trade profile denmark

8/9/2019 Trade Profile Denmark

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2010Submitted To: Sir Asim

Submitted By: IQRA KHAN

MB-08-12

4/11/2010

TRADE PROFILE DENMARK-2010


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OFFICIAL NAME : Kingdom of Denmark

GEOGRAPHICAL LOCATIONGEOGRAPHICAL LOCATION

Denmark is a Scandinavian country in Northern Europe and the senior member of the Kingdom of

Denmark. It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway,

and bordered to the south by Germany. Denmark borders both the Baltic and the North Sea. The

country consists of a large peninsula, Jutland and many islands.

Geographic coordinates:, 56 00 N, 10 00 E

GEOGRAPHICAL SIGNIFICANCE

Denmark has long controlled the

approach to the Baltic Sea;before the digging of the Kiel

Canal water passage to the Baltic

was possible only through the

three channels known as the

"Danish straits".Denmark

receives dues from parties who

pass through these straits for

trade. Denmark shares a border

of 68 kilometres with Germany to

the south and is otherwise

surrounded by 7,314 kilometres

of coastline. Since 2000 Denmarkhas been connected by the

resund Bridge to southern

Sweden.Denmark controls Danish

Straits (Skagerrak and Kattegat)

linking Baltic and North Seas; about one-quarter of the population lives in greater Copenhagen.of

total commodity exports, and Denmark's immediate neighbours continue to be, by far, the most

important customers. By way of example, Germany, Sweden and the United Kingdom alone account

for almost 40% of Danish exports.

TRADE PROFILE
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DEMOGRAPHICAL STATISTICSDEMOGRAPHICAL STATISTICS

Land Area - 43,100 sq km (excluding Greenland and the Faroe Islands)

Land use: Arable land: 54.02%

Permanent crops: 0.19%

Other: 45.79% (2001)

Land boundaries: Total: 68 km

Border countries: Germany 68 km

Population :5,500,510 (UN,2009)

Annual Population Growth Rate : 0.3% (2009)

Capital City : Copenhagen

Language : Danish

Currency : Danish krone (DKK)

Monetary unit : 1 krone = 100 ore

Internet domain : .dk

Ports and terminals : Aalborg, Aarhus, Copenhagen, Ensted, Esbjerg, Frederica,

Kalundborg

ECONOMIC OVERVIEWECONOMIC OVERVIEW

Denmark's industrialized market economy depends on imported raw materials and foreign trade.

Within the European Union, Denmark advocates a liberal trade policy. Its standard of living is

among the highest in the world. Denmark is a net exporter of food and energy. Its principal exports

are machinery, instruments, and food products. The United States is Denmark's largest non-European trading partner, accounting for 4.4% of total Danish trade in 2008. Aircraft, computers,

machinery, and instruments are among the major U.S. exports to Denmark. Among major Danish

exports to the United States are industrial machinery, chemical products, furniture,

pharmaceuticals, canned ham and pork, windmills, and plastic toy blocks (Lego). In addition,

Denmark has a significant services trade with the U.S., a major share of it stemming from Danish-

controlled ships engaged in container traffic to and from the United States (notably by Maersk-

Line). There were 402 U.S.-owned companies operating in Denmark in 2007. Denmark enjoys a


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TRADE PROFILE DENMARK-2010comfortable balance of payments surplus.

Like the rest of the world Denmark is affected by the global economic crisis. As of October 2009,

unemployment was rising and private consumption had contracted significantly. Exports had fallen

dramatically, also due to the devaluation of trading partners currencies, especially those of

Sweden, Norway, and the U.K., but exports had stabilized at about 20% below previous levels. Acontraction of GDP is expected in 2009, with estimates ranging from 3% to 5%. Denmark entered

recession in mid-2007 before the onset of the global economic crisis, and the slowdown has been

considerable. The Danish economy contracted by 1.1% in 2008 and 5.3% in the first half of 2009. In

2008, the budget surplus was $11.79 billion. In 2009 a deficit of $668 million is expected.

Unemployment is relatively low at 6.4%, but up from 3% in June 2008, and is expected to peak just

under double digits in early 2011. Most local observers agree that Denmark is on the path to a slow

recovery and forecast economic growth from the 3rd or 4th quarter of 2009 onward.

ECONOMIC STATISTICSECONOMIC STATISTICS

GNI per capita : US $59,130 (World Bank, 2008)

GDP : 342,672 millions of US dollars (2009)

GDP growth rate : 2009: -2.4% (estimate) ,2010: 0.9% (forecast)

PPP/GDP: 201,249 millions of International dollars (2009)

Inflation : 1.90% (feb 2010)

Budget deficit : $16.57 billion( 2009)

Trade deficit : 6.4 billion DKK (Jan 2010)

Fiscal balance/GDP : 3.000 (2008)

Current account balance : $9.103 billion (2009 est.)

Exchange rates : Danish kroner (DKK) per US dollar - 5.4742 (2009), 5.0236 (2008), 5.4797

(2007), 5.9468 (2006), 5.9969 (2005)(note: the Danish krone is pegged to the euro)

Debt - external: $607.4 billion (30 June 2009)

Central bank discount rate : 1.2% (31 December 2009)

GDP - composition by sector :

agriculture: 4.6%

industry: 30.7%

services: 64.7% (2009 est.)

Unemployment rate : 4.3% (2009 est.)


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RECENT ECONOMIC POLICIESRECENT ECONOMIC POLICIES

The government unveiled an expansionary draft 2010 budget on August 25th, promising to

increase public spending in a bid to help lift the economy out of the downturn. The fiscal effect,

which measures the impact of the budge on economic activity, is estimated to be 0.7% of GDP in

2010, less than the 0.9% fiscal boost in 2009, but still a relatively large expansion.

GOVERNMENTGOVERNMENT

Political system - Parliamentary democracy and constitutional monarchy

National government - Liberal-Conservative coalition

National legislature - Folketing (unicameral parliament)

Last election - November 2007

Next election due - November 2011

Head of State - Queen Margrethe II (acceded to the throne in January 1972)

Head of Government - Prime Minister Lars Lokke Rasmussen (Liberal Party)

Foreign Minister (Conservative People's Party) - Per Stig Moeller

FOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENT

Denmark is a small, open and strong economy, highly dependent on trade with other countries. The

UK is currently Denmarks third largest supplier, exporting 3.6 billion worth of goods and services

in 2007. Denmark is the UK's 18th most important export market exporting 2 billion worth of

goods and services in 2007.


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TRADE PROFILE DENMARK-2010Foreign direct investment (FDI) inflows into Denmark were worth an average US$9.5bn per year

during 2004-8, having recovered from global downturn in mergers and acquisitions during the early

years of the current decade. FDI inflows stood at an estimated US$10.9bn in 2008. This helped to

raise the stock of inward FDI to an estimated US$142.1bn, equivalent to 41.7% of GDP and

US$25,874 per person. In both absolute and relative terms, Denmark tends to attract less FDI than

many other small and medium-sized EU member states. However, the stock of investment per headis higher than in the large member states.

The Danish economy is closely integrated in the international division of labour in the sense

that import and export are large as measured in terms of GDP, currently more than 45 % (Gjerding,

2005). However, the Danish economy is mostly integrated with neighbouring economies, notably

Germany, Sweden and the UK. The role of proximity in international integration is marked in the

case of FDI as well. In general, Denmark experiences an outward capital flow that is larger than the

inward flow, however with the important exceptions of USA and Sweden that account for almost

half of FDI in Denmark, both among the top-five Danish trading partners. 70-80 % of the inward and

outward FDI in the form of equity capital. The profitability on outward equity capital during recent

years has been around 6 % while the profitability on inward equity capital has been slightly larger.

The difference may reflect that financial intermediation and business services account for half of

the inward flow while the outward flow is more evenly distributed among industries.

FDI inflow: US$10.921 million (2008)

FDI outflows: US$28.868 million (2008)

Stock of direct foreign investment - abroad: $204.5 billion (31 December 2009 est.)

Stock of direct foreign investment - at home: $160.4 billion (31 December 2009 est.)

Reserves of foreign exchange and gold: $72.66 billion (31 December 2009)

FDI OPPORTUNITIES FOR DENMARKFDI OPPORTUNITIES FOR DENMARK

As foreign trade accounts for most of its GDP, Denmark has a strong interest in the free exchange

of goods and services with other countries. It is an excellent market for UK companies because of

its strong purchasing power, ease of access and widespread use of English. Denmark is an ideal

starter market for small to medium companies with no previous exporting experience.


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TRADE PROFILE DENMARK-2010UK Trade & Investment has identified these priority sectors for 2008/9:

Aid-funded business

Creative & Media

Education & Skills

Financial & Legal Services

ICT

Life sciences (Biotechnology, Pharmaceutical and Healthcare)

Mass Transport (Rail, Airports, Ports)

Giftware, jewelary & Tableware

Chemicals

Food & Drink

MARKET ACCESSMARKET ACCESS

1) IMPORT REGULATIONS AND CUSTOMS DUTIESIMPORT REGULATIONS AND CUSTOMS DUTIES

Regulations

In accordance with its European Union membership, Denmark applies the European Union (EU)

rules that are in force in all European Union countries. While the EU has a rather liberal foreign

trade policy, there is a certain number of restrictions, especially on farm products, following the

implementation of the CAP (Common Agricultural Policy): the application of compensations on

import and export of farm products aimed at favoring the development of agriculture within the EU,

implies a certain number of control and regulation systems for the goods entering the EU territory.

Moreover, for sanitary reasons, regarding Genetically Modified Organisms (after being allowed in

the European territory), their presence should be systematically specified on packaging. The beef

cattle bred on hormones is also forbidden to import.

The BSE crisis (often called the "mad cow disease") urged the European Authorities to strengthen

the phytosanitary measures to make sure of the quality of meats entering and circulating in the EU

territory. The principle of precaution is now widespread: in case of doubt, the import is prohibited

until proof is made of the non-harmfulness of products.

Customs duties

Since the first of January 1993, the European Union, of which Denmark is part, has been a single

market, without any customs barriers, which ensures free circulation of goods. Trade within the

European Union is totally free from customs duties, provided that the merchandises' country of

origin is one of the 25 European Union Member States. Nevertheless, when introducing

merchandises into Denmark, exporters shall fill in an intrastate declaration.

When the country of origin of the merchandises which are exported to Denmark is not part of the

European Union, customs duties are calculated Ad valorem on the CIF value of the goods, in

accordance with the Common Customs Tariff (CCT).

The duties for non-European countries are relatively low, especially for manufactured goods (4.2%

on average for the general rate), however textile, clothing items (high duties and quota system)


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TRADE PROFILE DENMARK-2010and food-processing industry sectors (average duties of a 17.3% and numerous tariff quotas, PAC)

still know protective measures.

In order to get exhaustive regulations and customs tariffs rates regarding their products, exporters

shall refer to the TARIC code and its database, which includes all applicable customs duties and all

customs trade policy measures for all the goods.

Import taxes

Excise duties are also levied on certain products, especially on spirit.

2)2) DISTRIBUTIONDISTRIBUTION

The Danish population has one of the highest income levels in the European Union. The Danish

consumer therefore is one of most demanding in Europe. Retail trade reached 30.6 million Euros in

2004 showing a growth of 6.2% as compared to 2003.

The Business to Consumer (B to C) market

Contrary to other European countries, neighbourhood stores play an important role in the Danish

distribution market. According to the Danish office of statistics, in 2004 there were 23,573 legal

entities registered in the wholesale trade and 26,335 entities in the retail trade. The mass market

sector is dominated by two groups:

i. the consumer co-op F.D.B, which is the leading Danish distributor (with 33% of the market-share

in 2003) and owner of many stores like Kvickly, Brugsen, OBS, Irma and Fakta. F.D.B supplies

1,200 points-of-sale (hypermarkets, supermarkets, mini-markets and discount stores).

ii.the group Dansk super-marked with 465 points-of-sale; its main stores being Bilka and Netto

Shopping centers and malls generated a sales turnover of 5.5 billion euros in 2003 equal to 20% of

the retail trade. The main shopping center is Field's Copenhagen with an area of 115,000 square

meters. The evolution of distribution circuits is characterized by mergers of central buying officesand the creation of new chains allowing their members to supply themselves at lower cost and thus

consolidate their positions in the market.

The Business to Business (B to B) market

Agents exist in numerous sectors, such as furniture, textiles, clothing, tableware, interior

decoration, etc. Their margins generally are between 10% to 15% depending upon the activity

sector. Franchises are very common in the country. In 2002, there were 128 networks and about

5,419 franchises. Distribution franchises are more common than service franchises , with a total of

3,848 units. Generally speaking, the Danish government supports the F.D.I. (Foreign Direct

Investment). A certain number of important tax benefits are indeed offered to investors in

Denmark. Moreover, Danish firms benefit from favourable rules regarding depreciation. Theorganization "Invest in Denmark was created for international investors in order to lend them

assistance during the decision-making process.

3)3) TRANSPORTATION OF GOODSTRANSPORTATION OF GOODS

By road


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TRADE PROFILE DENMARK-2010The road network extends over 71,500 km, of which 850 km are highways. Considering that

Denmark is composed of around 500 islands, big projects were initiated under the aegis of the

Ministry of Transport in order to improve domestic traffic. The bridge over the Oresund (18 km),

inaugurated on the 1st of July 2000, now connects Copenhagen and Malm in Sweden, thus

accelerating the exchanges by road between the 2 countries. The other large road and railway

infrastructure created over the last few years is "The Great Belt" which connects the cities ofHalsskov and Knudshoved via Sprogo in the center of the country.

By rail

Denmark has 2,881 km of railroad lines, divided into two networks: the network connecting the

island of Seeland and Falster, and the network connecting Jutlande and Fionia. In 1999, the railway

transported about 7.5 million tons of goods, that is 10% of the global transportation. The national

company is the DSB: Danish railways will have to face other operators within the next years, since

the Danish government has decided to open up the market to competition.

By sea

The main Danish ports are Copenhagen, Arhus, Esbjerg on the national and international level.Arhus is the first port of containers and has an important centre of oil activity in the North Sea with

Esbjerg's port, which is the first largest fishing port. Denmark possesses a very important

commercial fleet which is one of the most modern in Europe.

Ferries: Denmark has very developed ferries network especially with the company Scandlines AG,

joint property of the Danish and German governments, it is one of the biggest ferries company in

the world and ensures regular connections between the Danish, Swedish, German ports and the

Baltic countries.

By air

Denmark holds 30% (with Norway and Sweden) of SAS (Scandinavian Airline System shares). The

international airports are located in Copenhagen, in Alborg, Arhus, Odense and in Ronne (on theisland of Bornholm, in the Baltic Sea). The airport of Copenhagen is a real hub for goods transit

entering or leaving Scandinavia, from the Baltic region to Northern Europe. Indeed more than 135

destinations are served from this airport which ranks 45th in the world due to the quantities of

freight transported annually.

4)4) PATENTS AND BRANDSPATENTS AND BRANDS

The Committee of Normalization and Metrology is the body working out the laws of standardization

and approval in Denmark. The purpose is to harmonize these standards with the European ones.The standard ISO 9000 is a factor of competitiveness, although it is optional.

TRADE & COMMERCIAL ASSOCIATIONSTRADE & COMMERCIAL ASSOCIATIONS


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TRADE PROFILE DENMARK-2010 Denmark is a member of the European Union (although not the monetary union) and, as such,

participates in various bilateral or regional Trade Agreements signed by the EU. These are seen asa complement to results obtained multilaterally at WTO. Of note, markets like the USA, Canada,

Japan and China are not presently covered by EU bilateral or regional free trade agreements. It joined NATO in 1949 and the EEC (now the EU) in 1973. However, the country has opted out of

certain elements of the European Union's Maastricht Treaty, including the European Economic

and Monetary Union (EMU), European defense cooperation, and issues concerning certain justiceand home affairs

Customs agreements with Australia,Canada, United States, Mexico and South Korea.The EU-EFTA (European Free Trade Association) Agreement was signed in 1972 with Iceland,

Liechtenstein, Norway and Switzerland,but left it in 1973 to join EEC(European EconomicCommunity)

Free trade agreements with Bulgaria and Romania that hope join European Union in 2007. Mediterranean Agreements , concerning: Turkey, Israel, Jordan, Morocco, Palestinian Authority,Tunisia, Egypt, Lebanon and Syria.

The ACP agreements, with 95% of the tariff lines with a 0% rate for developing countries in Africa,Caribbean Islands and Pacific.

The Cotonou Agreement, signed in the year 2000, defines the new EU-ACP partnership.The Generalised System of Preferences (GSP ): 54% of the tariff lines are at 0% for developing

countries outside the ACP framework. ADF(African development Fund) in 1973 ADB(Asian development bank) in 1966 CBSS (Council of baltic Sea states) formed in 1992 CE(Conformit Europenne) EBRD(european bank for reconstruction and Development) ADB(Asian development Bank) EIB (European Investment bank) joined in 1970 IADB (inter-American development bank) joined in 2004 ICFTU(International Confederation on Free Trade Union) IMF(International Monetary Fund) joined in 1973 OECD(organization for Economic Cooperation and Development)-OBSERVER UNO(United Nations Organization) joined in 1945, UN Security Council (temporary) UNCTAD(United nations Conference on trade and development) WTO(World Trade Organization) joined in 1995 EEA(european Economic Area) formed in 1994

IMPORTS / EXPORTSIMPORTS / EXPORTS

EXPORTS: $91.9 billion (2009 est.)

Leading export commodities: machinery and instruments, meat and meat products, dairy

products, fish, pharmaceuticals, furniture, windmills

industrial production/manufactured goods 73.0%

machinery and instruments were 25.5%

fuels, chemicals, etc. 13.3%

agricultural products 11.8%
http://secretariat.efta.int/presentation/http://europa.eu.int/comm/trade/bilateral/acp/index_en.htmhttp://www.acpsec.org/gb/cotonou/accord1.htmhttp://europa.eu.int/comm/trade/bilateral/acp/index_en.htmhttp://www.acpsec.org/gb/cotonou/accord1.htmhttp://secretariat.efta.int/presentation/


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TRADE PROFILE DENMARK-2010 pork and pork products 4.3%

fish and fish products 2.1%

Exports - partners: Germany 17.8%, Sweden 14.5%, UK 8.1%, Norway 5.7%, US 5.4%,

Netherlands 4.8%, France 4.7% (2008)

IMPORTS: $84.07 billion (2009 est.)

Leading Imports: machinery and equipment, raw materials and semi manufactures for

industry, chemicals, grain and food stuffs, consumer goods.

raw materials and semi-manufactures 42.6%

consumer goods 28.6%

capital equipment 11.6%

transport equipment 8.1%

fuels 7.9%

Imports - partners: Germany 21.1%, Sweden 13.9%, Netherlands 6.7%, Norway 6.3%,

China 5.7%, UK 5%, US 3.2% (2008)

ENERGY TRADE

Oil - exports : 267,600 bbl/day (2008)

Oil - imports: 137,000 bbl/day (2008)

Electricity - exports: 11.36 billion kWh (2008)

Electricity - imports: 12.82 billion kWh (2008)

Natural gas - exports: 5.516 billion cu m (2008)

Natural gas - imports: 0 cu m (2008)

Electricity - exports: 11.36 billion kWh (2008)

Electricity - imports: 12.82 billion kWh (2008)

Top 5 Exports from Denmark to the Rest of the World, 2008

Commodity US $Millions Share of total

1. Nuclear reactors, boilers, machinery, etc $16,293.9 14%

2. Mineral fuels, oils, distillation products, etc $13,276.3 11%

3. Electrical, electronic equipment $10,223.3 9%


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4. Pharmaceutical products $7,480.0 6%

5. Meat and edible meat offal $5,310.9 5%

Total $115,820.1 100%

Top 5 Imports into Denmark from the Rest of the World, 2008

Commodity US $Millions Share of total

1. Nuclear reactors, boilers, machinery, etc $14,774.1 13%

2. Electrical, electronic equipment $10,856.0 10%

3. Mineral fuels, oils, distillation products, etc $8,905.2 8%

4. Vehicles other than railway, tramway $8,885.9 8%

5. Plastics and articles thereof $4,784.6 4%

Total $110,817.5 100%

Provincial Distribution of Exports to Denmark, 2009

Province Cdn $Millions Share of total

1. Quebec $442.1 74%

2. Ontario $55.2 9%

3. Newfoundland & Lab. $34.2 6%

4. Nova Scotia $18.2 3%

5. Alberta $14.8 2%

6. New Brunswick $13.1 2%

7. British Columbia $9.6 2%

8. Manitoba $7.6 1%

9. Prince Edward Is. $2.1 0%

10. Saskatchewan $0.6 0%

11. Nunavut $0.0 0%

12. Yukon $0.0 0%

13. Northwest Terr. $0.0 0%

Canada Total $597.4 100%


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MAJOR EXPORTS AND IMPORTS BETWEEN DENMARK AND THE UNITED STATESMAJOR EXPORTS AND IMPORTS BETWEEN DENMARK AND THE UNITED STATES

For the non-European Nations, the United States is Denmarks largest trade partner. As evidence tothis, it was recorded that the US accounts for 5% of the total Danish trade for 2007. As recorded inthe world trade of Denmark for 2007, exports to other countries was comprised of manufacturedgoods, machinery and instruments, agricultural products, fish and shellfish and fuel. Importscoming from other members of global business were raw materials and semi-manufactures,consumer goods, capital and transport equipment and fuel. Leading trade partners includeGermany, Norway, Sweden, United Kingdom and the United States.

The exports coming from the United States to Denmark were aircraft, machinery, computers andinstruments while imports to the former from the latter were industrial machinery, furniture,chemical products, pharmaceutical preparations, canned goods and toys. As recorded by the USCensus Bureau, total US exports to Denmark as of September 2008 amounted to $2.09 billion andthe imports had a total of $4.84 billion. For the year 2007, the following data were noted:

Danish Exports to US. The total exports of Denmark to the US for the year 2007 were recorded at$6.07 billion. Of this total amount, 19.44% or $1.18 billion was earned by medicinal, dental andpharmaceutical preparations. Completing the top of the list were: generators, transformers andaccessories; other industrial machinery; clocks, portable typewriters and other household goods;other scientific, medical and hospital equipment; industrial engines, pumps, compressors andgenerators; meat products, poultry and edible animals; toys, shooting and sporting goods andbicycles; finished metal shapes and advanced manufactures excluding steel; and minimum valueshipments. Minimum value shipments were sold at a total of $149.99 million which is 2.47% of theyear's total.

Danish Imports from the US. Goods coming from the United States to Denmark earned a totalamount of $2.93 billion for 2007. Out of this total, 9.44% or $276.52 million went to the sales ofcivilian aircraft. Included on top of the list were: medicinal equipment, civilian aircraft parts;

telecommunications equipment; semiconductors; computer accessories; minimum valueshipments; pharmaceutical preparations; other chemicals; and complete military aircraft. The lastitem was sold at an amount of $84.27 million which is 2.88% of the total for the said category.

Fastest-Growing US Exports to Denmark. The prime commodities from the US entering theboundaries of Denmark were said to make their own share in the market. Commendable goodswhich had surprisingly increased in sales from 2006 to 2007 were prevalent. Topping the list wasmanufactured tobacco which earned a total of $278 thousand. The sales of the said productincreased by 631.82% from 2006. Other remarkable items were: engines and turbines for militaryaircraft; other commercial vessels; copper; and pulpwood and woodpulp. The last item was sold at$3.22 million or 425.79% higher than in 2006.

Fastest-Growing US Imports from Denmark. The imports of the US from Denmark made their ownstint in the market as well. As evidence to this, several goods improved their sales marks.Plywood and veneers were sold at a total of $4.3 million in 2007 which was 1,155.91% higherthan in 2006. Other products which made it to the sales percentage increase rankings were:synthetic rubbers, wood, cork, gums and resins; miscellaneous non-ferrous metals; complete andassembled goods; and unmanufactured leathers and furs. Unmanufactured leathers and furs weresold for a total of $101 thousand which was 272.97% higher than in 2006.

TRADE AGREEMENTS BETWEEN THE US AND DENMARKTRADE AGREEMENTS BETWEEN THE US AND DENMARK

To strengthen the bonds of friendship and trade between the two nations, the US and Danishgovernment signed some agreements. They have one which focused on commerce, navigation andfriendship and another for military security. Here are the vital parts of each treaty:


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TRADE PROFILE DENMARK-2010 Denmark Friendship, Commerce and Navigation Treaty. This treaty was signed in Copenhagen in

October 1, 1951. At around 10 years later, on July 30, 1961, the pact was entered into force bythe two nations. This was signed in order to strengthen not only the alliance between US andDenmark but more so to build a foundation for the trade of the two countries. Furthermore, itencouraged the mutual benefits of investment and free trade. Both companies and nationals wereallowed to enter the territorial jurisdiction of the other without prejudice to the resources of both

countries. Just like any other trade agreement, the main concern of this pact was to promotecamaraderie along the line of trade.

Modernization of US Base in Greenland. Denmark and Greenland signed an agreement tomodernize the US Air Force Base situated in the latter. This pact was formed for the future USmissile shield defense field. This was done for security reasons especially that there is noassurance to what the future holds when it comes to international terrorism. As part of themodernization plan, a radar facility needs to be installed. This would enable the US to filter theschemes on war of other nations against them.

CURRENT ECONOMIC & TRADE TRENDS IN DENMARKCURRENT ECONOMIC & TRADE TRENDS IN DENMARK

Wide fiscal deficit : The Danish economy was hit hard, if belatedly, by the global economic crisis

but is projected to recover gradually as world trade regains momentum and as support is

provided by the large automatic stabilisers, substantial fiscal easing and low interest rates.

Private consumption fell very steeply in late 2008 and early 2009 but less so subsequently, as it is

being supported by tax cuts, withdrawals from the special pension scheme and less depressed

equity prices. Sentiment is up in manufacturing and industrial production seems to have

stabilised at a low level, while the number of new bankruptcies is coming down.

Trade down : The Danish economy is currently experiencing its worst recession in over four

decades. The downturn, which started with the unwinding of the property boom, has now beencompounded by the trade and financial effects of the global economic crisis.

Severe capacity pressures : After years of strong expansion, the construction boom is now overand falling house prices have put an end to debt-financed consumption growth. As the impact ofglobal financial turmoil materialises, exports are likely to remain weak during 2009, leadingbusinesses to cut back investment.

Competitiveness warning : GDP growth has slowed, but the positive output gap remains large,with labour and capacity shortages evident. The inflow of workers from abroad has allowedemployment to rise strongly. Nevertheless, wage growth is now gaining momentum, and loss ofcompetitiveness is expected to weigh down on growth in the coming years.

Tax burden nears peak : Denmark is confirmed as the OECDs highest-tax country, followed by

Sweden, while Mexico and Turkey remain the lowest-taxing countries, the latest 2008 edition ofRevenue Statistics says. Denmarks tax-to-GDP ratio stood at 48.9% in 2007, while Turkeys wasat 23.7% of GDP.


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