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Australia and Germany enjoy an open and cooperative relationship underpinned by extensive political, economic and social links. Australia values Germany's continued international political and economic engagement, including meeting common challenges such as terrorism and pursuing measures to encourage good governance, sustainable development and climate change.
System of government
Germany is a Federal Republic. The Federal Government, based in Berlin, consists of the Federal Chancellor and the Cabinet of Federal Ministers. Federal elections are held every four years. In addition, there are 16 state governments and thousands of local government 'communes'. Each state has its own constitution and a state parliament. State elections are held every four or five years.
The federal legislative authority is the Bundestag (Parliament or lower house equivalent) whose members are elected through a combination of direct election and proportional representation. Following each federal election, the Bundestag elects a Chancellor by absolute majority. Angela Merkel was re-elected as Chancellor for a second term on 28 October 2009, following the federal election on 27 September 2009. The Bundesrat (Federal Council or uppper house equivalent) represents the 16 state governments and has 69 seats. Based on population size, a state has between three and six votes. The Bundesrat debates all legislation, but only approves legislation affecting state responsibilities (e.g. tax revenue distribution).
The Federal President, who has ceremonial duties, is elected every five years by the Bundesversammlung (Federal Assembly), a body comprised of all Bundestag members plus an equal number of state representatives. Presidents can serve up to two terms. Dr Horst Köhler, who was re-elected for a second term on 23 May 2009, resigned on 31 May 2010. The Federal Assembly elected the Premier of Lower Saxony, Christian Wulff, as President on 30 June 2010.
Germany has five major political parties: the Christian Democratic Union (CDU), including the Christian Social Union (CSU), the CDU's sister party; the Free Democratic Party (FDP); the Social Democratic Party (SPD); the Green Party; and the Left Party (die Linke).
The Left Party is a recent addition to Germany's political landscape. Formed in 2007 from a merger of leftist parties in former East and West Germany, the Left Party is largely dominated by former left SPD members.
The German federal election was held on 27 September 2009. The CDU/CSU secured the highest percentage of the votes (33.8%), followed by the SPD (22.9%), FDP (14.6%), the Left Party (12%), and the Greens (10.7%). The CDU/CSU and FDP formed a coalition government (with 332 seats out of a total of 622 in the Bundestag), and the new German Cabinet was sworn in on 28 October 2009. The next federal election must take place by October 2013.
Seven of Germany’s 16 states will hold elections in 2011. In the four state elections this year so far, the CDU/CSU has lost ground including major setbacks in the key states of Hamburg and Baden-Württemberg, the latter a traditional stronghold of the CDU and FDP for the past 58 years.. The Green’s victory in Baden-Württemberg has resulted in them controlling four of the six Bundesrat (upper house) state-allocated seats. While Chancellor Merkle’s centre-right ruling coalition lost its majority in the Bundesrat in 2010, the further loss of votes will make it harder for the government to progress its legislative agenda in areas requiring the approval of the states. The remaining three state elections in 2011 are in Bremen (May), Berlin and Mecklenburg-Vorpommern (both September).
Germany is a strong supporter of multilateralism and is the third-largest contributor to the United Nations (UN) budget and largest contributor to the European Union (EU) budget. Germany has been elected to the UN Security Council (UNSC) for the 2011-12 term but continues to seek a permanent seat on the Council. Priority themes for Germany’s UNSC term are nuclear non-proliferation and disarmament, climate change and security, crisis prevention, and inter-cultural dialogue.
Germany has taken a leading role on a number of key international issues, including the G20, climate change, energy, the Middle East Peace Process, and international security.
Germany is the EU’s most populous member state (82 million) and its largest single economy. It plays an increasingly prominent role in all major EU decisions including laying the groundwork for a reworked EU "reform" treaty signed on 19 October 2007 in Lisbon. Germany was the ninth EU member to ratify the Lisbon (EU Reform) Treaty, on 24 April 2008. The treaty entered into force on 1 December 2009.
Germany is an important dialogue partner for Australia on a wide range of multilateral issues, including the global economic crisis, global security, arms control, disarmament, poverty alleviation, UN reform, human rights, development cooperation and climate change. We work together closely in the UN and other forums including the G20, the Global Carbon Capture and Storage Institute (GCCSI), and the International Renewable Energy Agency (IRENA). Germany was actively involved in the International Commission on Nuclear Non-proliferation and Disarmament (ICNND), a joint initiative of the Australian and Japanese governments which completed its work in July 2010. We now work closely together on the Non-Proliferaton and Disarmament Initiative (NPDI).
The NATO alliance is the predominant focus of German defence and security policy. Germany is the second-largest troop contributor to the NATO-led mission in Afghanistan and provides the naval monitoring role in Lebanon as part of UN Interim Force in Lebanon (UNIFIL). Germany is also a contributing member of the UN peace missions in Darfur, Sudan, Liberia, Kosovo, Bosnia and Herzegovina, Georgia, Moldova/Ukraine, and the Palestinian terrorities.
Analysis of the economy
Germany is the largest economy in Europe and the fourth-largest economy in the world (GDP was more than A$3.3 trillion in 2010). Germany is ranked as the world's second-largest goods exporter: approximately A$1.16 trillionwith a trade surplus of A$194 billion. Exports of goods and services made up over 41 per cent of GDP. Manufacturing is the mainstay of the German economy, with the export sector dominated by automobiles and machinery. Germany's exports of services are relatively underdeveloped and reform in the services sectors is relatively slow, but new sectors, like IT, biotechnology and renewable energy are growing markedly. Agriculture accounts for only one per cent of GDP.
Key economic indicators
Key economic indicators
Germany felt the effects of the global economic and financial crisis particularly strongly in the export-oriented manufacturing sector. The economy fell into recession in the first quarter of 2009 as global demand for German exports weakened but in 2011 its exports are expected to grow by 8.5 per cent. GDP contracted by 4.7 per cent in 2009 but rose by 3.6 per cent in 2010 and is forecast to rise by 2.2 per cent in 2011 (IMF/EIU forecasts).
The Federal Government attributes this expected recovery to improved global economic conditions and increased domestic demand, as well as a sharp expansion in industrial output in the second quarter of 2010. Inflation, after falling to 0.2 per cent in 2009, rose slightly to 1.3 per cent in 2010 and is forecast to remain steady for 2011 at 1.4 per cent (IMF/EIU). The budget deficit is forecast at 1.7 per cent of GDP in 2011, reduced from 3 per cent in 2010 (EIU). Germany implemented an austerity package at the start of 2011 to reduce the budget deficit significantly by 2014. This will require substantial savings of approximately €82 billion (A$134 billion) between 2011 and 2014.
People to people links are significant. In 2009-10, 20,880 working holiday maker visas were issued to young Germans (Department of Immigration and Citizenship), a slight increase on the previous year. A substantially lower number of German working holiday maker visas were issued to young Australians (German Embassy). In 2009, Germany was Australia's largest European market for students (Australian Education International) with 6,340 German student enrolments in Australia, and the second-largest European market for overseas visitors in Australia (almost 162,000). According to the 2006 census, approximately 106,500 Australian residents were born in Germany.
Germany promotes its culture in Australia primarily through the Goethe Institute and regular visits of musicians, artists and writers. The Berlin Philharmonic Orchestra made its first concert tour of Australia in late 2010.
An Australia Council representative in Berlin works with the Embassy to assist Australian artists enter and operate in the German market. A Cultural Agreement between Germany and Australia aimed at enhancing cultural and academic exchanges was signed in November 1997.
A significant number of Australian artists are based in Germany, working in music, performing and visual arts, literature, as well as arts management. They include prominent figures such as Simone Young, General Manager and Musical Director of the Hamburg State Opera, and Barrie Kosky, who has been appointed Managing Director of Komische Oper in Berlin from 2012. Australian performers regularly tour Germany, including in recent years leading companies such as the Melbourne Symphony Orchestra, the Sydney Symphony Orchestra, the Queensland Ballet, and the Bangarra Dance Company. High-profile events in 2011 include a major exhibition of Australian Indigenous art in Cologne, the Berlin International Film Festival (Berlinale) which will feature Australian films, and the Bangarra Dance Company’s German/Swiss tour. In September, the Australian Embassy will support an Australian presence at the International Literature Festival and an Australian cultural presentation at ‘Asia Pacific Week’ in Berlin.
High level visits
High level visits
High level contact and visits are important in promoting cooperation and understanding between Australia and Germany.
-- The Hon Kevin Rudd MP (as Minister for Foreign Affairs) attended the International Security Assistance Force (ISAF) meeting in Berlin in April 2011 and participated in the 47th Munich Security Council Conference in February 2011
-- Mr Rudd (as Prime Minister) visited Germany in July 2009 and held discussions with German Chancellor Merkel and former President Köhler.
-- The Hon Stephen Smith MP (as Minister for Foreign Affairs)
-- The Hon Kim Carr MP (as Minister for Innovation, Industry, Science and Research) visited Germany in March 2011 and in July 2010 to promote Australia’s Square Kilometre Array (SKA) world’s largest radio telescope bid.
-- The Hon John Hogg (as President of the Senate), led a parliamentary delegation to Bonn and Cologne 27 April to 1 May 2010.
-- The Hon Anthony Albanese MP (as Minister for Transport, Infrastructure, Regional Development and Local Government) visited Germany in May 2009 and June 2008.
-- The Hon Stephen Conroy (as Minister for Broadband, Communications and the Digital Economy) attended the CEBIT Fair in Hannover in March 2009.
-- The Hon Peter Garrett MP (as Minister for Environment, Heritage and the Arts) visited Germany in May 2008.
Two German Parliamentary delegations (the Australian-New Zealand Friendship Group and the Bundestag Budget Committee) visited Australia in early March 2011, and the President and CEO of the German peak industry body, the Federation of German Industries (BDI), visited Australia in mid-February 2011. The German State Secretary for Economic Affairs, Dr Bernd Pfaffenbach, visited Australia in November 2010. The most recent German ministerial visitor to Australia was then-Finance Minister Peer Steinbrück in November 2006 for the G20 Finance Ministers' Meeting.
Germany accepted the Prime Minister’s invitation to be Australia’s Partner Country for CeBIT Australia 2011 (Sydney 31 May – 2 June 2011) – which is based on its German parent event, CeBIT, the largest information and communications technology event in the world. Foreign Minister Dr Guido Westerwelle will make his first visit to Australia to open CeBIT Australia 2011 and undertake a bilateral program. His visit will be the third to Australia by a German Foreign Minister (Klaus Kinkel visited in 1993 and Joschka Fischer in 2005).
Bilateral agreements and official dialogue
Bilateral agreements and official dialogue
In March 2011, the Australian Solar Institute (part of the Government’s Clean Energy Initiative) signed a Memorandum of Understanding (MoU) with Germany’s national research centre for aeronautics and space, the Deutches Zentrum für Luft- und Raumfahrt (DLR). The MOU is the second agreement that the Australian Solar Institute have signed with a German organisation – the first being in February 2010, with the Fraunhofer Institute, Europe’s largest research institution. Under the MOUs the respective parties will be able to collaborate on solar energy technology and deployment. This highlights Australia and Germany’s shared commitment to deepen and expand our collaboration. It builds on other, established, bilateral co-operation arrangements, including: an MOU on development cooperation with Germany which establishes a framework for ongoing cooperation in the Asia-Pacific region; an enhanced working holiday maker arrangement; and a supplementary social security agreement on elimination of double payment of superannuation for temporary workers.
Australia and Germany signed a bilateral social security agreement in December 2000 which improves social security protection for people who have lived and/or worked in both Australia and Germany. The social security agreement also exempts Australian employers from providing German social security support for Australian employees sent temporarily to work in Germany, provided the employee remains covered in Australia by compulsory superannuation arrangements. Further information is available on the Australian Taxation Office website (http://www.ato.gov.au/superprofessionals/content.asp?doc=/content/00164391.htm) .
Australia and Germany have a number of other bilateral agreements including double taxation, extradition, cultural cooperation, reciprocal banking arrangements, and scientific and technological cooperation. Texts of bilateral agreements are available at the AUSTLII website (http://www.austlii.edu.au/au/other/dfat/countries/). The Group of Eight Universities (Go8) signed a research cooperation arrangement with the German Academic Service (DAAD) in May 2007.
Senior officials' bilateral talks take place regularly covering, amongst others, political relations, regional developments, climate change, counter-terrorism and development assistance. The most recent senior officials' talks took place in Berlin in May 2010. Senior officials' talks also took place in Canberra in February 2010 focusing on clean energy technologies and building stronger strategic bilateral cooperation in science and research. Arising from their talks the two Ministries responsible for science and research (BMBF and DIISR) together provided A$900,000 to support Australia-Germany researcher mobility.
Bilateral trade links between Australia and Germany are substantial but heavily in Germany's favour. Overall, Germany was Australia's tenth-largest merchandise trading partner in 2009-10. Total two-way merchandise trade was valued at over A$12.4 billion, of which A$10.7 billion were imports from Germany. Germany is ranked Australia's sixth-largest source of merchandise imports (mainly cars) and is the largest source of imports from Europe. However, Germany is only ranked as Australia's 18th-largest merchandise export market. Australia's merchandise exports to Germany in 2009-10 were valued at A$1.7 billion. Major Australian exports were gold coin and legal tender coin A$250 million and coal A$193 million.
Two-way trade in services between Australia and Germany was valued at A$2.3 billion in 2009-10.
In 2009 German investment in Australia totalled over A$38 billion, A$16.4 billion of which was foreign direct investment (FDI). Australia’s investment in Germany in the same period was valued at A$37.6 billion, of which A$9.7 billion was FDI.
Australia hosts over 650 German-owned business, including 340 German subsidiary companies employing more than 100,000 people. Their interests span a broad range of sectors: the automotive and automotive components industry (Daimler AG, BMW, Bosch, Hella and VDO); telecommunications (Siemens); refining plants and environmental products (Lurgi, Uhde); building and construction (Hochtief and Bilfinger Berger through their affiliated companies Leighton Holdings and Baulderstone Hornibrook, respectively); and chemicals (Boehringer, Bayer Schering Pharma). German banks also have a significant presence in Australia. Deutsche Bank, which celebrated its 35th year in Australia in 2009, is the largest European Bank operating in Australia and employs about 1000 staff in its Sydney and Melbourne offices.
Aerospace Australia, wholly owned by EADS, provides helicopters to the Australian Defence Forces. Blohm and Voss was the German partner in the multi-billion-dollar ANZAC frigate project - the largest single co-operative project between Australia and Germany. VUAG bought the Kurri Kurri aluminium smelter in the Hunter Valley. It is estimated that these companies together generate thousands of jobs in Australia.
About a third of the German subsidiary companies also manufacture or assemble in Australia, thus making an important contribution to Australia's exports and research and development (R&D) capability. For example, VDO Australia develops and produces instrumentation, fuel-supply units, electronic modules, windshield-washer systems and sensors that it exports to Germany, France, Malaysia and the United Kingdom. Australia is also the site of one of the company's three worldwide research and development centres. Bosch has established a Centre of Competence for R&D for vehicle security systems, which services the entire company and is the only such centre located outside Germany. The German supermarket chain Aldi continues to expand its operations in Australia after entering the market a few years ago. Schrey & Veit, a German manufacturer (vibration dampers for railway rails, wheels and steel bridges) has recently established a presence in Australia.
There is growing recognition by German business of the benefits of Australia as a headquarters for regional operations. Lufthansa, for example, has located its Asia-Pacific reservation call centre in Melbourne to take advantage of the wide range of available language skills and telecommunications infrastructure, and Volkswagen has established its Volkswagen Group Australia which imports and distributes VW cars, in the region. (For Australian companies operating in Germany, refer to Trade Successes below.)
Australian investment in Germany is also worth approximately A$38 billion. There are several prominent Australian companies operating and investing in Germany including Macquarie Bank (with significant investments in the roads, airports, energy and telecommunications sectors), Greater Union (with a chain of cinemas throughout the country), and the Toga Hospitality Group (owners and operators of Medina and Vibe hotels in Australia), which as several new hotels across Germany.
Australian trade and investment strategies
Australian trade and investment strategies
Germany's political and economic weight makes it influential in the EU policy formulation process. The Australian Government actively encourages Germany to show leadership within the EU in pushing for increased international trade liberalisation, especially in agriculture.
The Australian Trade Commission (Austrade) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets. Austrade's Opportunities Online website is a valuable resource for information on export opportunities to many countries, including Germany. Austrade has an office in Frankfurt.
Australia, through Austrade, encourages German investment in Australia. In particular, the Australian Government is targeting stronger investment links with Germany's small to medium sized enterprises (the 'Mittelstand'). These companies account for around half of German output and employ two-thirds of the German workforce. Australia and Germany have a number of bilateral agreements to promote commercial activity and labour mobility covering double taxation, reciprocal banking arrangements and social security.
Germany offers Australian companies many commercial opportunities as a gateway into Central and Eastern Europe. Many German companies have strong commercial links with, and expertise in, Central and Eastern Europe. Australian companies can make useful contacts at trade fairs through which more than 90 per cent of new products and technologies are introduced into the German market.
The German automotive and automotive parts industries are a major source of international investment. Opportunities in Germany include original equipment manufactures (OEM) components, light materials, aftermarket components and accessories (including replacement parts), alternative fuels technology and equipment, tooling and production equipment and engineering services.
Information and communication technology
Information and communication technology
Opportunities exist for Australian companies in IT security, software and niche hardware, telecommunications applications and e-commerce, e-government and e-banking services, particularly with the deregulation of the telecommunications sector and the launch of the German Government's program Bundonline 2005, which put 376 government services online.
Germany has a large pharmaceuticals industry. The market has well established international networks and offers easy access through government-supported biotech clusters with access to public as well as private funding. Opportunities in Germany include research and development contracts, research and strategic collaborations, licensing agreements and export of base products (marine and plant organisms) for pharmaceutical manufacturing.
Education and training
Education and training
Germany is Australia's largest source of foreign students from Europe. Increased opportunities in the postgraduate education sector can be expected as Germany undertakes reforms in its tertiary education sector. Postgraduate studies provide institutions with the greatest opportunities to enter the German market, particularly in the areas of Information Technology, International Law and International Business and Technology. The cooperative arrangement between the Group of 8 Universities (Go8) and German agency DAAD will help promote university research exchanges. Additionally, Working Holiday Maker visa holders aged 18 - 30 are able to undertake English Language Intensive Courses for Overseas Students (ELICOS) and vocational and training opportunities that offer short placements of up to three months duration.
Seasonal opportunities (September to May) exist for Australian exporters (with tightly controlled supply chain management and a strong import/distribution partner in Germany) to supply the German market with fruit, including apples, citrus fruits (navels and easy peelers), pears and cherries. Limited opportunities also exist for high-quality seafood exports to Germany, particularly in niche markets.
An increasing number of Australian companies are operating and investing in Germany. In May 2010, Macquarie Group completed the purchase of German private bank Sal. Oppenheim’s cash equities sales and research business. In 2009, Ceramic Fuel Cells (CFCL) launched its BlueGen gas-to-electricity product and opened its fuel cell stack manufacturing plant in North-Rhine Westphalia (NRW). NRW state government recently awarded CFCL a prestigious innovation prize. CFCL develops fuel cell technology for high efficiency and low emission electricity generation units for use in domestic and commercial buildings. In March 2010, Australian Industry Funds (AIF) purchased a 40 per cent holding in Germany's '50Hertz Transmission' company, a high voltage electricity grid, from Germany's fourth largest energy utility, ‘Vattenfall'. Other recent activity includes Australian company Sonic Healthcare's acquisition of the German laboratory company Bioscientia. The Australian investment bank Macquarie is present in the German market, including for example via a majority holding in billing services company Techem, and with PBL owns one of Germany's largest real estate websites, Immobilien Scout.
One of the largest Australian companies manufacturing in Germany is CSL Behring. Based in Marburg, CSL employs around 2,000 people in the development of blood plasma products. CSL Behring opened a new facility in July 2009. Quickstep Technologies, a composite materials manufacturer, has secured a manufacturing development contract with Airbus Germany. Several precision engineering and production firms input into the German manufacturing supply line, including Bishop Technology Group and ANCA Machinery (precision grinding). In 2008, Plantic, which produces biodegradable packaging, set up its European Headquarters in the German State of Thuringia and is establishing a manufacturing operation. In recent years, other Australian companies have been active in a wide range of German sectors, including Cochlear, Transfield (solar cell technology), ResMED (anti-snoring), John Fairfax newspaper and magazines, Burns Philp (yeast and bakery), Greencorp Magnetics, (recording tapes), Brambles (waste management), Amcor (packaging), MIM, Moldflow (software solutions), SDI (dental products), Nufarm (agricultural products) Goodman Group (real estate) and Greater Union (cinema).
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