We must work to build an economic partnership that is so strong and vibrant that it can withstand any problem, dispute, or shock—even on the world stage.

I congratulate each of you for demonstrating the commitment to stronger transatlantic relations by giving so much of the most precious commodity you have—your time.

I look forward to a day of stimulating discussion, frank exchange, and good friendship.

I'd now like to call on the CEO of the German Business Federation and my good friend Ludolf von Wartenberg to invite onstage and introduce our first panel.

Thank you very much.