4 April 2006 - Revisions since last year's report are mainly statistical updates. For the biotechnology sector the EU is approving new events but a significant number of local politicians are still strongly opposed to this new technology. With respect to the wine market, efforts are underway to create a new national wine quality seal for wines to reflect traditional wine making practices in Germany.
Executive Summary
As a full member of the European Union (EU), all EU regulations fully apply to Germany.Germany’s tariff system and agricultural market regimes are dictated by EU policies.Preferential trading agreements, such as with Mercosur, South Africa, ACP countries or the Everything-But-Arms agreement with least developed countries, are negotiated and implemented at the EU level.As one of the founders of the European Economic Community and as the strongest economic power within the EU, Germany is the largest net contributor to the European budget.Nearly 43 percent of the total net contribution to the European budget was covered by Germany in 2004.Other major net-contributors are the United Kingdom, Netherlands, Italy, and Belgium.It is Germany’s long-term goal to lower its net contribution to balance the financial burden among European partner countries and to further harmonize European economic policies and trading rules.Germany has the longest borders with the new EU member countries Poland and the Czech Republic.As a result, Germany is the strongest supporter of integrating Central and Eastern European countries into the EU.So far, German agricultural exports into the new member states exceed imports from these countries.On the other side, German labor unionists and small businesses are concerned about the competition with low wages paid in the new EU member countries.Additionally, lower environmental and labor protection standards have the potential to make products from these countries considerably less expensive than those produced in Germany.
Germany is the world’s largest trading nation but about 64 percent of its export trade is with other EU countries.Exports comprised about 35 percent of Germany’s 2005 GDP of US$ 2.785 trillion.
German agricultural imports, including forest products from the United States, in 2005 amounted to US$ 1.67 billion.This accounts for 2.9 percent of total German agricultural imports.Major U.S. export items to Germany are soybeans, almonds, tobacco, wine and fish products.These products account for about 55 percent of U.S. agricultural exports to Germany.U.S. exports to Germany currently at risk are bulk commodities derived from biotech varieties because of labeling requirements for biotech foods and feed imposed in April 2004.
German exports of food and feed products are predominantly fully processed value added items.The leading group of products is dairy products, which accounts for about 14 percent of German agricultural exports.Exports of meat products accounted for 12 percent.Cocoa, bakery and candy account for another 15 percent.Tobacco products, coffee and tea and alcoholic beverages account for another 15 percent of German food exports.Major target regions are neighboring EU countries, which receive about 80 percent of all German agricultural exports.German exports to the United States have been rising steadily and surpassing the import volume from the United States for the first time in 2005, amounting to US$ 1.9 billion in 2005 or nearly 3 percent of total food and feed exports.Despite the strength of the Euro, German wood products exports to the U.S. more than tripled over the past five years, amounting to an impressive US$ 0.7 billion in 2005.
Germany’s position on agricultural trade policy has changed over the past six years and is less supportive of trade liberalization.Germany is still a supporter of a smooth phase-in process of further liberalization but opposes the U.S. WTO proposal for the Doha Round.In contrast to the U.S. proposal, Germany demands that non-trade issues such as animal welfare, labor protection, and environmental standards be included in the Doha negotiation process.Germany strongly supported the comprehensive EU midterm agricultural policy reform of 2003.Germany implemented a far-reaching decoupling system of agricultural subsidies from actual production.It is in the process of implementing a system of single but regionalized area premiums, which will reach the highest level of decoupling within the EU-15 by 2012 (see GAIN report GM4009.)German politicians currently argue that there is hardly anymore room for further lowering of market access barriers.In their view, the EU has done enough to open their markets to third country competition.It is frequently pointed out that the Everything-But-Arms agreement with least developed countries provides more market access to the needy countries than offered by any other industrialized country.
Export subsidies for shipments outside the EU are managed and regulated by the various EU commodity regimes.Germany does not grant any additional export subsidies.To a limited extent, exports to non-EU countries are supported by market promotion activities of Germany’s Central Market Promotion Agency for Agriculture (CMA) and the Wine Marketing Board.Both organizations are funded through mandatory check-off programs.