As the world’s fourth largest economy, Germany is the European Union’s (EU’s) most populous nation and plays a leading role in the continent’s economic, political and security affairs. Germany is renowned for its technological innovation, art and science.
The Federal Republic of Germany consists of sixteen states. The directly-elected Bundestag (lower house) and the Bundesrat (upper house or states’ chamber) constitute the Federal Parliament. The Bundesrat debates all draft legislation but only votes on bills affecting state responsibilities and interests. Bundestag members elect the Federal Chancellor at the start of each four-year parliamentary term.
Elections to the Bundestag were held on 24 September 2017. Chancellor Merkel’s Christian Democratic Union and its Bavarian sister party, the Christian Social Union (CDU/CSU) won 33.1% of the vote, its lowest result since 1949 and 8.4% lower than its 2013 result. The Social Democrats (SPD) won 20.4% of the vote. The big winners were the smaller parties. The far-right Alternative for Germany (AfD) won 13.2% of the vote, making it the third largest party in the new parliament. The Free Democratic Party (FDP) won 10.4% of the vote, ensuring it will re-enter the federal parliament. The Green Party won 9.3% of the vote and the Left Party 8.9%.
The CDU/CSU will now seek to form a coalition government, in the first instance with the FDP and the Greens. The SPD, which governed in a “Grand Coalition” with the CDU/CSU between 2013 and 2017, has indicated it will not be seeking to join another CDU-led coalition. Coalition negotiations are expected to take at least several weeks. Once a coalition has been formed, the Bundestag will vote for the next federal Chancellor. An absolute majority of votes is required. Chancellor Merkel is expected to be re-elected for a fourth term.
The Federal President, currently Frank-Walter Steinmeier, was elected for a five-year term in February 2017. The President’s role is largely ceremonial, although he or she formally approves new legislation and the nomination of the Federal Chancellor, and is empowered to dissolve parliament and call an early election.
Foreign and security policy
Germany contributes actively to international peace and prosperity. It has played a key role in addressing ongoing conflict in Ukraine and Islamic State terrorism in Iraq and Syria. As the EU’s largest economy, Germany exerts significant influence over the group’s common foreign and economic policies, including measures to help Europe recover from a multi-year debt crisis.
Germany supports multilateralism. It is the third-largest contributor to the United Nations’ (UN) budget and largest contributor to the EU budget. It has lead responses to common challenges such as energy security, climate change, nuclear non-proliferation and counter-terrorism. It supports the Middle East Peace Process and as a member of the E3+3 nuclear negotiations with Iran was influential in reaching agreement on a Joint Comprehensive Plan of Action on Iran’s nuclear program. Germany is a major contributor to humanitarian assistance projects across the world, with an official development assistance budget of US$17.8 billion in 2015.
The NATO alliance is the anchor of German defence and security policy. In Afghanistan, Germany contributed many troops to the NATO-led mission, an expert to the UN Assistance Mission and continues to provide troops for the Resolute Support Mission. Germany contributes to UN peace missions in Darfur, South Sudan, Liberia, Lebanon, Western Sahara, Kosovo and Mali and to the Building Partner Capacity Coalition in Iraq.
Germany is the world’s fourth-largest economy and Europe’s largest, with GDP of US$3.4 trillion in 2015. It is the third-largest exporter, with goods and services exports in 2015 worth US$1.3 trillion, accounting for more than a third of Germany’s total GDP. Germany’s export strengths are in manufacturing, while services exports are less developed.
As the largest economy in the Eurozone, Germany is often regarded as an economic leader of Europe. Its economy recovered faster than most in the Eurozone after the global financial crisis.
Australia and Germany have a warm, vibrant and diverse bilateral relationship. Both countries have closely aligned interests and perspectives on a wide spectrum of issues, as outlined in the Berlin-Canberra Declaration of Intent on a Strategic Partnership. They work closely in multilateral forums, including the UN and G20, to address global economic governance, counter-terrorism, poverty alleviation, non-proliferation and disarmament issues, and climate change. Australia and Germany are committed to promoting international trade liberalisation and deepening economic linkages.
Significant recent developments
The November 2015 report to Chancellor Merkel and Prime Minister Turnbull by the Australia-Germany Advisory Group (AGAG) has been a driving force behind recent intensification of the bilateral relationship. Containing 59 recommendations across five themes – trade and investment, strategic dialogue, science and education, diversity and integration, and culture and sport – the report provided a comprehensive blueprint to build on Australia and Germany’s complementary strengths.
Implementation of AGAG’s recommendations over the course of 2016 has significantly strengthened the bilateral architecture. The establishment of the 2+2 Ministerial Meeting, a high- level meeting involving foreign and defence ministers, together with a new regular officials-level Asia dialogue and a new 1.5-track dialogue, has led to closer strategic engagement between our governments and public policy leaders.
The progress report by AGAG co-chairs, Australian Minister for Finance Mathias Cormann and German Minister of State Maria Böhmer, highlights the key achievements during 2016 by government and non-government stakeholders in implementing AGAG’s proposals.
High level contact and visits are important in promoting cooperation and understanding between Australia and Germany. Recent high-level bilateral visits include:
Visits to Germany
- Prime Minister Turnbull in July 2017 and November 2015
- Finance Minister Cormann in July 2017 and December 2016
- Minister for Aged Care and Minister for Indigenous Health Ken Wyatt, Assistant Minister for Vocational Education and Skills Karen Andrews and Assistant Minister for Industry, Innovation and Science Craig Laundy in May 2017
- Minister for International Development and the Pacific Concetta Fierravanti-Wells in March 2017 and April 2016
- Deputy Prime Minister Barnaby Joyce in January 2017
- Foreign Minister Bishop visited Germany in September 2016 (with Minister for Defence)
- Treasurer Scott Morrison in January 2017
- Minister for Trade, Tourism and Investment Ciobo in April 2016
- Minister for Justice Keenan in March 2016
Visits to Australia
- Chancellor Merkel visited Australia in November 2014
- Minister of State at the Federal Foreign Office, Böhmer, visited Australia in October 2015
- The Bundestag Australia and New Zealand Parliamentary Friendship Group visited Australia in February 2016
- Parliamentary State Secretary at the Federal Ministry of Defence Brauksiepe visited Australia in March 2016
- Federal Minister for Agriculture Schmidt visited Australia in April 2016
- Parliamentary State Secretary to the Federal Minister of Health Fischbach visited Australia in October 2016
- President of the Bundestag Norbert Lammert visited Australia in November 2016
People-to-people links between Australia and Germany are warm and well-established. According to the 2011 census, about 108,000 Australian residents were born in Germany, while almost 900,000 Australians claim German ancestry. In 2015-16, 25,980 working holidaymaker visas were issued to young Germans, Australia’s second-largest source behind the UK. Germany was the second-largest European market for tourists visiting Australia (195,100) in 2015-16.
A significant number of Australian artists are based in Germany, working in music, performing and visual arts, literature, as well as arts management. The cultural diversity of both countries support a long history of exchange in culture, arts and sport. The Australia now 2017 cultural diplomacy program will build on these ties by promoting contemporary perspectives on Australia’s creative excellence, diversity and innovation among Germany’s sophisticated audiences.
AGAG’s recommendations included a major theme on strengthening bilateral exchange in arts, culture and sport. Stakeholders in both countries are making good progress toward joint artistic performances, friendly football matches and closer cooperation in wine manufacturing.
Innovation and R&D linkages
Australia and Germany share strong ties in innovation and research. More than 500 partnerships and cooperation agreements exist between Australian and German universities. Germany is a key partner for Australia’s peak scientific body, the CSIRO. German partner organisations include the Fraunhofer Gesellschaft and the Max Planck Institute. 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 and radio astronomy and aerospace research.
In addition to the implementation of AGAG’s extensive recommendations in science, research and innovation cooperation, the Australian Government in 2016 established an innovation landing pad in Berlin to assist Australian start-ups and entrepreneurs access world-class in-market business development, investment and mentorship in Germany and across Europe.
Germany is the third-largest source country of European students after Italy and the UK, with 4,732 German students studying in Australia in 2015. Postgraduate studies provide Australian 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 German Academic Exchange Service (DAAD) and Universities Australia signed the Australia-Germany Joint Research Cooperation Scheme in December 2014 to support bilateral research exchanges. The Alexander von Humboldt Foundation also offers grants for research exchanges.
Bilateral economic and trade relationship
Australia’s economic relationship with Germany is substantial.
Some of the largest German employers in Australia are Allianz, Hanson Australia (Heidelberger Zement), BOC (Linde), Siemens, Bosch, DB Schenker and Deutsche Bank. Other German companies have a presence across a number of industries in Australia, including automotive and advanced manufacturing (Bosch, Hella, Continental, ZF, Fuchs, Carl Zeiss), ICT (SAP Research, Software AG, IMC), pharmaceuticals/chemicals (Boehringer Ingelheim, Bayer, BASF, Evonik, Fresenius Medical Care), logistics and transport (DBSchenker, DHL), clean technologies (Remondis) and banking/insurance (Munich RE, Commerzbank, Allianz) and clean energy (SMA, Schueco, Degerenergie).
A range of Australian companies have a large presence in Germany. Sonic Healthcare and CSL Behring, both in the medical sector, employ around 5,000 and 2,000 people respectively, making them the biggest Australian employers in Germany. High profile Australian companies, like Macquarie Bank, have a broad range of interests in Germany, from wind farms to internet start-ups. Large Australian investment companies, like IFM investors, have made investments in sectors like the electricity grid, buying 40 per cent of '50Hertz Transmission,' which transports power to 18 million people in Germany.
A number of other Australian companies also operate in Germany. Ceramic Fuel Cells (CFCL) launched its BlueGen gas-to-electricity product and opened its fuel cell stack manufacturing plant in the German state of North-Rhine Westphalia (NRW). Quickstep Technologies, a composite materials manufacturer, has secured a manufacturing development contract with Airbus Germany. Plantic Technologies, which produces biodegradable packaging, has its European Headquarters in the German State of Thuringia. 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 AHL (cinemas).
The Australian Trade Commission (Austrade) operates an office in Frankfurt.
Germany is Australia’s ninth-largest trade partner, with two-way goods and services trade A$20.2 billion in 2016. Australia’s total goods and services exports to Germany were worth A$3.9 billion in 2016, of which goods accounted for A$2.4 billion. Major Australian goods exports to Germany are gold coins, oil seeds, precious metal ores and concentrates, coal and pharmaceutical products. Germany is Australia’s fifth-largest source of imports (A$16.4 billion), comprising mostly goods (A$13.5 billion). Major goods imports from Germany are cars, medication, pharmaceuticals and high-tech equipment.
Germany is the sixth-largest destination for Australian investment abroad. The level of Australian investment in Germany at the end of 2016 was worth A$65.8 billion.
Germany is Australia’s thirteenth-largest source of foreign investment. Germany’s investment in Australia in 2016 was valued at A$38.8 billion. German investment spans automotive and manufacturing, information and communications technology, pharmaceuticals and finance.
A key recommendation of AGAG was to sign a revised double taxation agreement (DTA). The DTA entered into force on 1 January 2017, enhancing the infrastructure supporting bilateral trade and investment. The revised treaty provides increased certainty for businesses in Australia and German and reduces tax impediments to bilateral trade and investment.
A major regional business conference to be held in Perth from 3 to 5 November 2017 in conjunction with the Asia-Pacific Conference of German Business will bring together business and government leaders from Germany, Australia and the Asia-Pacific to showcase the opportunities in both countries’ economies. Further details for the conference are available from the Asia-Pacific Regional Conference website.