Tale

Speech by the Danish Prime Minister at the Federation of Industries of the State of Rio de Jaineiro 26 April 2007

Det talte ord gælder

Europe and Latin America in a Globalised World

Excellencies, Ladies and Gentlemen,

I appreciate this opportunity to share thoughts and ideas on Europe and Latin America – and in particularDenmark and Brazil – in a globalised world.

This is my first visit to Brazil, and your country has already greatly impressed me. Brazil has everything and on a large scale: Nature, agriculture, industry, culture and most importantly a friendly and dynamic population. And Brazil is steadily increasing its weight in global politics and economic affairs.

Close links between our two countries is – obviously – nothing new. For centuries Brazil and Denmark have traded - in rubber, timber, coffee and sugar. Culture has constantly linked our populations. Most Brazilians have read the Danish poet Hans Christian Andersen and I believe that a number of Danish football players have learned a trick or two from the Brazilian football aces.

I am here to further strengthen and broaden relations between Denmark and Brazil. Why is that important? Why does a small country like Denmark and a large country like Brazil located at the opposite ends of the world need to work together? The answer is very simple: globalisation.

To reap the full benefits from globalisation we need not only trade goods and services, but also ideas. And we need strong international cooperation to define the rules of the game and to ensure that no country and region is left out.

I believe that our two countries share values that will allow us to prosper in a globalised world.

Firstly, our open societies and our belief in freedom, democracy and human rights allow our people to pursue their aspirations, to be innovative and to have an open mind viz-à-viz the surrounding world. These are strong assets in the world of today.

Secondly, we share a strong commitment to multilateralism. Through international cooperation – whether global cooperation in the United Nations or World Trade Organisation or regional cooperation in the European Union or Mercosul – we aim to create a level playing field that will allow all countries to prosper. And we make joint efforts to tackle common challenges such as terrorism, drug trafficking, climate change and energy security.

My visit to Brazil demonstrates in concrete terms our determination to foster closer links between our two countries.

During my meeting with President Lula yesterday an agreement to cooperate on combating climate change was signed, and we decided to enhance cooperation in the field of environment and energy.

Climate change is probably globalisation at its most extreme. It affects us all. We therefore share a responsibility to regulate emissions through a strong international regime. Denmark will be hosting the UN Climate Conference in 2009. We hope on that occasion to be able to get the whole world to agree to a follow-up to the first phase of the Kyoto Protocol that expires in 2012. This should lead to decisive steps to curb global warming. We look forward to strong cooperation with Brazil on bringing forward the global response to climate change that was launched in this beautiful city in 1992.

There is also a good reason to strengthen Danish-Brazilian cooperation on environmentally sound energy policies. Our countries have strong track records in promoting renewable energy. Brazil is at the forefront of ethanol production. Denmark excels in wind energy and energy efficiency. Even though the Danish economy has grown by approximately 70 per cent over the past 25 years our energy consumption has not increased - showing that economic growth and environmental protection are fully compatible.

Not only at a political level but also within the business sector cooperation is blossoming. This morning I opened a new factory in Montes Claros owned by the Danish health care company Novo Nordisk. The insulin production facility represents a significant investment and will create direct employment to 850 persons. I believe that this is the very essence of globalisation.

Globalisation is not a new thing. But the pace of globalisation has increased and the scope has broadened. There are different strategies for responding to globalisation. When the wind blows, one can react in one of two ways - by building windmills or by building shelters. Both Denmark and Brazil have chosen the first path. Harnessing the dynamic forces of globalisation rather than trying to insulate our countries. So far I think we have been successful. But strategies and leadership are required to be at the cutting edge of globalisation – whether we are talking about a small European country or a large South American one.

I will argue that there are two parallel and intertwining tracks for ensuring full benefit from globalisation. First of all we need to reduce barriers to trade globally and regionally. Secondly, on a national level each country must make the reforms necessary in order to prosper in a globalised world. In both cases we need to introduce changes in a way that will prepare our populations for globalisation. We must avoid a fragmented society, where large groups of people are left out. My vision is globalisation with a human face.

First on trade. We urgently need to reduce barriers to trade that hamper economic globalisation. There is a strong need to reach an agreement on the Doha Development Round of the WTO. Further progress is essential for the global economy. According to World Bank estimates the gain from full liberalization of global trade would be approximately 300 billion US dollars. Of which the developing countries in the short run would gain approximately 90 billion US dollars or 30 percent.

Thus, there is a huge potential for increased prosperity and stability in furthering free trade. We as political leaders owe it to our populations to promote the opening of the economies in a responsible way. It is also essential for economies such as Brazil in order to reach their full potential. I can assure you that Denmark, within the EU, promotes free trade benefiting all countries, regardless of size and income level.

In the present international trade negotiations the EU has already indicated room for further flexibility on agriculture. This position must be met with similar concessions in the area of industrial market access and services by other negotiating partners. Without a well functioning international trading system all countries – not least the poorest developing countries - will miss out on potential growth.

It is important to liberalize not only globally but also regionally. In Europe we are celebrating the European Union’s 50th anniversary. The Union is the very foundation of the prosperous and stable Europe that has evolved – first in Western Europe and with the reunification of Europe also in Central and Eastern Europe. Free trade has been the very dynamic in this whole process.

I believe that Mercosul and the establishment of a common market have the potential to strengthen prosperity and stability in this region as well.

Denmark also strongly supports further integration between regions – such as the EU and Mercosul. We hope that the negotiations of an Association and Free Trade Agreement will be finalised soon. Such an agreement creating a vast free trade area would improve trade and investment opportunities for companies in the EU and Mercosul.

Now let me turn to the need for reform at a national level. Preparing for globalisation starts at home. Allow me to share with you some points on Denmark’s experience on globalisation, and the continued efforts by my government to ensure that Denmark is at the forefront of globalisation.

To start with, let me briefly outline some characteristics of my country:

Denmark is a small country with a population of a little more than 5 million people. We have limited natural resources. The population is our main resource.

We are, furthermore, an open and trade-oriented economy. Therefore, we have felt the impact of globalisation very strongly. Our private sector is used to international competition – in fact it welcomes international competition – and has responded rapidly to the market changes caused by globalisation.

Denmark has developed a strong welfare system. It guarantees that all citizens are covered by the universal health system and have access to education – from primary school through university. We have a high female participation in the work force. This is accomplished through family policies that make it possible to combine work and family life. In short, we invest in people. And we give everybody an opportunity to participate and benefit from development.

Equally important, we have pioneered a unique combination of flexible labour markets and social security. This enables the economy to adapt to the ever-changing conditions of globalisation. This winning combination is known as flexicurity. Basically, flexicurity consists of three elements:

  • First, a flexible labour market which makes it easy to hire and fire,
  • Secondly, a high level of social security which ensures that no one is left outside – even in the event of unemployment
  • Thirdly, a very active labour market policy, including life long learning.

This ensures that people are not afraid to change jobs. Also, the qualifications of the work force are constantly adapted to the demands of employers. In one year as much as a third of the labour force in Denmark starts in a new job. This flexibility implies that both the employers and the employees enjoy a large degree of freedom.

As a result of these characteristics, Denmark today is one of the strongest economic performers in Europe. According to international studies the system provides additional benefits – a population that is ready for globalisation, and that associates globalisation with opportunity rather than a threat.

Last year the Danish Government launched an ambitious strategy for Denmark in the Global Economy. The overall goal of the strategy is to make Denmark the world’s most competitive economy by 2015. I believe we are on the right track.

The price of globalisation should not be a fragmented society. No one must be left behind. Globalisation may lead to some degree of economic restructuring, but we are determined to maintain a cohesive society while remaining an open and competitive economy.

That is why the Globalisation Strategy puts forward 350 specific initiatives to improve competitiveness and create the right framework conditions for business, while at the same time safeguarding future Danish welfare, in particular by ensuring life long education.

I believe two very important lessons can be derived from the Danish experience:

First of all that protectionism is not the way forward and that you need to prepare the whole of society for globalisation. There needs to be broad popular participation in globalisation and wide distribution of the benefits from globalisation.

Secondly, that an enabling environment for the business sector is one of the key factors of success.

According to a recent World Bank Report, doing business in Denmark is easy. On average it takes only 5 working days to start a company in Denmark. That is substantially better than most countries.

The strong entrepreneurial spirit of Danes has been nurtured by such an enabling environment. This has allowed the Danish private sector to flourish and develop world-class competencies. Examples of these competencies are to be found in the business delegation accompanying me on this trip. It includes leading Danish companies within the fields of environment and energy as well as pharmaceuticals and life science.

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To conclude my speech on ways to reap the benefits of globalisation, I would like to quote your world-famous countryman Pelé. He has a special connection to Denmark, as he was nominated ambassador for the famous Danish author Hans Christian Andersen in 2005.

'Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.'

Thank you for your attention.