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U.S. DEPARTMENT OF STATE
DENMARK: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                             DENMARK

                     Key Economic Indicators
       (Millions of U.S. dollars unless otherwise noted 1/)


                                     1992     1993      1994 2/

Income, Production and Employment:

Real GDP (1985 prices) 3/          97,004    91,292    96,700
Real GDP Growth (pct.)                1.7       1.0       4.3
GDP (at current prices) 3/        122,364   117,658   127,000
By Sector:
  Agriculture                       4,353     4,410     4,700
  Energy/Water/Heat                 2,043     2,337     2,550
  Manufacturing                    23,561    22,258    24,000
  Building/Construction             6,536     6,123     6,600
  Raw Materials/Mining              1,231       977     1,000
  Rents                            12,587    11,556    12,450
  Financial Services                2,105     2,439     2,700
  Other Services                   44,151    42,705    46,100
  Government Services              28,360    27,531    29,700
  Overlap Corrections              -2,562    -2,679    -2,800
Net Exports of Goods & Services    11,269    10,905     9,000
Real Per Capita GDP 3/
  (USD/1985 prices)                18,762    17,592    18,578
Labor Force (000s)                  2,835     2,851     2,852
Unemployment Rate (pct.)             11.3      12.4      12.4

Money and Prices:  (annual percentage growth)

Money Supply                         -1.2      11.2       4.8
Base Interest Rate (pct.) 4/         11.6      10.5       8.3
Personal Saving Rate (pct.)           5.7       5.2       4.4
Retail Inflation
  Consumer Price Index                2.1       1.3       2.0
Wholesale Inflation                  -1.1      -0.6       0.8
Exchange Rate (USD/DKK)            0.1656    0.1543    0.1567

Balance of Payments and Trade:

Total Exports (FOB) 5/             38,908    37,196    40,300
  Exports to U.S.                   1,724     1,898     2,250
Total Imports (CIF) 5/             30,578    30,549    35,500
  Imports from U.S.                 1,788     1,418     1,800
Aid from U.S.                         N/A       N/A       N/A
Aid from Other Countries              N/A       N/A       N/A
External Debt                      50,000    42,130    38,900
External Debt Service
  Net Interest Payments             5,583     4,722     4,200
Gold and Foreign Exch. Reserves     7,444    11,539    10,000
Trade Balance 5/                    8,330     6,647     4,800
  Trade Balance with U.S.             -64       480       450


N/A--Not available.



1/ Danish Krone/Dollar exchange rates used:
1992: DKK 6.04=$1.00; 1993: DKK 6.48=$1.00; 1994: DKK 6.38=$1.00
2/ 1994 figures are all estimates based on available data in
October 1994.
3/ GDP at factor cost.
4/ Figures are actual, average annual bank lending interest
rates, not changes in them.
5/ Merchandise trade, excludes EU Agricultural Export Subsidies.

Note:  All dollar figures shown in the text have been converted
from Danish Kroner figures using the average DKK/USD exchange
rate in the relevant year.



1.  General Policy Framework

    Denmark is a small, highly industrialized "value-added"
country with a long tradition of foreign trade, free capital
movements, political stability, an efficient and well-educated
labor force, and a modern infrastructure effectively linking
Denmark to the rest of Europe.  Denmark's natural resources are
concentrated in oil and gas fields in the North Sea, which make
Denmark more than self-sufficient in oil and gas.  As Denmark
remains dependent on imported raw materials and
semi-manufactures for its industry and on coal for its
electrical power production, ensuring adequate supplies has
always been a major goal of Danish trade and industry
policies.  Denmark's active liberal trade policy in the EU,
OECD, and GATT often coincides with U.S. interests.  Denmark 
ratified the Uruguay Rounds agreements in 1994.  EU and EFTA
countries account for more than three-quarters of Denmark's
total trade.  The United States, Denmark's largest non-European
trading partner, accounted in 1993 for about five percent of
total Danish merchandise trade.  On May 18, 1993, Danish voters
reversed their earlier rejection of the far-reaching European
Union (The Maastricht Treaty) and reinforced Denmark's
commitment to continued EU cooperation and integration.
However, Denmark reserved its participation in the third phase
of the Economic and Monetary Union (EMU).  Denmark benefits
from the EU Single Market, which started January 1, 1993, and
has taken the initiative to increase the EU Commission's and
member countries' focus on new nontariff trade barriers being
created while other barriers are dismantled.

    Despite increasing unemployment and low economic growth in
the late 1980's and early 1990's, the underlying Danish economy
has been strong due to increasing balance of payments surpluses
and falling inflation.  This resulted from the former minority
center-right coalition government's tight fiscal policies of
minimum increases in public expenditures and monetary and
exchange rate policies similar to Germany's.  The Social
Democratic Party (SDP)-led majority coalition government, which
took power in January 1993, relaxed fiscal policy, and
introduced a limited income tax reform to kick-start the
economy.  The government also introduced a series of measures
to combat unemployment, which have included government-funded
leave programs and government-subsidized job creation
measures.  An SDP-led minority government has continued in
office following the September 21, 1994 election.

    Despite strong economic growth starting in the second half
of 1993, unemployment has been slow to react due to large
productivity increases and extraordinarily large new inflows of
labor.  Although there is broad political agreement on putting
a lid on the public sector's size and costs, increased
unemployment benefit costs and other transfer income costs, as
well as the introduction of recession response measures, have
led to growing budget deficits.  The public sector budget
deficit almost doubled in 1993 to 4.4 percent of GDP and is
only being marginally reduced in 1994.  Foreign investment
economic incentives consist of lenient income taxation of
high-paid foreigners working in Denmark (a flat 30 percent tax
on gross income).  Since 1989, the government has spent the
equivalent of about $10 million promoting direct investment in
Denmark by U.S. and Japanese high-tech companies, which has
assisted some U.S. acquisitions of Danish high-tech companies. 
U.S. and Japanese greenfield investments, on the other hand,
have been limited.

    Danish fiscal policy meets the conditions of the EMU.  For
example, Denmark complies with the prohibition against
monetization of its central government deficits.  Deficits are
financed through the sale of government bonds and treasury
bills on market terms.  

    The Danish fixed exchange rate policy (see section 2),
pursued since the early 1980's, requires a monetary policy
which gives high priority to price stability.  This together
with fully liberalized capital movements means there is limited
room for Denmark to adopt independent interest rate and
liquidity policies.  Official Danish interest rates are linked
closely to those of Germany.  In order to tighten management of
money-market rates (without adjusting official rates), the
Central Bank, which has monetary policy authority, introduced
in April 1992 a liquidity management system via weekly
issuances of two-week deposit certificates and by providing
liquidity to commercial banks via re-purchases of both treasury
bills and deposit certificates.  During 1993, the Central Bank
successfully used discount rate adjustments to control
liquidity and to protect the krone.  The discount rate was
adjusted 17 times, twice upwards by two percent during the
February and July currency crises.  The 15 downward changes
were generally within 0.25 to 0.5 percentage point range. 
Starting at 9.5 percent at the beginning of 1993, the discount
rate was reduced to 6.25 percent by the end of the year.  By
September 1994, the discount rate was five percent (last
reduction was in May).  However, the low inflation (two percent
in 1994), together with monetary and the exchange rate
policies, maintains high real market interest rates which
impede investment.


2.  Exchange Rate Policy

    Denmark is a member of the European Monetary System (EMS)
and its Exchange Rate Mechanism (ERM).  It supports the
objectives of the EMU, but has the right not to participate in
its third phase (establishment of a single EU currency and
relinquishment of national sovereignty over monetary policy). 
Since 1982, the government has successfully resisted solving 
Denmark's economic problems through exchange rate adjustments,
and this policy continues.  In August 1994, the trade-weighted
value of the krone was more than five percent higher than in
August 1993, due mostly to volatile developments in the ERM in
July and August 1993, when the ERM fluctuation bands were
widened to plus or minus 15 percent.  Intervention by the
Danish Central Bank (and German Bundesbank) protected the
krone's position in the ERM, but drained foreign exchange
reserves, which in turn required new large government borrowing
abroad.  As foreign exchange markets stabilized, Denmark's
foreign exchange reserves returned to normal levels.

    The value of the krone against the dollar in September 1994
(DKK 6.11 to $1.00) was almost nine percent higher than in
September 1993.  In late October, the dollar had fallen further
to DKK 5.87, a 13 percent decline since late October 1993.  The
consequent improvement in U.S. price competitiveness should
assist increased U.S. exports to Denmark.


3.  Structural Policies

    Danish pricing policies are based on market forces. 
Entities with the ability to fix prices because of their
dominance in the market are regulated by a Competition Council.

    In spite of the income tax reform introduced in 1994, Danes
generally concede that the tax system needs further overhaul to
improve incentives for work and investment and to reduce the
"underground" economy, which today may equal as much as 10
percent of GDP.  For example, the highest marginal tax rate is
more than 60 percent and applies to all income above that of a
fully employed skilled worker.  With the introduction in 1994
of a five percent tax on gross income (increasing to eight
percent by 1997), the Danish income tax system was brought
closer to those of other EU countries.  Uniquely among EU
countries, Danish employers pay virtually no nonwage
compensation.  Most of employers' costs of sick leave and
unemployment insurance are paid by the government.  Employees
pay their part of unemployment insurance out of wages.  Another
concern is the high Danish Value Added Tax (VAT), which, at 25
percent, is the highest in the EU.  However, as VAT revenues
constitute more than one-quarter of total central government
revenues, a reduction would have severe budgetary
consequences.  The government has no plans to reduce the VAT,
and hopes for VAT rate harmonization through increases in the
VAT rates of other EU countries, particularly those of
Germany.  The corporation tax is 34 percent which, combined
with favorable depreciation rules and other deductions, is
among the lowest in the EU. 

    Despite Denmark's success in resolving many of its former
structural problems, unemployment remains a major problem. 
Despite high unemployment, labor mobility, both geographically
and sectorally, is low in Denmark due to leniently applied
requirements to qualify for unemployment benefits and
structural rigidity which prevents crossing craft lines.  The
government is considering enforcing present rules more
vigorously to tighten eligibility for benefits and increase
mobility in general.  At present, about two-thirds of the costs
of unemployment benefits are paid from general revenues.  
Rather than consider extensive labor market reform, the SDP
government's efforts have so far concentrated on job rotation
(leave programs) and on job creation through subsidization of
repair and maintenance of buildings and subsidization of home
services work, the latter without any notable success.


4.  Debt Management Policies

    Since 1963, large, recurring balance of payments (BOP)
deficits produced a foreign debt which in 1988 peaked at $44
billion (DKK 6.73 to the dollar), or 40 percent of GDP. 
However, since 1990, the BOP has moved into a surplus which
reached $5.6 billion in 1993.  Consequently, foreign debt is
gradually being reduced and by the end of 1993 equaled 31
percent of GDP.  Despite BOP surpluses, net interest payments
on the debt continue to be a burden, accounting for some 10
percent of goods and services export earnings.  Standard and
Poor's and Moody's Investors Service rate Denmark AA+ and AA1,
respectively, reflecting the strong economy and the large BOP
surplus.  Denmark's public sector is a net external debtor,
while the private sector, including banks, is a net creditor. 
At the end of 1993, the public sector's net foreign debt,
including foreign exchange reserves, was the equivalent of $59
billion, of which krone-denominated government bonds accounted
for more than 70 percent.

    The central government's debt denominated in foreign
currencies rose almost 60 percent to the equivalent of $34.6
billion at the end of 1993 due to the large borrowing in
connection with the July/August currency crisis.  Dollar
denominated debt accounted for 31 percent of this debt,
followed by German mark debt accounting for 29 percent.  Close
to one-half of the debt is in short term obligations with
variable interest rates.  The total debt has an average term of
two years (3.5 years for the fixed interest rate debt alone).

    Danish development assistance is large by international
standards, accounting for one percent of Gross National Product
(GNP), or $1.3 billion in 1993.  It is almost equally
distributed between bilateral and multilateral assistance. 
Bilateral assistance is concentrated on 18 "program" countries,
of which four were added in 1993: Burkina Faso, Eritrea,
Nicaragua, and Vietnam.  African countries account for some 60
percent of total bilateral assistance.  Denmark also supports
the new democracies in Central Europe, the Baltics and the
former Soviet Union and in 1994 will spend about $330 million
for assistance (0.25 percent of GNP).  Finally, Denmark will
spend in 1994 about $750 million for multinational
environmental and disaster programs, including "pre-asylum"
refugee costs in Denmark and U.N. peace keeping efforts. 
Denmark actively participates in the IMF, the EBRD, the World
Bank, and the Paris Club.


5.  Significant Barriers to U.S. Exports

    Heavily dependent on foreign trade, Denmark maintains few
restrictions on imports of goods and services and on
investment.  Denmark adheres to all GATT codes and, as a member
of the EU, also to all EU legislation which impacts on trade 
and investment.  There are no special Danish import
restrictions or licenses which pose problems for U.S.
industrial products exporters.  Agricultural goods must compete
with domestic production, protected under the EU's Common
Agricultural Policy.  Denmark also has stringent phyto-sanitary
requirements.

    With the implementation of the EU Single Market on January
1, 1993, most industrial standards, testing, labeling and other
requirements are being harmonized within the EU.  However, as
harmonization takes place, new trade barriers have surfaced in
individual EU member countries.  Denmark has taken the lead in
combatting the problem and, together with the EU Commission,
hosted a successful nontariff barrier conference in Copenhagen
in September 1994.

    With respect to services, the Danish Credit Card Act,
adopted in 1987, prevents credit card companies from operating
in Denmark on standard international terms.  This law prohibits
credit card companies from charging vendors for costs related
to the use of cards held by Danes.  As a consequence, American
Express stopped issuing credit cards to Danes for use in
Denmark.  However, other credit card companies have continued
operations under the new requirements.

    Denmark, like most other countries, requires an exam or
experience in local law in order to practice law.  The Danish
goverment requires the managing directors of foreign-owned
stockbroker companies to have at least three years of
experience in securities trade.  However, experience in a U.S.
stock exchange alone will probably not meet this requirement.

    Denmark provides national, and in most instances
nondiscriminatory, treatment to all foreign investment. 
Ownership restrictions are only applied in a few sectors: 
hydrocarbon exploration (which in general requires limited
government participation, but as of the end of 1994, no longer
on a carried interest basis); arms production (a maximum of 40
percent of equity and 20 percent of voting rights may be held
by foreigners); aircraft (third-country citizens or airlines
may not directly own or exercise control over aircraft
registered in Denmark); and ships registered in the Danish
International Ships Register (a Danish legal entity or physical
person must own a significant share and exercise a significant
control -- about 20 percent -- over such ships).  Danish law
provides for a reciprocity test to foreign direct investment in
the financial sector, which, however, has not been an obstacle
to U.S. investment.  For example, the U.S. Republic National
Bank of New York opened a representative office in Copenhagen
on July 1.  Once established, an entity receives national
treatment.  The Danish telecommunications network will be a
government controlled monopoly until 1998 when networks become
liberalized within the EU, but is open to minority portfolio
investment.  A second private cellular mobile telephone network
(General Systeme Mobile-GSM) with the U.S. BellSouth
participating, competes with the government controlled Tele
Danmark's GSM operation.

    Danish government procurement practices meet the
requirements of the GATT public procurement code and of EU
public procurement legislation.  Denmark implemented the EU 
Public Procurement Directive 93/36/EEC on June 24, 1994 and the
new EU "Utilities" Directive 93/38/EEC (public procurement of
goods, building and construction, and services within the
water, energy, transport, and telecommunication sectors) on
July 1, 1994.  Regarding the latter, indications are that the
voluntary "50 percent EU Origin requirement" will be
interpreted liberally by the Danish government and that the
mandatory three percent price differential requirement will
only have minor importance in procurement decisions. 
Countertrade, or rather offset trade, is used by the Danish
government only in connection with military purchases which are
not covered by the GATT code and EU legislation.  Denmark has
no "Buy Danish" laws. 

    There is no record of U.S. companies complaining about
burdensome customs procedures.  Denmark has an effective and
modern customs administration which has reduced processing time
to a minimum.

    U.S. companies residing in Denmark as a general rule
receive national treatment regarding access to Danish R&D
programs. In some programs, however, Denmark requires
cooperation with a Danish company (ies).  The Embassy has no
record of complaints by U.S. companies in this area.


6.  Export Subsidies Policies

    EU agricultural export restitutions (subsidies) in 1993 of
$880 million were equivalent to more than 10 percent of the
value of total Danish agricultural exports.  Government support
for agricultural export promotion programs is insignificant. 
Denmark has no direct subsidies for its nonagricultural exports
except for shipbuilding.  Also, the government does not
subsidize exports by small and medium size companies. 
Indirectly, however, Denmark has programs to assist export
promotion, establishment of export networks for small and
medium sized companies, research and development, regional
development, and a limited number of preferential financing
schemes aimed, inter alia, at increasing exports.  In 1989,
Denmark restructured its development assistance and abolished
the distinction between untied and tied bilateral assistance. 
However, the principle of using at least 50 percent of all
bilateral assistance for purchases of Danish goods and services
is maintained (it was 51 percent in 1993).  All these programs,
however, apply equally to foreign companies producing in and
exporting from Denmark.

    Denmark has one of the lowest rates of state aids to
industry (about two percent of GDP) among EU countries. 
Shipbuilding support, where Danish subsidization is within the
ceiling set in the EU Shipbuilding Directive (nine percent of
the contract value), accounts for about one-third of total
Danish state aids to industry.  Denmark, as an ally of the
United States, strongly welcomed the 1994 OECD agreement to
phase out shipbuilding subsidies internationally, but EU
ratification of the agreement is pending.


7.  Protection of U.S. Intellectual Property

    Denmark is a party to, and effectively enforces, a large
number of international conventions and treaties concerning
protection of intellectual property rights.

    Patents:  Denmark is a member of the World Intellectual
Property Organization (WIPO).  It adheres to the Paris
Convention for the protection of Industrial Property, the
Patent Cooperation Treaty (PCT), the Strasbourg convention and
the Budapest convention.  Denmark has ratified the European
Patent Convention and the EU Patent Convention.

    Trademarks:  Denmark is a party to the 1957 Nice
Arrangement and to this arrangement's 1967 revision.  A new
Danish trademark act entered into force January 1, 1992 which
also implements the EU trademark directive harmonizing EU
member countries' trademark legislation.  Denmark strongly
supports efforts to establish an EU-wide trademark system.  In
addition, Denmark has legislation implementing EU regulations
for the protection of the topography of semiconductor products
which also extends protection to legal U.S. persons.

    Copyrights:  Denmark is a party to the 1886 Berne
Convention and its subsequent revisions, the 1952 Universal
Copyright Conventions and its 1971 revision, the 1961
International Convention for the Protection of Performers,
etc., and the 1971 Convention for the Producers of Phonograms,
etc.  There is little piracy in Denmark of records or
videocassettes.  However, software piracy in Denmark is
estimated at more than $100 million annually.  Piracy is on the
decline due to sharply reduced prices, improved protection of
programs, and efforts to combat such piracy by the Business
Software Alliance.  Piracy of other items, including books,
appears very limited.  There are no indications that pirated
products are being imported to or exported from Denmark.  One
possible copyright problem involves the imposition on January
1, 1993 of a Danish levy on blank analog and digital audio and
video tapes for home use.  Pending implementation of "material
reciprocity" provisions, U.S. artists as of October 1994
receive national treatment.  If these provisions are
implemented, a large share of revenues from the levy will be
passed on to Danish artists and artists from countries having a
comparable levy.  Since the United States imposes a comparable
levy only on digital tapes, U.S. artists, who account for some
two-thirds of works being copied in Danish homes, would not
benefit from the levy collected on analog tapes.

    The U.S. Embassy has no record of other complaints by U.S.
organizations, exporters or subsidiaries in Denmark regarding
infringement of intellectual property rights and/or unfair
Danish practices in this field.  Thus the impact on U.S. trade
with Denmark appears limited. 

    Denmark is not named on the Special 301 Watch List or
Priority Watch List, nor is it identified as a Priority Foreign
Country. 


8.  Worker Rights

    a.  Right of Association

    Workers in Denmark have the right to associate freely, and
all (except those in essential services and civil servants)
have the right to strike.  Approximately 80 percent of Danish
wage earners belong to unions.  Trade unions operate free of
government interference.  They are an essential factor in
political life and represent their members effectively.  In
1993, 113,700 workdays were lost due to labor conflicts (up
from 62,800 in 1992).  Greenland and the Faroe Islands have the
same respect for worker rights, including full freedom of
association, as Denmark.

    b.  Right to Organize and Bargain Collectively

    Workers and employers acknowledge each others' right to
organize.  Collective bargaining is widespread.  The law
prohibits antiunion discrimination by employers against union
members, and there are mechanisms to resolve disputes. 
Salaries, benefits, and working conditions are agreed in
biennial negotiations between the various employers'
associations and their union counterparts.  If negotiations
fail, a national conciliation board mediates, and its proposal
is voted on by both management and labor.  If the proposal is
turned down, the government may force a legislated solution
(usually based upon the mediator's proposal).  In case of a
disagreement during the life of a contract, the issue may be
referred to the Labor Court.  The decisions of the court are
binding.  The labor contracts which result from collective
bargaining, as a general rule, are also used as guidelines in
the nonunion sector.

    Labor relations in non-EU parts of the Danish Realm,
Greenland (a beneficiary of the U.S. Generalized system of
Preferences) and the Faroe Islands, are generally conducted in
the same manner as in Denmark proper.

    c.  Prohibition of Forced or Compulsory Labor

    Forced or compulsory labor is prohibited and does not exist
in the Danish Realm.

    d.  Minimum Age for Employment of Children

    The minimum age for full-time employment is 15 years.  The
law prescribes limitations on the employment of those between
15 and 18 years of age, and it is enforced by the Danish
Working Environment Service, an autonomous arm of the Ministry
of Labor.  There are no export industries in which child labor
is significant.

    e.  Acceptable Conditions of Work

    There is no legally mandated workweek nor national minimum
wage.  However, the workweek set by labor contracts is 37
hours.  The lowest hourly wage in any national labor agreement
is sufficient for an adequate standard of living for a worker. 
Danish law provides for five weeks of paid vacation.  Danish
law also prescribes conditions of work, including safety and 
health; duties of employers, supervisors, and employees; work
performance; rest periods and days off; medical examinations;
and maternity leave.  The Danish Working Environment Service
ensures compliance with work place legislation.  In addition,
Danish law provides for government-funded temporary withdrawal
from the labor market through parental, educational or
sabbatical leave programs.

    Similar conditions of work, except leave programs, are
found in Greenland and the Faroe Islands, but the workweek is
40 hours.  Unemployment benefits in Greenland are either
contained in labor contract agreements or come from the general
social security system.  A general unemployment insurance
system in the Faroe Islands was established in August 1992,
replacing former unemployment compensation covered by the
social security system.  Sick pay and maternity pay, as in
Denmark, fall under the social security system.

    f.  Rights in Sectors with U.S. Investment

    Worker rights in those goods-producing sectors in which
U.S. capital is invested do not differ from the conditions in
those other sectors where no U.S. investment is found.



  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
                                                                
              Category                          Amount          

Petroleum                                               (1)
Total Manufacturing                                     206
  Food & Kindred Products                   (1)
  Chemicals and Allied Products             (1)
  Metals, Primary & Fabricated              (1)
  Machinery, except Electrical              (1)
  Electric & Electronic Equipment            15
  Transportation Equipment                  (2)
  Other Manufacturing                        78
Wholesale Trade                                         572
Banking                                                 (1)
Finance/Insurance/Real Estate                           363
Services                                                113
Other Industries                                         20
TOTAL ALL INDUSTRIES                                  1,797    

(1) Suppressed to avoid disclosing data of individual companies
(2) Less than $500,000
Source: U.S. Department of Commerce, Bureau of Economic
Analysis

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