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Article - Promotion of Foreign Trade and Investment

Promotion of foreign trade and investment

Introduction

The Federal Government uses a broad toolbox of foreign trade promotion instruments to help German companies to develop and secure foreign markets.

Ein Containerschiff setzt am Hafen an.

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Germany’s promotion of foreign trade and investment is characterised by a division of responsibilities between the state and the private sector. Various institutions, such as German missions abroad, and Germany Trade and Invest (GTAI) and the German chambers of commerce abroad work together closely to deliver the best possible backing for German firms.

The German missions abroad are often the first point of contact for German companies that want to find out more about a country’s political and economic conditions, as well as its security situation. They can provide companies with support for their business projects and set up key contacts with market participants and government agencies. Another important form of support is the political backing provided by the embassies when German companies are involved in large-scale projects, participate in foreign tenders, or need to claim for damages for projects covered by federal guarantees.

Germany’s foreign trade and investment is a decisive factor in its growth and prosperity. As a major exporter, Germany is successfully integrated in international trade. At the same time, Germany is a business hub that also benefits from attracting foreign companies, which create additional jobs in the country.

In times of increased international competition, fostering successful economic development is more important than ever. This work is heavily supported by Germany’s business promotion agency, Germany Trade & Invest (GTAI). Across its 50+ branches worldwide, GTAI provides German and foreign companies with the comprehensive economic and industry data they need to have about foreign markets. It also offers them information on tenders, investment and development projects, and legal and customs matters. As part of the Digital Hub Initiative, GTAI focuses on marketing Germany as a centre for the digital industry worldwide, networking the Digital Hub Initiative and its 12 hubs with international partners (e.g. innovation networks and venture capitalists), and recruiting technology startups from abroad. In addition, GTAI promotes inward investment into Germany and helps German regions affected by structural change to internationalise their economies. GTAI and its services are funded by the Federal Ministry for Economic Affairs and Climate Action. Learn more

The German Chambers of Commerce Abroad, delegations and representative offices have 140 branches in 92 countries all working to support the activities of German firms on foreign markets. They are partially funded by the Federal Ministry for Economic Affairs. These institutions work in the interest of the economies of both Germany and the host country and provide wide-ranging services to foster business in both directions. They are thus also acting in the public interest by taking responsibility for a major aspect of the promotion of German foreign trade and investment. Learn more

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Your path into foreign markets – step by step

1

Find out about foreign markets

2

Get to know the markets first hand

3

Present your products and services abroad

4

Get advice on the ground

5

Secure your project financially

GTAI is your central port of call for information on foreign markets. Its extensive range of services includes information on global economic and industry trends, legal and customs regulations, investment and development projects, and invitations to tender. GTAI also operates iXPOS, the central platform for German foreign trade and information for companies preparing to internationalise their activities, tap foreign markets or export their goods. The portal bundles information from more than 70 institutions, organisations and networks that support German companies in conducting foreign business.

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Through our Market Entry Programme (MEP) and industry-specific export initiatives, you can find out about new markets abroad first-hand and tap them for yourself. The programme caters to forward looking industries such as energy, environmental technology, healthcare and civil security, but also to more traditional industries. Coordinated modules enable companies to choose the right measures for them.

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For the purpose of promoting foreign trade, the Federal Republic of Germany participates in selected trade fairs and exhibitions abroad under the the label ‘Made in Germany’. The Federal Government assumes a large part of the costs, making it easier for small and medium-sized companies in particular to participate in trade fairs abroad and, though them, to open up new markets. On the basis of proposals from the business community, the Federal Ministry for Economic Affairs and Climate Action works together with the Association of the German Trade Fair Industry (AUMA) to determine which foreign trade fairs and exhibitions should be participated in. The list is compiled in the first half of each year for trade fairs the following year.

Find out more (in German)

Companies wishing to establish or expand their business abroad can obtain advice at more than 140 German Chambers of Commerce Abroad (AHKs), delegations and representative offices located across 92 different countries. The close partnership of the AHKs with the Chambers of Industry and Commerce (IHKs) in Germany ensures that the needs of the business community are properly understood. Thanks to the good cooperation between the two sets of chambers at home and abroad, company enquiries can be handled directly by experts on the ground and the right solutions developed that are tailored to the market.

Find out more (website of the German Chambers of Commerce Abroad)

The Federal Government’s export credit guarantees (‘Hermes insurance’) protect exporters and banks providing export financing against the risks of payment defaults due to economic or political reasons. By issuing export credit guarantees, the risk of default is largely transferred to the Federal Government. Companies receiving cover from credit guarantees pay a premium commensurate with the risk. Federal export credit guarantees are an important element of risk management and in many cases are the reason why financial institutions are able to finance the transaction in question. Upon application and in exchange for a fee, the Federal Government also provides investment guarantees for companies that have decided to invest abroad, but wish to protect themselves against political risks. The government will only issue guarantees if the company is based in Germany and the investment enjoys an adequate level of protection under the legislation of the relevant country.

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Economic Affairs Ministry in dialogue

Strengthening economic relations and networks

The Federal Ministry for Economic Affairs and Climate Action is engaged in a regular dialogue with institutions in Germany and abroad which work on issues of foreign trade and investment. This dialogue aims not only to foster bilateral economic relations but also to promote the activities of German firms abroad.

Joint economic bodies and cooperation councils

Important instruments of bilateral economic relations include the joint economic commissions and cooperation councils (document in German), and the working groups on commerce and energy of the binational commissions agreed on by the governments of the partner countries. In this context, “joint” signifies that representatives both of the governments and of the business community (business associations, companies) participate in the regular events. The bodies work to promote trade in goods between the economic partners, to intensify mutual investment relations, and to boost technology transfer.

Africa Business Network

The Africa Business Network works to network established players and programmes in the areas of foreign trade promotion and development cooperation. It also provides German companies with a comprehensive range of information, advice and support as they plan their route onto the African market. The Africa Business Guide (website in German) published by GTAI sets out detailed information on business conditions in African markets, promising sectors as well as listing contact partners in Germany and on the ground. The office of the Africa Business Network leads companies to undertake an initial consultation on foreign trade promotion with the IHK Network Office Africa at DIHK Service GmbH or on development cooperation with the Agency for Economic Affairs and Development. It has a number of ‘Africa Partners’ on hand to answer companies’ questions throughout the market entry process. The office also offers new foreign trade promotion measures for market entry in Africa.

Business councils and business forums

In addition to the joint economic commissions and cooperation councils agreed between the governments, there are also many bodies organised independently by the business community. Many of these take the form of business councils or business forums (cf. Federation of German Industries).

High-level government consultancy provided by the German Economic Team on behalf of the Federal Ministry for Economic Affairs and Climate Action

The Federal Ministry for Economic Affairs and Climate Action finances high-level government consultancy for Ukraine, Moldova, Belarus, Georgia, and Uzbekistan. The main objective is to provide continuous support and guidance on economic reform processes. The team of consultants works closely with national research institutes and international organisations on a demand-driven basis, analysing current economic policy problems and developing specific recommendations for action for high-ranking decision-makers in these countries. The focus of the consultancy is on macro-economic analysis and other issues including fiscal, monetary, and exchange-rate policy, debt management, trade and integration policy, development prospects, and on ways to attract foreign direct investment and improve the investment climate. Advice on regulation and privatisation work is also provided. Implementation of the consultants’ recommendations for action also benefits German businesses on the ground.

Bilateral administrative partnerships

In many countries, outdated administrative structures, excessive bureaucracy and non-transparent decision-making processes create market barriers that are difficult to overcome. Often, governments lack the necessary expertise to address this situation. In order to help with this problem, the Federal Ministry for Economic Affairs and Climate Action has set up bilateral administrative partnerships. Under this instrument, it works together with the business community to identify structural challenges and offers German administrative expertise to partner governments. Deploying German civil servants can help modernise and reform foreign administrations and, in the medium term, improve the business environment for both local companies and German firms on the ground.

The administrative partnerships are essentially based on the EU instrument of Twinning (article in German), via which the Federal Ministry for Economic Affairs and Climate Action is also involved in many partner countries. They are led by administrative experts who draw upon upon twenty years of networking experience and can offer a high level of technical and project expertise.

Container Terminal

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Export initiatives: finding new markets

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Making foreign business possible

Financing and insurance

The Federal Government helps banks and German firms in all sectors to implement and finance international projects. The Federal Republic of Germany is also a reliable partner for the insurance for exports and investments.

By concluding bilateral investment treaties (page in German) with developing and emerging economies, the Federal Government creates a stable environment for German foreign direct investment. The treaties furnish the investors with comprehensive legal protection for their investments under international law and make it easier for SMEs in particular to develop foreign markets. Also, they form the basic precondition for the assumption of federal guarantees for German foreign direct investment in order to provide coverage against political risks.

On 5 November 2016, the Federal Government adopted key points for a new export strategy. The aim of the measures is to strengthen the competitiveness of German companies bidding for strategic large-scale projects abroad. As a first step, life was made easier for exporters needing to insure high volumes of services/quantities of parts supplied to projects abroad.

The instruments of AKA Bank, KfW-IPEX and DEG - Deutsche Investitions- und Entwicklungsgesellschaft m.b.H. are available to finance exports and projects abroad. Find out more (article in German)

Export credit guarantees (Hermes insurance)

State export credit guarantees are available to all German exporters as well as to the banks financing these exports. They can be used to insure against default on repayment claims due to economic and political reasons, with the exporting company paying a premium commensurate with the risk. They do not include funding, i.e., cash grants or subsidies.

Export credit guarantees supplement the products provided by private credit insurers. They are primarily called upon in cases where the private sector does not offer any (adequate) insurance cover. These especially include exports of goods and services to emerging and developing economies. Export credit guarantees particularly help SMEs to tap hard-to-access markets and to carry on doing business even when times are difficult. Find out more

Investment guarantees

On application, the Federal Government provides guarantees for investments by Germany-based companies in developing and emerging economies and former countries in transition in order to insure them against political risks. The investment must be eligible for assistance and enjoy adequate legal protection. Commercial risks are not covered. Find out more

Guarantees for untied financial loans

Guarantees for untied financial loans form an integral part of the Federal Government’s raw materials strategy. They provide cover for loans from financial institutions based in Germany (and, upon certain conditions, also from foreign banks) for raw materials projects, protecting against the risk of default on repayments for commercial or political reasons. By doing so, they make an important contribution to ensuring that the Federal Republic of Germany is supplied with the raw materials that it needs. Untied financial loans are not tied to German supplies or services, but are rather project-based. Find out more

Vertragspartner zu Investitionsschutzabkommen; Quelle: Fotolia.com/Rawpixel

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Investitionsschutz

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Boosting opportunities to compete for large-scale projects

Strategic support for projects abroad

The German instruments to promote foreign trade and investment have basically proved their worth. However, competitors from third countries are increasingly entering tenders for foreign projects backed by political support and a full range of financing options. This creates competitive disadvantages for German suppliers.

The Federal Government’s Strategy Paper "A fresh stimulus for tenders for major strategic international projects – improving Germany’s chances" (paper in German) sets out key points which provide for the following in particular:

  • better coordination of the political backing for projects in the strategic interest of the Federal Republic of Germany
  • better use of the existing instruments to promote foreign trade and investment, with these instruments to be supplemented in certain cases
  • supplementing of the instruments to finance strategically relevant projects via large low-interest loans in certain cases
  • intensification of the international initiatives for further developing export financing rules

The Federal Government Coordinator for Projects Abroad in the Strategic Interest of the Federal Republic of Germany, Udo Philipp, works together with a team of colleagues from the Ministry to classify specific projects as foreign projects in the interest of Germany. This classification indicates the will of German government to provide special political support for the project. Contact: Division for Strategic Projects Abroad, Africa Business Network.

Containerschiff am Hafen zum Thema Außenwirtschaftsrecht; Quelle: Colourbox.de

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Außenwirtschaftsrecht

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Business opportunities through international organisations

Supporting German firms in international tenders

The Federal Government advises and supports German firms on contracts advertised by the United Nations, the World Bank Group, regional development banks and other international organisations.

On behalf of the German Federal Ministry for Economic Affairs and Climate Action, GTAI also offers a broad selection of international tender information. It lists international tenders made by the KfW Development Bank as well as current tenders linked to development projects led by the World Bank, European Commission, United Nations, Inter-American Development Bank and Asian Development Bank.

As one of the world’s leading purchasers, the United Nations buys goods and services worth just under USD 20 billion each year. The main procurement centres include New York, Copenhagen, Rome and Geneva, and the procurement takes place decentrally by the various UN agencies. Tenders and statistics can be accessed centrally, at the United Nations Global Marketplace.

The leading goods bought by the UN include pharmaceutical products, foodstuffs and construction services, and the main services used are in the field of transport, technology and administrative services. On behalf of the German Federal Ministry for Economic Affairs and Climate Action, the German chambers of industry and commerce abroad in New York, Milan and Copenhagen offer support with developing business contacts with the UN.

International, European and national UN procurement seminars as well as sector-specific events organised on behalf of the German Federal Ministry for Economic Affairs and Climate Action not only provide opportunities for companies to find out what they need to know, but also offer a platform where they can enter into direct exchange with UN organisations.
In New York and Geneva, staff at the permanent representations to the United Nations (staff seconded from the Economic Affairs Ministry) are also responsible for procurement issues. They stay in contact with the relevant UN offices and are available as a contact for German firms.

World Bank Group

The International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID) are jointly known as the World Bank Group. The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) form the World Bank in the narrower sense. Their main task is to promote economic and social progress in developing countries in order to help people live better lives.

Every year, the World Bank provides funding worth approximately USD 40 billion to projects in developing and emerging economies. Up to 100,000 contracts are concluded with the private sector every year. The World Bank’s website provides further information about the procurement procedures.

Regional development banks and other organisations

Regional development banks offer further business opportunities for German companies. Their aim is to promote economic and social development. They include the following:

  • African Development Bank (AfDB)
  • Asian Development Bank (ADB)
  • Asian Infrastructure Investment Bank (AIIB)
  • European Bank for Reconstruction and Development (EBRD) /
  • European Investment Bank (EIB)
  • Inter-American Development Bank (IDB)
  • Caribbean Development Bank (CDB)
  • International Fund for Agricultural Development (IFAD)
  • Organisation for Economic Co-operation and Development (OECD)
  • International Atomic Energy Agency (IAEA)

Publications

Further information

  • 01/12/2021 - Press release - Promotion of Foreign Trade and Investment

    ‘Africa advice vouchers’: Economic Affairs Ministry launches new service for SMEs to promote economic activity in African markets

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  • 02/11/2021 - Press release - Foreign Trade

    Launch of new research programme "Economic Research on Africa"

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  • 02/11/2021 - Press release - Foreign Trade

    New hydrogen task force: Germany and United Arab Emirates to expand bilateral energy partnership

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  • 06/10/2021 - Press release - European Economic Policy

    Cloud IPCEI: 12 EU Member States and around 180 companies enter next phase

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  • 27/08/2021 - Press release - International Cooperation

    G20 Compact with Africa Conference: strengthening the partnership with Africa to foster German investment and create prosperity

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  • 25/08/2021 - Press release - Foreign Trade and Investment Law

    Federal Cabinet adopts amended Foreign Trade and Payments Ordinance bringing its trade and payments legislation in line with the EU’s new Dual-Use Regulation

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  • 30/06/2021 - Press release - The Economy

    5-point package of measures extended: Economic Affairs Ministry continues its support for German export industry during coronavirus pandemic

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  • 20/05/2021 - Press release - Foreign Trade

    Meeting of EU Trade Ministers marks fresh start in trade policy

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Worker in front of containers symbolizes Promotion of foreign trade and investment; Source: Getty Images/Yur_Arcurs