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 those bills affecting state responsibilities and interests, such as tax revenue distribution. Bundestag members (currently 631) elect the Federal Chancellor at the start of each four-year parliamentary term. Current Chancellor Angela Merkel was elected by the Bundestag to a third consecutive term in December 2013.
The Federal President, currently Joachim Gauck, was elected for a five-year term in 2012. 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.
After winning a combined 41.5 per cent of the vote in the September 2013 federal election, Chancellor Merkel’s centre-right Christian Democratic Union (CDU) and smaller Bavarian sister party the Christian Social Union (CSU), entered into a ‘Grand Coalition’ government with the centre-left Social Democratic Party (SPD), which obtained 25.7 per cent of the vote. The three parties governed together between 2005 and 2009 during Merkel’s first term as Chancellor.
Chancellor Merkel’s Government commands an overwhelming majority in the Bundestag (504 of 631 seats) and an effective majority in the Bundesrat. The federal opposition parties, the Green Party and Left Party, hold 127 Bundestag seats. Two other high profile parties in Germany, the Alternative for Germany (AfD) and the Free Democratic Party (FDP), are not currently represented in the Bundestag, though are represented in some state parliaments.
Foreign and security policy
Germany is an active contributor 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 is a strong supporter of multilateralism. It is the third-largest contributor to the United Nations’ (UN) budget and largest contributor to the EU budget. It has taken a leading role in responding 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 played an influential role 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, spending over US$16.2 billion in 2014 on foreign aid, with a particular focus on Africa.
The NATO alliance is the anchor of German defence and security policy. Germany was the second-largest troop contributor to the NATO-led mission in Afghanistan and continues to provide troops in Afghanistan as part of the Resolute Support Mission. Germany is a contributing member of the UN peace missions in Darfur, South Sudan, Liberia, Lebanon, Western Sahara and Mali and is also contributing to the Building Partner Capacity Coalition in Iraq. In 2016 Germany will release a new defence white paper, outlining at the highest level the features and objectives of German security policy.
Germany is the world’s fourth-largest economy with a GDP of US$3.9 trillion in 2014. It is also the globe’s third-largest exporter, with goods and services exports in 2014 worth US$1.8 trillion, equating to nearly half 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. In 2014, economic growth was 1.6 per cent, after just 0.6 per cent and 0.4 per cent in 2012 and 2013 respectively.
Australia and Germany have a warm and vibrant bilateral relationship. Strategic dialogue on global political, security and defence issues has increased in recent years. Both countries are committed to deepening economic linkages and promoting international trade liberalisation. They work closely together in multilateral fora such as the UN and G20 to address non-proliferation and disarmament issues, climate change, counter-terrorism and poverty alleviation.
Significant recent developments
Chancellor Merkel visited Australia in November 2014, becoming only the second German Chancellor to do so. During the visit, Chancellor Merkel and former Prime Minister Abbott announced a new high-level advisory group to examine ways of deepening the bilateral relationship. The Australia-Germany Advisory Group, co-chaired by Australian Finance Minister Mathias Cormann and Minister of State at the German Federal Foreign Office, Dr Maria Böhmer, met in Berlin in July 2015 and in Canberra in October 2015. The co-chairs presented their report to leaders in November 2015.
Containing 59 recommendations across five themes – trade and investment, strategic dialogue, science and education, diversity and integration, and culture and sport – the report provides a blueprint to take the already strong bilateral partnership to a new level.
Collaboration, Innovation and Opportunity, Report of the Australia-Germany Advisory Group
Among the report’s recommendations are the establishment of a high-level strategic dialogue involving foreign and defence ministers, a working group on energy and resources, and a best practice exchange on migration, integration and attracting skilled workers.
A key recommendation of the report was to update the bilateral Double Taxation Treaty. This was signed in Berlin in November 2015. This new generation treaty will modernise bilateral tax arrangements and, in line with the OECD/G20 recommendation, includes clauses to address base erosion and profit shifting practices.
High level contact and visits are important in promoting cooperation and understanding between Australia and Germany. Other recent high-level bilateral visits include:
- Prime Minister Turnbull visited Germany in November 2015
- Foreign Minister Bishop visited Germany in April 2015
- Finance Minister Cormann visited Germany in July and November 2015
- Minister for the Environment Hunt visited Germany in June 2015, January 2015 and September 2014
- President of the Senate Parry visited Germany in January 2015
- German Bundestag President Lammert visited Australia in October 2014
- German Finance Minister Schäuble visited Australia in February and September 2014
- Then Communications Minister Turnbull visited Germany in May 2014
- Trade and Investment Minister Robb visited Germany in March and July 2014.
On 28 January 2013, Australia and Germany signed a Strategic Partnership which marked the 60th anniversary of Australian-German bilateral relations. It established an annual Strategic Dialogue for senior officials to discuss current challenges and areas for further cooperation.
Australia and Germany signed a Joint Declaration on Resources and Energy Cooperation in 2011, recognising the value of further German investment in the Australian resources sector and boosting Australian raw material exports to Germany companies.
People-to-people links between Australia and Germany are well established and warm. Generations of German immigrants have made an important contribution to Australian society. In 2013, the bicentenary of the birth of Ludwig Leichhardt, a German-born naturalist and early explorer of Australia, was commemorated by science and research exchanges and cultural events in both countries. According to the 2011 census, just over 108,000 Australian residents were born in Germany, while almost 900,000 Australians claim German ancestry. In 2014-15, 26,327 working holidaymaker visas were issued to young Germans, Australia’s third-largest source worldwide, and second-largest source in Europe. Germany was the second-largest European market for tourists visiting Australia (over 186,900) in 2014.
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, Dr Nicholas Milton, Conductor and General Music Director, Saarländisches Staatstheater, and Barrie Kosky, who was appointed Managing Director of the 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 include a major exhibition of Australian Indigenous art in Cologne, the Berlin International Film Festival (Berlinale) which featured Australian films, and a tour by the Bangarra Dance Company.
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, and Australia’s third most important research partner overall. 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.
Germany is the third-largest source country of European students after Italy and the UK, with 4,571 German students enrolled to study in Australia in 2014. 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. Between 1953 and 2014, it sponsored 616 Australian researchers for visits to Germany and 115 German researchers for visits to Australia. 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 offering short placements of up to three months duration.
Bilateral economic and trade relationship
Bilateral trade links between Australia and Germany are substantial with the trade balance in Germany's favour. Germany is Australia’s fifth-biggest source of imports, selling goods and services to Australia worth A$13.9 billion in 2014. Australia’s total goods and services exports to Germany were worth only A$2.9 billion in 2014. Major imports from Germany are cars, medication, and measuring and analysing equipment. Major Australian exports to Germany are gold coins, precious metal ores and concentrates, and oil seeds. Australia’s trade deficit with Germany is smaller when global supply chains are taken into account, whereby natural resources exported from Australia to Asia are exported onto Germany as commodities and final manufactured goods – linking German demand to more Australian exports.
Germany is the fifth-largest destination for Australian investment abroad. The level of Australian investment in Germany at the end of 2014 was worth A$65 billion. Germany has less invested in Australia, with the level of total investment in 2014 valued at A$40 billion; A$15.8 billion of which was FDI. The German Central Bank, the Bundesbank, states that German investment in Australia is responsible for 110,000 jobs in Australia.
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).
Trade and investment successes
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 enjoy success 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 (cinema).