Current Business Matters - February 2023

In this update, we provide our take on the meaning of Economic Minister Bruno Le Maire's and Vice Chancellor Robert Habeck's visit to Washington, D.C. and of the one-year mark of the Russian invasion of Ukraine
Photo copyright: Kyle Ryan via Unsplash

Ministers Bruno Le Maire and Robert Habeck meet with representatives of the U.S. Department of Commerce

Early February, French Finance Minister, Bruno Le Maire and German Vice-Chancellor and Minister for Economic Affairs and Climate Protection, Robert Habeck, travelled to Washington to meet with U.S. officials such as U.S. Treasury Secretary Janet Yellen, Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo to discuss trade issues, primarily in the backdrop of the Inflation Reduction Act (IRA). The visit comes amid ongoing trade tensions between the U.S. and the EU over issues such as digital taxation and aircraft subsidies. Further topics included finding resolutions to the aforementioned issues and the promotion of transatlantic cooperation on climate change and other global challenges. As the official statement from the U.S. Department of Commerce emphasizes, the representatives noted the need for transparency on incentives to the private sector and to exchange information on potential disruptions of shared concern in the semiconductor supply chain. The parties involved underlined the value of the U.S.-EU Trade and Technology Council (TTC) to find resolutions on such prevalent issues for the transatlantic economies.

AmCham Germany’s take:

Taking the February visit of the Economic Ministers as an example, AmCham Germany welcomes the open dialogue between European partners and the U.S. political representatives. Uncertain times with multiple crises demand solidarity and coordination among transatlantic stakeholders to stabilize the single market as the backbone of economic success, as well as a close and coordinated transatlantic partnership among governments.

Partnership does not only apply to politics and governments, whose composition and goals can change rapidly. It also applies to economic actors, which have increasingly become an essential guarantor of stability and progress. In order for such economic actors to succeed, governments must foster a business-friendly climate and provide a stable and clear political and administrative framework in place. To continue to fulfill this task in the future, AmCham Germany sees three central prerequisites:

  1. open and value-based transatlantic economic and trade relations
  2. further networking instead of decoupling of economic areas
  3. priority of entrepreneurial freedom and innovation over government overregulation

It is essential to create spaces and strategies in a joint transatlantic effort that boost commerce and open trade. In a globalized world, economic turbulence has vast ripple effects for individuals, businesses, and countries. One principle is indispensable: We need to focus on cooperation.

In this context, AmCham Germany explicitly welcomes the cooperation in the EU-U.S. Trade and Technology Council (TTC). The already existing councils/working groups should be used to reach political agreements. Furthermore, AmCham Germany welcomes the EU-U.S. taskforce that was established to address the specific concerns of the EU in connection to the IRA. We value the solution-orientedapproach and the partial success from December 2022 - according to which EU companies could benefit from tax breaks for the leasing of e-vehicles in the U.S. (It remains to be seen whether the U.S. will also agree to concessions regarding tax incentives for the purchase of e-vehicles. The U.S. Treasury Department plans to submit interpretive guidance on these tax incentives by March 2023.)

As AmCham Germany, we are calling on the EU-COM to discuss and coordinate standard issues with the U.S. administration in the TTC, such as for the Green Deal Industrial Plan. In the spirit of the goal of transatlantic sovereignty, the EU and the U.S. must define standards based on shared democratic and constitutional values and bring them to global application and enforcement.

One-year anniversary of the Russian invasion of Ukraine

On the mark of the one-year anniversary of the Russian invasion of Ukraine, AmCham Germany, in union with AmChams in Europe signed the declaration “One year on: AmChams in Europe steadfast in support for the people of Ukraine” and stands by the efforts to minimize humanitarian impact stemming from the crisis. AmCham Germany prioritizes upholding the central values of the transatlantic partnership: democracy, rule of law and security, amidst the conflict in Ukraine.

The following is a short summary of other headlines surrounding the Ukraine crisis:

In this context, a recent Wall Street Journal article* reports that NATO is pushing to add more weapons to its existing military presence in Eastern Europe in response to Russia’s military buildup near the Ukraine border. NATO’s focus lies on adding more air and missile defense capabilities to the region, as well as increasing the number of warships in the Black Sea.

To support Ukraine and counter Russia’s military buildup, countries within NATO, along with the U.S. and the EU, are working to revitalize their defense industries. Many of these industries had shifted their focus away from traditional arms manufacturing following the end of the Cold War. To address this, there is a renewed effort to boost cooperation among NATO, EU and U.S. arms makers to increase the speed and efficiency of arms production as they work to support Ukraine’s military. With national arsenals being depleted, cooperation is seen as a way to ensure that the necessary weapons and equipment can be provided in a timely manner. This process has shown the many challenges allies are facing in terms of government decision-making and approval processes as well as supply chain issues for their production lines.

Another recent development is the U.S. pledge of aiding Ukraine with USD 2 billion in military supply. This Wall Street Journal article* suggests that the arms deal reflects a growing concern within the U.S. government and among its allies about the situation in Ukraine and the broader security implications of Russian aggression in the region. Moreover, the decision to supply weapons to Ukraine is seen as a significant shift in U.S. policy towards the conflict, which until now had largely been limited to economic and diplomatic support. The pledge of the arms deal has been met with mixed reactions from both within the U.S. government and the international community.

Proponents argue that the weapons will help Ukraine defend itself against Russian aggression, and that the move sends a message of support to other countries in the direct region. Critics, on the other hand, argue that the move risks further escalation and could impede diplomatic efforts to reach a solution.

AmCham Germany’s take:

The key to security lies in transatlantic solidarity. Germany needs to follow through on its commitment to raise its defense budget to 2 percent of its gross national product and use the €100 billion special fund to effectively address the current security challenges. To procure the necessary capabilities for maximum security, it is crucial to create a business environment that encourages innovation and transatlantic cooperation in the aerospace and defense industry. This requires adequate funding, coordinated export policies, and clear taxonomy rules that promote innovation and cooperation between U.S. and German defense companies. Such efforts will help to provide security solutions on both sides of the Atlantic.

In the context of international security and the 59th Munich Security Conference, AmCham Germany hosted a German-U.S. Congressional Business Roundtable together with the Transatlantic Business Initiative (TBI) and the U.S. Embassy Berlin. With the goal of providing a direct platform for transatlantic exchange between U.S. and German political and business stakeholders, topics within the round included pressing issues for the partnership: achieving economic stability, energy security and the energy transition.

AmCham Germany recognizes and underlines importance of cooperation and the value of the transatlantic relationship which is founded on the common values of our partners and how this aspect overarches to a range of industries and global companies. The foundation of such relationship is freedom, human dignity, openness, a market economy, and the rule of law.

To ensure the stability of the transatlantic economies and work towards a future-oriented agenda, AmCham Germany calls for close exchange between partners. Economic exchange between the U.S. and Europe is the key global driver of security, technological innovation, and sustainable growth. Currently, we are experiencing that politicians on both sides of the Atlantic want to reach a consensus on the areas and technologies in which they would like to set common standards. We should break new ground in the geopolitical competition.

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Heather Liermann

Head of Department

Membership Engagement & Development