U.S.-Germany Relationship and the Transatlantic Economic Partnership

Admiral Sigourd Hess, Brigadier General Reindl, Lt. General Tandecki and other distinguished guests, thank you for inviting me here to speak this evening. It is great to be in Germany again, visiting the beautiful city of Bonn.

I have spent a lot of time in Germany of late as I am the American G8 "Sous Sherpa." This title may sound fancy, but what it really means is that I have been, and until June will continue to be, locked in a room with seven other colleagues from the G8 negotiating the G8 text that will be an important part of the summit in June in Heiligendamm.

This evening I wanted to talk about an important subject: the ties that bind the U.S. and Germany, and our Transatlantic Partnership. And while there are many ties that connect us, tonight I want to focus on three in particular:

• Our personal and cultural bonds.
• The bonds of history.
• And the bonds of common values.

In many ways, these bonds, like the strands of a rope, are all inter-related--building on and mutually supporting one another. Despite what you might read in the media, it is my view that these bonds today are strong--and getting stronger.

First, and perhaps most fundamental are the personal bonds that are in many ways the cornerstone of our relationship. Whether it was the millions of German immigrants who flooded to America's shores over the past two centuries, dramatically influencing American culture and building a strong continental economy, or whether it was the hundreds of thousands of Americans who have served and lived in Germany, particularly after World War II, German-American personal and cultural bonds are some of the most enduring in the world. Not only did Germans dramatically influence the course and culture of America, but Americans also dramatically influenced that of Germany.

You are looking at a proud product of these personal bonds, whose lineage significantly influenced the import issue and course of U.S.-German botanical relations. Allow me to explain. I know what you must be thinking -- there are not many Sullivans living in Germany. But my grandmother's maiden name is Wilhelmy. Her father, an immigrant from northern Germany, and his brother were florists who began flower shops in Cleveland, Ohio -- my home town. Today, if you drive around Cleveland, there are still several "Wilhelmy Florist Shops" in town.

Floral shops are only part of the U.S.-German botanical relations in my family history. My great-great-great grandfather, Christian Ehrenfried Weigel, was born in Goettingen in 1748. As a professor of medicine, chemistry and pharmacy, he supervised the botanical garden at Greifswald University. One of Germany's flowering plants, the 'Weigela,' is named for him. Weigel was known as the botanist of the king.

So you see, whether in Cleveland, Ohio or Goettingen, Germany, Weigels and Wilhelmys -- my direct ancestors -- made America and Germany more beautiful places. This is only one small example of how the personal bonds of Germans and Americans strengthened the political and cultural ties between us. Such bonds form the foundation upon which our common history rests.

The bond of our shared history, which I'd like to discuss next, is particularly poignant this year. 2007 marks the 60^th Anniversary of the Marshall Plan, as well as the 50`" Anniversary of the founding of the European Economic Community. Even today -- decades later -- our strong transatlantic relationship rests on these two momentous events and their emergent policies.

2007 is also the year that Germany is making history as both the President of the G8 and of the European Union. Germany is providing exceptional leadership to the European Union and the G8, bringing its considerable political, economic, security, and diplomatic resources to bear on some of the most pressing challenges of our time. And it is a time when our two countries are working together as allies and partners to deal with global challenges as never before.

I say "never before," when of course we worked together as the closest of Allies during the Cold War and the following decade. But those challenges were all centered on Europe. What is unique today is that the principal challenges our nations face are outside of Europe, and the United States and Germany are now working together on a global agenda. This agenda requires a common vision and common values.

Common values, the third important bond between our two countries, continue to be an important facet of our relations. The current climate, as reported in the media and elsewhere, would have us believe that our countries no longer share the same values, that the shared vision is no more. Some voices deride the strength of our Trans-Atlantic partnership. There is no question that misunderstandings - and misinterpretations of intentions - have arisen. I would be surprised if over the course of time they didn't.

The truth, however, is that our bonds are still strong and growing. Economically, Europe and the U.S. continue to move forward together. Our Transatlantic Economic Partnership is overwhelmingly positive. In 2005, the bilateral investment stock between the EU and the U.S. stood at $2 trillion, and our trade reached a record high of $743 billion. Our economies together comprise 59 percent of global GDP. This economic relationship will be further deepened as part of the Transatlantic Economic Partnership, which Chancellor Merkel has launched and we are enthusiastically embracing.

Policies are a reflection of common values. However, there are times when the media and government officials do not clearly explain important policies the public misunderstands the course of action. So tonight, I would like to this opportunity to explain a few very important American policies which I believe underscore our common values.

Take, for instance, America's assistance policies for the developing world, an immensely important issue to both the U.S. and Germany. Much time in the G8 meetings is dedicated to discussing these policies. The Bush Administration is deeply committed to alleviating poverty, improving health, and promoting economic growth in the developing world. Personally, I truly believe that actions speak louder than words.

Here are some U.S. actions not readily known by the public.

Over the course of five years our Official Development Assistance -- or ODA -- funds nearly tripled. In 2000 we spent $10 billion helping developing countries, but by 2005 our expenditures reached $27.6 billion. In fact, aid to Sub-Saharan Africa totaled $4.1 billion in 2005, a 250 percent increase in five years. This is a tangible expression of the U.S. commitment to our neighbors.

The President is also committed to fighting infectious diseases. A large portion of U.S. ODA targets infectious diseases. The President's Emergency Plans for AIDS Relief (PEPFAR) is a five-year, $15 billion effort to combat HIV/AIDS around the world. In the six decades since the Marshall Plan, there has not been a multi-year development assistance program of this size. In fact, U.S. foreign aid more than doubled over the past six years.

The President's Malaria Initiative is a $1.2 billion program that aims to cut malaria-related deaths by 50 percent in 15 African countries over the course of five years. In addition, the U.S. is the largest donor in the world to the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria. We also remain the largest bilateral donor for polio eradication. The United States remains, by far, the world's largest provider of ODA.

Now, for those of you who follow the ODA debate, you will say "Yes, Dan, but what is this ODA as a measure of U.S. GDP? In 2005 it was .22 percent of your Gross Domestic Product."

This figure, admittedly, might not compare favorably with some other donors, particularly those in Europe. However, this ODA figure only tells part of the story. A more useful measure of how government policies support economic growth and poverty reduction in the developing world is to measure total monetary flows from both the public and the private sectors. Total monetary flows from the United States to the developing world actually compares very favorably to that of other developed countries.

In 2005, we spent $634 billion in trade, investment, ODA, remittances and private grants. This figure comprises 5.1 percent of the U.S. GDP, and considerably exceeds comparable figures for the U.K., France, Germany, and Japan, in both quantitative and GPD percentage terms.

This brings me to my second policy issue - Doha and trade liberalization.

Trade liberalization, particularly with the developing world, has always been a top priority for this Administration. In addition to our leadership in launching the Doha Round, the Administration pressed for and twice succeeded in renewing our trade preference programs with the developing world.

In the U.S. system, these trade programs are difficult to negotiate, especially on the scale of programs with more than 130 countries. But such policies continue to help promote the substantial capital flows and trade between the U.S. and the developing world. In March of this year, the Financial Times published an interesting article that underlines the difference between the U.S. and Europe on this issue.

After reviewing U.S. and European Union trade preference programs, World Bank economists found the EU to be almost twice as restrictive as the U.S. regarding poor country imports. I know that many of you read in the papers that the protectionists in the U.S. are preventing a deal in the Doha Agreements. The high subsidies in agriculture are often cited. However, a look at the facts will allow them to speak for themselves.

• In 2005 the European Union spent $36 billion on subsidies, while the U.S., the larger economy, spent only $14 billion.
• The EU spent nearly three times as much on subsidies as we did. Three times the amount - yet the U.S. is accused of trade distorting through its subsidies.
• With regard to tariffs on agricultural products, the EU. tariffs are twice as high as those of the United States. While we place an average agricultural tariff of 11 percent, the EU's burden is 22 percent.

Even though our tariffs and subsidies are lower, the U.S. still maintains a significant commitment to further reduction, as evidenced through our Free Trade Agreements and subsidy cuts.

Another crucial policy issue is in the area of the environment and climate change. There is popular notion in Europe that the U.S. is the climate culprit, the environmental sinners, while Europe is populated by the eco-friendly saints. However, do the facts bear witness to the belief? Let me refer to a recent speech delivered in Berlin by Principal Deputy Assistant Secretary Kurt Volker:

"Now, I know there is a deeply held view among many in Europe that the U.S. Government doesn't get it. That we don't care about climate change, that we are doing nothing to reduce greenhouse gas emissions, and that Europe, while perhaps not perfect, is doing a far better job of tackling the issue than the United States. This proposition--no matter how simple, no matter how widely held, and no matter how much it fits a pop-culture "blame-the-United States" paradigm--is completely wrong, on every point."

Here are some clear, simple statements that support this assertion:

• The United States, and this Administration, care deeply about climate change.
• We agree that human activity contributes to global warming.
• We support the recent IPCC report, in which U.S. scientists played a leading role.
• We are committed to reducing greenhouse gas emissions.
• We have made tremendous investments in reducing emissions.
• We are working multilaterally to do so.
• We are continuing these efforts.
• These efforts are producing results that stand up favorably against other results in the world.

First, let's look at the data. There is no question that the United States is the world's largest emitter of C02. Everybody in the room knows this. But this fact says no more about the United States, than what the fact that Germany leads Europe in emissions says about Germany.

We emit the largest proportion of greenhouse gas emissions primarily because we are the largest economy in the world. We produce 25 percent of the world's wealth, yet we are only 5 percent of the world's population.

Despite Germany's relatively clean and green status, Germany emits the greatest percentage of greenhouse emissions in Europe. Why? Because it is Europe's largest economy.

When U.S. emissions are compared to the size of our economy, they are in no way out of line. It should also be noted that the International Energy Agency forecasts that China, with a smaller economy, will soon surpass the U.S. in greenhouse gas emissions. This is expected to happen in only two years.

A true comparison between the emissions rates of the U.S. and Europe must include the rate of change from year to year. In this measure, the U.S. is, in fact, more successful than Europe in reducing our emissions growth rate. The so-called "sinners" are actually reducing their negative impact on the environment at twice the rate as Europe. Or more plainly put, the saints increased their greenhouse gas emissions at twice the rate of the U.S. in these first years of the twenty-first century.

According to data from the UN Framework Convention on Climate Change, from 2000-2004 - the most recent period for which we have good, comparative data -- U.S. greenhouse gas emissions increased by 1.3 percent. The EU-25, on the other hand, collectively increased their emissions by 2.1 percent.

Now notice something else. During this same time period, the U.S. enjoyed a period of rapid economic growth. Between 2000 and 2004 we grew our economy by almost 1.9 trillion dollars. That's about the equivalent of adding Italy to the U.S. economy. And we increased our population by 11.3 million people - adding more than the population of Greece. And yet our emissions grew only 1.3 percent. In spite of a surging economy and rapid population growth, the U.S. was able to reduce its emissions growth rate. This tells you a lot about how the U.S. economy is already changing to reduce greenhouse gas emissions.

How did we do this? We work very hard to bring cleaner technology into the marketplace. Cleaner technology is vital to cleaning the environment while at the same time continuing to allow strong economic growth. We not only invest heavily to foster technological advances, but we institute policies which make these technologies cost-competitive.

From Fiscal Year 2001 to the end of Fiscal Year 2006, our Administration devoted nearly $30 billion to climate science, technology, international assistance, and incentive programs.

To give you a sense of the significance of this investment, think of the GDP of Bulgaria, which had a 2006 GDP of just over $28 billion. Essentially, over the past five years, the United States has invested the economic output of Bulgaria in a year in combating climate change.

Most newsworthy of late are the President's recent proposals to address climate change. President Bush has not only talked about the importance of climate change for years, he has also adopted concrete measures to address it. What he did recently was to set some new and ambitious mandatory targets for America.

The President's plan includes a comprehensive scheme to reduce gasoline usage in the U.S. by 20 percent over one decade -- 20 in 10. Such a reduction will curb the projected growth of carbon dioxide emissions from U.S. passenger vehicles and will reduce our dependence on oil, which has left us vulnerable to hostile regimes and terrorists.

One feature of the plan is the reformation and modernization of the corporate average fuel economy (CAFE) standards for cars. These new standards will reduce projected annual gasoline use by up to 32 billion liters in 2017. Also under the new plan, we will raise the mandatory fuels standard to require the use of 132.5 billion liters of renewable and alternative fuels by 2017 -- nearly five times the 2012 target now in law.

However, while we target emissions at home, we are also aggressively involved in international partnerships on climate change. Four examples come to mind.

The first is our Clean Coal Initiative, a plan to deploy advanced coal technology for cleaner and ultimately emissions-free energy. Last year we announced $1 billion in new tax credits for nine projects in the U.S. to construct cleaner commercial scale coal power plants. The Methane to Markets Partnership is an international initiative launched by President Bush in 2004. We partner with other countries to recover and use methane as a fuel source, and already we are cutting a huge amount of emissions. Germany, by the way, joined last summer, bringing membership to 18 countries.

Our Asia Pacific Partnership on Clean Development and Climate (APP) produces results where they matter most -- the major emissions-producers and the major new energy-consumers of the world.

We started the APP a year ago to bring China, India, Japan, South Korea and Australia together with the U.S. to tackle complementary energy, economic and environmental goals. These countries account for about 50 percent of the global population, 50 percent of the global economy, and 50 percent of the world's energy use.

If this partnership is not multi-lateral, nothing is. Conversely, trying to craft a global climate policy without these countries would be futile.

Lastly, we are currently seeking to develop a new Global Nuclear Energy Partnership. There can be no solution to climate change that does not include nuclear energy.

As nuclear technologies are developed, we will work with our GNEP partners to provide developing countries with small-scale reactors that would be secure, cost-effective, and able to meet their energy needs.

In summary my friends, although the public perception and media coverage may indicate a rift between Germany and the U.S. in the goals and actions of today's important issues, the truth of the matter is that we still share the bond of common values and still hold common hopes for our futures. We are all working towards achieving those goals.

I'd like to leave you with a quote from my favorite president, John F. Kennedy. Though spoken four decades ago, his sentiment still holds true today: "To those old allies whose cultural and spiritual origins we share, we pledge the loyalty of faithful friends. United, there is little we cannot do in a host of cooperative ventures. Divided, there is little we can do -for we dare not meet a powerful challenge at odds and split asunder."