Germany: Foreign Economic Relations

Germany's foreign economic relations are consistent with the policy of the European Union (EU) to expand trade among the 25 member states and also with the goal of global trade liberalization through the latest Doha Round of the World Trade Organization (WTO).

Germany uses its position as the world's leading merchandise exporter - a fact that partially reflects the strength of the euro - to compensate for subdued domestic demand. German companies derive one-third of their revenues from foreign trade. Therefore, Germany is committed to reducing trade restrictions, whether involving tariffs or non-tariff barriers, and improving the transparency of foreign markets, including access to public works projects.

The fact that Germany has exceeded the EU's Stability and Growth Pact's 3 percent limit on the budget deficit as a percentage of gross domestic product every year since 2002 has been an irritant in relations with the rest of the EU.

In 2003 Germany conducted slightly more than half of its trade within the then 15-member EU, followed by, in order of volume, developing countries, Eastern Europe (including countries like Poland that subsequently joined the EU), the United States and Canada, non-EU Europe (Switzerland, Norway, Liechtenstein, and Iceland), and Japan.

Increasing emphasis is being placed on trade with Russia and China. The 2005 Hanover trade fair devoted much of its attention to Germany's growing economic and trade ties to Russia, particularly in the area of energy. Germany is Russia's top trade partner. In 2002 China overtook Japan as Germany's top trade partner in Asia, and Germany is investing heavily in that rapidly rising economic power.