Germany country brief
Australia and Germany enjoy an open and cooperative relationship underpinned by extensive political, economic and social links. Australia values the active, constructive and effective role Germany plays on a wide range of international political and economic issues, including meeting common challenges such as terrorism, governance, protection of human rights, and sustainable development and climate change. On 28 January 2013, on the 60th anniversary of Australian- German bilateral relations, Foreign Minister Bob Carr and German Foreign Minister Dr Guido Westerwelle signed a Strategic Partnership between Australia and Germany. 2013 marks the bicentenary of the birth of Ludwig Leichhardt, the German-born naturalist and early explorer of Australia, which will be commemorated throughout the year by science and research exchanges and cultural events in both countries.
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 upper 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 comprising all Bundestag members plus an equal number of state representatives. Presidents can serve up to two terms. The Federal Assembly elected Joachim Gauck as President on 19 February 2012.
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 relatively 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 last 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.
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. It has taken a leading role on a number of key international issues, including the G20, climate change, energy, the Middle East Peace Process, and on nuclear non-proliferation, in particular as a member of the P5+1 Group on Iran. It is a major contributor to humanitarian assistance projects across the world, spending over US$14.5 billion in 2011 on foreign aid, with a particular focus on Africa.
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 recent efforts to address the Eurozone debt crisis.
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 territories.
Germany is the largest economy in Europe and the fourth-largest economy in the world (GDP was almost $3.2 trillion in 2012). Germany is ranked as the world's third-largest exporter: approximately A$1.6 trillion with a current account balance of US$239 billion. Exports of goods and services made up about 52 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
Germany has one of the most robust economies in Europe and is central to its economic strength. A strong free-trade zone and robust demand in Europe is critical to German economic prosperity. After a strong recovery from the Global Financial Crisis, with growth of 3.6 per cent and 3.1 per cent in 2010 and 2011 respectively (after a recession of -5.1 per cent in 2009), the ongoing Euro zone crisis has affected the German economy, with growth expected to slow to 1.0 per cent in 2012. In 2012, goods and services exports amounted to about 52 per cent of the US$3.2 trillion German GDP, much of which were exports to the EU. Germany also enjoys the economic benefits of the common euro, without which German goods might be priced out of foreign markets. Germany has therefore consistently defended the euro, making significant contributions to rescue funds and supported the European Central Bank (ECB).
People-to-people links are significant. In 2012-13, 9,820 working holiday maker visas were issued to young Germans, Australia’s sixth largest source worldwide, and third largest source in Europe. Germany was the second largest European market for tourists visiting Australia (over 158,000) over the same period. According to the 2011 census, just over 110,000 Australian residents were born in Germany, while more than 900,000 Australians claim German ancestry.
Germany promotes its culture in Australia primarily through the Goethe Institute and regular visits of musicians, artists and writers.
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 was 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. Recent high-profile events in include a major exhibition of Australian Indigenous art in Cologne, the Berlin International Film Festival (Berlinale) which featured Australian films, and the Bangarra Dance Company’s German/Swiss tour. In September 2011, the Australian Embassy supported an Australian presence at the International Literature Festival and an Australian cultural presentation at ‘Asia Pacific Week’ in Berlin.
Innovation and R&D linkages
Australia and Germany share strong ties in innovation and research. There are over 300 partnerships and cooperation agreements between Australian and German universities. Germany is Australia’s third most important research partner.
In 2011, three Memoranda of Understanding (MOU) were signed between Australian and German research agencies on traffic flow management; renewable energy opportunities related to the Square Kilometre Array project; and solar energy research and development. 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.
Germany consistently ranks among the top partner countries for CSIRO’s international engagement; areas of collaboration with German organisations include: ICT, food safety technology and food processing, solar technology, materials science and engineering, crop science, science education programs or radio astronomy and aerospace research.
Key German partner organisations include corporates and institutes such as Fraunhofer Gesellschaft, Max Planck Institute for Radio Astronomy, German Aerospace Research Institute, Bayer CropScience, BASF, Audi, Siemens, GE Global Research Centre, EVONTA-Service GmbH.
Australia’s ICT Research Centre of Excellence NICTA, enterprise software company SAP and Europe’s largest application-oriented research organization Fraunhofer are also collaborating on R&D and have jointly established the Future Logistics Living Lab.
Germany is the second largest source country of European students after the UK, with approximately 2,700 German students enrolled to study in Australia in 2013. 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 Group of Eight Universities (Go8) signed a research cooperation arrangement with the German Academic Service (DAAD) in May 2007 to promote university research exchanges. The DAAD provides a range of attractive scholarship programmes and the Alexander von Humboldt Foundation has awarded 569 research awards and fellowships (between 1953 and 2011) to top Australian researchers. 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.
High level visits
High level contact and visits are important in promoting cooperation and understanding between Australia and Germany. Recent high-level visits to Germany include:
- then Minister for Foreign Affairs, Senator Bob Carr, visited Germany in January 2013 to sign a Strategic Partnership between Australia and Germany with German Foreign Minister Dr Guido Westerwelle.
- then Minister for Trade and Competitiveness, Dr Emerson, visited in June 2012.
German Foreign Minister Dr Guido Westerwelle made his first visit to Australia to open CeBIT Australia 2011 and undertake a bilateral program in May-June 2011. 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.
Bilateral agreements and official dialogue
Germany is an important dialogue partner for Australia on a wide range of multilateral issues, including 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-Proliferation and Disarmament Initiative (NPDI). We are well-suited to work as partners across such a broad range of issues because we share common values and are both strong supporters of multilateralism and a rules-based approach to international relations. This is underlined by the Strategic Partnership Agreement Australia and Germany signed in January 2013.
An area with strong potential for growth is the supply of Australian raw materials to Germany and German investment in our resources sector. To facilitate further cooperation in this sector, Australia and Germany signed a Joint Declaration on Resources and Energy Cooperation in 2011. This complements other bilateral cooperation arrangements, including: an MOU on development cooperation; and treaties on double taxation, extradition, cultural cooperation, reciprocal banking arrangements, and scientific and technological cooperation. Texts of bilateral treaties are available at the AUSTLII website.
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 Canberra in May 2012.
Bilateral economic and trade relationship
Bilateral trade links between Australia and Germany are substantial but heavily in Germany's favour. Overall, Germany was Australia's eleventh-largest merchandise trading partner in 2012. Total two-way merchandise trade was valued at over $13 billion, of which $11 billion were imports from Germany. Germany is ranked Australia's fifth-largest source of merchandise imports (mainly cars) and is the largest source of imports from Europe. However, Germany is only ranked as Australia's 17th-largest merchandise export market. Australia's merchandise exports to Germany in 2012 were valued at $2 billion. Major Australian exports were gold coin and legal tender coin $336 million and precious metals ores A$256 million.
Two-way trade in services between Australia and Germany was valued at $2.5 billion in 2012.
In 2012 German investment in Australia totaled $18.5 billion, $13.6 billion of which was foreign direct investment (FDI). Australia’s investment in Germany in the same period was valued at A$48.9 billion. Germany is one of the top 10 of sources of FDI into Australia according to ABS data over the last 10 years. Australia has attracted over 650 German-owned businesses, including 340 German subsidiary companies employing more than 100,000 people across automotive and advanced manufacturing (Bosch, Hella, Continental, ZF, Fuchs, Carl Zeiss), ICT (SAP Research, Software AG, Siemens, IMC), pharmaceuticals/chemicals (Boehringer Ingelheim, Bayer, BASF, Evonik, Fresenius Medical Care), logistics and transport (Schenker, Rhomberg Rail, DHL), clean technologies (Remondis) and banking/insurance (Deutsche Bank, Munich RE, Commerzbank, Allianz) and clean energy (Repower, Conergy, Q-cells, Degerenergie).
Australian trade and investment strategies
Whilst Germany is strongly engaged in China and other Asian growth markets, it has a strong philosophy of market diversification to balance risk and ensure it protects its competitive advantage. It sees future product/service differentiation being created by quality, innovation and sustainability, and is prepared to invest wherever it finds genuine excellence in these areas. Government policy is encouraging the internationalisation of research and industrial collaboration by the German “Mittelstand”, the engine room of the German economy, which has traditionally relied on alliances built around its regional clusters within Germany. This opens the opportunity to target and attract new investment from this large section of the German economy which is characterised by high levels of private ownership, low debt and high investment into technology.
Trade and investment successes
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).
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 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 website is a valuable resource for information on export opportunities to many countries, including Germany. Austrade has an office in Frankfurt.
Updated September 2013