SPIEGEL ONLINE: Five months ago, US President George W. Bush, European Commission President José Barroso and German Chancellor Angela Merkel announced a trans-Atlantic economic partnership agreement in the Rose Garden at the White House. What exactly has happened since then?
Robert Kimmitt: In early November we have the first meeting of the Trans-Atlantic Economic Council, which will meet once a year from now on. The overriding common goal is to link our two economic zones more closely, so as to increase prosperity and jobs. Europe has set itself the goal to cut back on regulation and bureaucracy by 25 percent over the next five years. We would like to help them to achive that goal. In November we'll be talking about how to do that best.
SPIEGEL ONLINE:And your president is still interested in this closer cooperation with Europe?
Kimmitt: I'm going to the White House right after this interview to discuss the details with the president's advisors. You can be sure that American interest in tighter cooperation with Europe is substantial -- across party lines. We can already say that the "Open Skies" agreement, which makes less regulated air traffic between Europe and America possible, would not have come about without the new economic partnership. We have also made a lot of progress in the recognition of accounting and financial reporting standards. The goal now is to improve investment conditions on both sides of the Atlantic.
SPIEGEL ONLINE: An important issue in the economic partnership is cooperation to protect Western patents and intellectual property rights, which are being abused in China and other Asian countries. Is there any concrete progress in this area?
Kimmitt: This partnership between the United States and Europe is designed for the long term. We will pay very close attention to the issue of patent protection. China knows that the way our inventions are being treated today is not up to the standards of a modern global economy.
SPIEGEL ONLINE: The Chinese government is using its enormous foreign currency reserves to buy its way into US companies like the Blackstone Group. In light of the large US trade deficit with China, the US Congress is openly debating punitive duties and import quotas. Is a trade war brewing?
Kimmitt: I don't expect a trade war, neither with China nor with any other country. We have embarked on a strategic economic dialogue with China. We will take a look at Chinese minority holdings in US companies, which, as they have declared, they do not plan to increase -- so far there have not been any problems in this regard. We should pay more attention to investments by state-controlled companies in the United States and Europe. That's why we have just amended for security reasons our law on the scrutiny of foreign investments here in America.
SPIEGEL ONLINE: The German government has similar plans. How would you describe the status of economic relations between China and the Western industrialized nations today?
Kimmitt: Trade is strong and will continue to grow. But we also make it clear to the Chinese that they must open up their economy more -- to our products and our investments. We want trade that is free and fair.
SPIEGEL ONLINE: Until now, the Chinese have simply smiled and changed nothing.
Kimmitt: As part of our strategic economic dialogue, we have achieved progress on the opening of markets. But one of the biggest structural problems is still the undervalued Chinese currency, which contributes greatly to our enormous trade deficit with China. In fact, the Chinese agree that the exchange rate needs to be adjusted -- but we disagree on how quickly that should happen.
SPIEGEL ONLINE: Can the United States even exert pressure, or is there already too great a dependency on inexpensive Chinese products and the Chinese demand for US Treasury bonds?
Kimmitt: The Chinese will not do what they have implied. If they start selling their Treasury bonds, they will only hurt themselves financially.
SPIEGEL ONLINE: The US population is becoming increasingly skeptical over the issue. According to recent polls, only a small majority of Americans still believe that free trade is good for their country.
Kimmitt: I remember a poll that was done a few years ago, when three-quarters of all Americans said that foreign direct investment was bad for the United States. Then they were asked how they felt about foreign direct investments that create American jobs. Suddenly 75 percent were saying the whole thing wasnt so bad, after all. We cannot offer citizens theoretical concepts. We must explain to them, in concrete terms, that free global trade creates jobs at home.
SPIEGEL ONLINE: Trade with Iran is something you'd like to see become less free. The US wants German banks to cut business ties with Iran, as part of an effort to convince the mullah-controlled regime to cooperate in the nuclear dispute.
Kimmitt: You're mistaken. It isn't the United States but the United Nations that insists on these sanctions. The UN Security Council has already adopted two resolutions on the issue. Another one is expected next month. I will meet with my counterparts in Europe this week to discuss the most effective things we can do in the interim to get an answer from Iran. We Americans have already made it clear that we are willing to make concessions. If Iran shows a willingness to abandon its nuclear program, we will join the European diplomatic effort.
SPIEGEL ONLINE: Are you satisfied with European support for the Iran sanctions?
Kimmitt: German banks and companies have taken some very important steps. For example, the number of Hermes export guarantees for trade with Iran has gone down significantly.
SPIEGEL ONLINE: The Europeans see the US's call for tougher sanctions as a step closer to war. Can you rule out a war against Iran?
Kimmitt: The diplomatic approach has been and remains our priority. I think that the Europeans' approach to resolving the Iran crisis is extremely skillful. The only problem is that there are no real negotiating partners in Iran. We believe that economic sanctions could encourage the Iranians to enter into real negotiations.
SPIEGEL ONLINE: Germany's small and mid-sized businesses feel that America is rather nonchalant about the way it deals with the successful economic relations of other nations. Germans are proud of the fact that they regularly have a positive balance of trade to show for themselves at the end of the year, unlike the US, with its deficits running into the billions.
Kimmitt: We are not talking about cutting trade relations with Iran. We are merely interested in putting a stop to all business dealings that could further the development and proliferation of nuclear weapons technology. I see no alternative to severing these business ties. This has to be understood everywhere in Europe, Germany included.
SPIEGEL ONLINE: You are apparently unconcerned about the global economy, which sometimes reacts in a sensitive way to symbolic acts?
Kimmitt: America will continue to grow, and so will the world economy. This is still true, even after the current debates over the mortgage and credit crisis in this country. Just look at the extremely positive labor market figures we just released. Secretary Hank Paulson, my boss here at the Treasury Department, says: I have been in this business for the past 35 years, but I've never seen such a strong world economy.
SPIEGEL ONLINE: Alan Greenspan, the chairman of the US Federal Reserve for many years, has just leveled serious criticism at your government in a new book. He writes that the conservatives, in particular, hurt the nation with their tax cuts and higher deficits. Do you share or at least understand Greenspan's disappointment?
Kimmitt: I have great respect for Alan Greenspan for his life's work. But anyone who takes a sober look at the facts must disagree with him on this point. We have created new jobs for 49 months in a row. This has never happened before in US history, not even under President Ronald Reagan, for whom I worked. Eight million new jobs in this time period! The United States has become an incredible job machine, and this trend began in the month in which President Bush achieved his tax cuts.
SPIEGEL ONLINE: The only blemish is that you turned the budget surpluses of the Clinton era into budget deficits.
Kimmitt: Measured against the Maastricht criteria of 3 percent, we're with a deficit of 1,2 percent still a model pupil.
The interview was conducted by Gregor Peter Schmitz and Gabor Steingart