speeches by amb. coats

State Secretary Chrobog,

Fred, Norbert, Ludwig,

Ladies and Gentlemen,

Marsha and I are very pleased to be here this evening. This is our third AmCham Goose Dinner since coming to Germany. Your tradition has become one of our traditions.

I am particularly pleased to share this evening with you because it gives me the opportunity to again congratulate you all -- the staff, the members and the friends -- on the Chamber's 100th anniversary. The American Chamber of Commerce and the transatlantic business community as a whole have played a unique role in shaping the German-American partnership, a partnership that stands for some of the greatest success stories in modern history. And so, our relationship is a very special one, in almost every way – in economic terms as AmCham members can well document, but also in security, political and cultural terms.

But relationships between nations are in constant change -- shaped by divergent histories and perceptions. Often, these relationships defy simple political explanations.

September 11 changed the way, for example, that America looks at the world. The events of that day left Americans with a sense of vulnerability similar to that of the early years of the Cold War. It was made clear that believing that 9/11 was a one-time event was not an option. As we are all discovering, terrorism is an increasing threat to free and open societies.

The war on terror has led us to Iraq, where, as President Bush has stated, we are taking the fight to the terrorists instead of being forced to meet them on the home front. There was a great deal of criticism about this decision. As we all know, the disagreement caused a serious disruption in the German-American relationship. But the international community is coming together. We are cooperating closely on issues of counter-terrorism, non-proliferation, and a number of regional issues. Germany has troops in Afghanistan and has supported the United States on recent United Nations resolutions. And we are currently consulting on further cooperative efforts.

We felt that confronting Saddam Hussein's regime in Iraq was essential. We also feel that success in Iraq will establish a new model for a troubled part of the world -- and answer key questions about the compatibility of Islam and democracy. For future generations, the answer needs to be clear and positive -- not only for our own citizens, but also for the citizens of Islamic countries who seek to better their lives and improve their circumstances. Make no mistake -- the vast majority of the citizens of Iraq do not want to return to the tyrannical rule they experienced under Saddam Hussein.

Despite our differences with respect to the war in Iraq, we know -- based on what the Chancellor said at his meeting with President Bush in September -- that the German Government also wants to see a stable and democratic Iraq at peace with its neighbors. The next day at the UN General Assembly, Chancellor Schroeder pledged his support to the people of Iraq. The Chancellor agreed that we cannot afford to fail in this effort -- and we trust that this commitment will lead to real and tangible support.

Success in Iraq will have a multiplier effect. It could well lead to a renaissance for a troubled region. We have set what some might perceive as lofty goals but we must be equal to the challenges facing our world -- from lifting up failing states to opposing terrorism. One of the main pillars of global peace and security in the 21st century will be the expansion of democracy, and the hope and progress it brings, as the alternative to instability and hatred and terror.


And one of the basic principles of democracies is a belief that free markets are essential to economic stability. The number of people living under democratic systems has increased sharply in recent decades -- a remarkable endorsement of this political system. And an increased volume of trade based on expanding free markets has brought prosperity to many developing countries.

Both the U.S. and Germany have much at stake in expanding trade through partnership in the WTO. At the September ministerial at Cancun, German officials, including Minister Clement and State Secretary Tacke, closely shared U.S. goals for a successful next step in the Doha Development Round of trade talks. Strong German leadership in the EU allowed us to present a common U.S.-EU road map in Cancun for resolving issues of trade in farm products. I know German officials pushed hard for progress and were as disappointed as we were when the Cancun talks ended without an agreement. We are closely consulting on the way forward. Commerce Under Secretary Grant Aldonas discussed WTO strategies with Secretary Tacke in Berlin when they met for our U.S.-German economic talks on November 25. Both our countries are committed to making the WTO’s multilateral system a vehicle for engaging more nations in expanded trade as the path to economic growth.

The United States is a strong supporter of the WTO. As you know, President Bush removed the U.S. steel safeguards last week to respond to the WTO decision.

We also stand ready to address other trade problems as they arise. Currently the U.S. Congress is deliberating on changes to our tax law to make the law compatible with WTO commitments. Both houses have passed bills and discussions are moving forward with expectations that the bill will pass in the first part of next year. We are acting in good faith. However, as I can assure you from my time in the Congress, fundamental changes to our tax code take time. We hope that Germany can be helpful within the EU policy process in order that the EU awaits Congress’ action on Foreign Sales Corporations rather than implementing trade sanctions already set to take effect March 1. Given the mutual investment and growing integration between our two economies, all sides would lose in such a trade dispute.

We have received some excellent economic news recently that indicate a strong U.S. economic recovery is underway. We expect to sustain strong growth this year and next -- not at the 3rd quarter 8% level but in the 4% range by 2004. Financial markets reflect this turnaround. The value of U.S. stock markets has increased by more than $2 trillion since the beginning of 2003. Through restructuring, U.S. firms perform with growing productivity per worker hour, adding to the economic pie. The U.S. tax cuts carefully target their help for families by lowering their taxes through a tax credit of $1,000 per child. Small businesses that make new plant investment also received tax relief to encourage plant investment. Based on security challenges, the President also increased spending for defense and created the new Department of Homeland Security, adding a stimulus to the demand side of the economy.

Strong growth created 57,000 new jobs in November; 328,000 jobs have been added over the last four months. Surveys show that manufacturing orders are the strongest they have been in 20 years. Household spending increased as an engine for the economy. Retail sales grew at an average 8.5 percent annual rate for the four months July through October. Home sales remain strong.

We are also witnessing strong economic recovery in Asia and Latin America. However, amid this encouraging economic news, there is one reservation. We need our key trading partners in Europe, and especially in Germany, to share in this upswing. The U.S. cannot afford to be a worldwide engine of growth while the EU members continue to stagnate.

As a key global trader, Germany has to move beyond reliance on the export only economic growth that experts predict for 2004. Real German economic recovery must also depend on growth through more domestic demand, reflecting a change in the German consumer’s behavior. Instead of setting world records for savings rates, Germany needs families to decide on long-delayed purchases, as jobs and opportunities expand.

German business leaders sometimes express concern the dollar's slide is endangering German growth, since their exports become less competitive as the euro appreciates. But if one asks U.S. business and consumers, many opt first for the prestige and reliability of German products, and are willing to pay a premium for them.

Germany recently won the title as the world’s champion exporter in total value, outpacing the U.S. Germany enjoys the strength of firms with traditions of production excellence and top technology that wins consumer confidence. The label "Made in Germany" sells products. Positioned globally, German firms have foreign direct investments in the U.S., Asia, Latin America and elsewhere that prepare them for new growth. Together with improvement in domestic demand, it is hoped that Germany can end its 3-year drought in economic growth.

Germany's ongoing reform efforts will need to generate flexibility, higher productivity and reduced costs. Germany’s working families and firms need reforms that make Germany more competitive while creating job opportunities. We all hope to see renewed confidence – the spark of a bright vision of the future that we remember from Germany’s post-war "Wirtschaftswunder." Germany needs renewed consumer confidence that currently languishes and has lead to zero growth. If tax rates and regulatory hurdles decrease, and labor flexibility increases, German and foreign firms will invest, leading to more demand. Germany needs a recovery in business plant investment.

The current stalemate of reform and lack of growth seriously affects our potential for partnerships. The U.S. hopes for a Germany ready to return to growth and have the resources to exert economic leadership in Europe and contribute to world economic recovery.

The American Chamber’s 100 years has marked a growing membership of both U.S. and German firms. Many of the traditional U.S. investors continue to create new jobs here through new technologies and plant expansion -- witness the AMD decision to invest 2.4 billion Euro in Dresden. It is our hope that current economic reform debates in the Bundestag will heed the vital interest that overseas firms, including our U.S. companies, have in fair solutions to tax and labor market issues. U.S. companies need a stable perspective on costs and regulatory structures to plan their future investment in German plants that are often vital for their European and global strategies.

Clearly the world has become a rapidly changing place. The history of this era needs to be written about how we overcame the dangers of terrorism, but also record how we turned to a page of opportunity for trade, growth, development, and economic security, and how we drew on the links between trade and political liberty.

It is clear that we cannot afford to rest on past achievements, or hope that the current political, economic and social challenges will be self-correcting. We have to remain committed to look for ways to ensure our citizens have the best opportunities to fulfill their hopes and dreams. We must continue to find ways to coordinate and work together for our common good. For the past 100 years, the AmCham in Germany has played a vital role in this regard, and I am confident you will continue to provide leadership for the next 100 years of German-American co-operation.