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Speech by Danish Minister for Trade and Investment
Mrs. Pia Olsen Dyhr
Brookings Institution, 26 April 2012

Good morning everyone!

Ladies and Gentlemen. Let me start by thanking the Brookings Institution for the invitation to speak here today. It is a privilege to be invited to one of the world’s most prominent think tanks.

The Brookings Institution has a stated mission to provide innovative and practical recommendations, which will secure a more safe, prosperous and cooperative international system.

The initiative to host a series of public seminars on Green Trade shows that Brookings is indeed on track with this mission.

My main theme today is how we can tailor trade policies to support our objective of combating climate change.

We need to work smartly and through all international mechanisms, if we are to achieve a cleaner, safer and more prosperous world community.

Today, I would like to present a few suggestions. I am equally interested in the views and considerations of my fellow panellists – and of the participants in the audience.

In view of the upcoming Rio+20 Summit, our discussion today is well-timed. Preparations for Rio+20 are proceeding fast.

Green Growth is an issue at the heart of my own political agenda – both when I wear the hat of Denmark’s Minister for Trade and Investment and as a representative of the current Danish EU Presidency.

It is a priority for me during the Presidency to put green trade liberalization firmly back on the EU trade agenda. Also, it is an issue where transatlantic cooperation is immensely important.

In December, I participated at the 8th WTO ministerial conference in Geneva.
My impression was clearly – but unfortunately – that a conclusion of the Doha Round is not possible in the immediate future.

The same difficulties in achieving progress in the Doha round as a whole, have also been evident in the dynamics of the negotiations on environmental goods and services at the WTO.

The impasse of the Doha round has forced us to look for new approaches to further trade liberalization at a time, when crises around the world make it tempting to turn to protectionism. And so for green trade, we must also look for new approaches.

But let me first stress that I am not giving up on the WTO as an institution.

We have to move forward on our goal of reaching a multilateral agreement. We must not let our disappointment over the fate of Doha affect our support for our first priority: A strong and rules-based multilateral trading system, which also benefits the developing countries.

Green trade liberalization contains two paradoxes. First, while almost all governments agree that trade liberalization in the area of green goods and services is a good thing, almost all governments to some extent distort free trade in green products through subsidies, tariffs or non-tariff barriers such as local content rules.

Second, while almost all governments agree that the challenge of climate change is increasingly important, progress in multilateral negotiations to address the issue is very limited.

I am committed to look past these paradoxes and to promoting Green Trade liberalization, because I see no real alternative:

If we are to combat climate change effectively, the global society must find a constructive way forward in green trade liberalization.

One should not be naive about the possibilities: Behind the paradoxes are economic and industrial interests among the world´s biggest economic players.

A fierce competition is going on to become world leader in sustainable production. What some has called the “race to the top” – shaping the energy framework to a world much less depended on fossil fuels – has already begun.

On the other hand, it is worthwhile to recall the words of President Franklin D. Roosevelt, who once said:

“Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.”

These clever words have stood the test of history. The global community does need to look past competition and strive for cooperation.

The window of opportunity has come, and it is too important to be missed. It is in the interest of every nation to do so.

The key question is: How do we promote international cooperation in green trade in practice? I do not yet have the full answer to this question, but I have two suggestions as to where we start:

First, green trade liberalization should be high on the agenda for all governments, including in bilateral Free Trade negotiations.

Second, possibilities for new approaches at the WTO should be examined with an open mind.

On my first point, Green Growth is an overall priority of the Danish EU Presidency.

In the area of trade policy, it is my ambition to put green trade firmly on the EU agenda again.

When EU trade ministers met in March this year, the European Commission was asked to prepare an options paper for our next meeting, which will take place on 31 May.

On this basis, EU trade ministers will discuss possible ways forward in green trade – including with the US.

The EU must have a strong green component in every Free Trade Agreement made with partners around the world.

In particular with the US such a component could have a significant bearing on sustainability and job creation in our two economies.

By putting green trade liberalization high on their agendas, governments will pave the way for green FTA stepping stones – pointing to a later agreement at the multilateral level.

This goes for the EU and the US as well as all other countries.

This leads me to my second point concerning the World Trade Organization: The changing overall political framework conditions in trade policy and the need for fresh approaches at the WTO.

There is now an even stronger push towards bilateral or regional solutions than before the 8th WTO Ministerial Conference in Geneva in December last year.

This is not necessarily bad. However, our efforts to negotiate a multilateral agreement at the WTO should not be given up.

Past experience has shown tremendous challenges with the two paradoxes, I just mentioned. Still, it is worthwhile to take a fresh look at things in Geneva.

Let me give you one example why: So far, it has been very difficult to engage China in negotiations about green trade liberalization.

China has viewed the issue as domestic industrial policy – not trade.

However, this view is slowly changing: Partly, because China is increasingly exporting green goods like wind mills and solar panels and therefore has increasing interests in green trade. And partly, because China too needs international cooperation in order to combat environmental challenges nationally.

And yes, I am fully aware that some are questioning, whether Chinese exports in green products is truly reflecting market-based prices.

Let us not forget that what was not possible to discuss at the WTO six months ago, is now being discussed – heeding the call from the 8th WTO Ministerial Conference for new and innovative negotiation approaches to be explored.

The most obvious example is of course the recent US initiative on a services plurilateral agreement.

I fully share the hope of Mark Linscott, the Assistant US Trade Representative, who – when he spoke here at Brookings on March 20th – pointed to significant prospects for bringing to the table a constructive discussion of trade and environment issues.

As an example of a new approach, let me bring to your attention a specific proposal put forward by the Geneva-based think tank International Center for Trade and Sustainable Development, the ICTSD.

It concerns the ambitious proposal for a Sustainable Energy Trade Agreement – the so-called SETA, put forward in the autumn last year.

SETA is a way to bring trade liberalisation in climate friendly goods and services back on the agenda. SETA is a plurilateral approach on green trade liberalization proposing to focus on renewable energy and barriers related to that.

SETA is innovative, and it is a pertinent dossier for politicians to examine further. I support such new thinking, which could help overcome past differences and break new ground.

I am not saying that we necessarily have to call it SETA.

The most important thing is that we agree on a broader framework which is not only for Europeans, but – most importantly – also includes the developing countries.

For those reasons, I have been highlighting the merits of SETA in meetings with colleagues from both developed and developing countries, and I have done so during my talks with the Obama Administration here in Washington.

Ladies and Gentlemen: Time is ripe for examining all options to liberalize trade in environment and climate friendly goods and services.

These options could include a commitment to transparency in – and discussion of – bilateral and regional green initiatives.

I have noted the commitment from the APEC summit last year to cut green tariffs to 5% by 2015 – and to introduce a ban on local content requirements.

Equally interesting ideas are being discussed in the Trans Pacific Partnership.

From an EU perspective it is of vital importance that any such plurilateral initiative is taken in full transparency and with due respect for the non-discrimination clauses enshrined in GATT and GATS.

One key challenge is to get a critical mass of countries offering reciprocal market openings in order for a plurilateral agreement such as SETA to attract enough interest.

The critical mass should include the OECD countries and most of the emerging economies. If emerging economies are not in, there will not be enough to gain for the developing countries.

SETA and other plurilateral options contain the same inherent conflicts as we have seen in the Doha Development Round, where emerging economies are reluctant to move forward in green trade.

We have to make an agreement, where the emerging economies will benefit from green trade liberalization. That is crucial and we cannot afford to shy away from that goal.

Talking about high ambitions, I would like to share with you that Denmark sees the threat of climate change as a real crisis.

We are also convinced that it is more expensive to respond after the crisis hits, rather than preparing for and anticipating the crisis.

Denmark has passed a bill to make us a carbon free society by 2050. We aim to reduce green house gasses by 40 per cent by 2020.

To achieve this goal, the Danish Government supports the wind industry by setting up ambitious goals for wind power in Denmark. We have a vision for a doubling of our power supply from wind in the next 8 years from 25 % to 50 %.

Let me finally make a pitch for the importance of deepening the broader transatlantic economic relationship: I am encouraged about the recent talk on exploring the possibilities of a deep and comprehensive Transatlantic trade agreement.

One reason is – also in this regard – the deadlock we have encountered with the Doha round.

The trade and investment relationship between the EU and the US is by far the strongest and the biggest in the world. We already have a strong foundation.

If the EU and the US could agree to eliminate tariffs and non-tariff barriers, the gain would be huge on both sides of the Atlantic.

Recent studies indicate that it would have a significant impact in terms of growths and jobs – for both sides!

There is now a window of opportunity. Dialogue between negotiators has intensified in the High Level Working Group created last autumn – and progress has been made.

Now is the time to be bold on both sides of the Atlantic: A comprehensive approach should be sufficiently large so that it sparks a truly job-creating outcome.

Strengthening transatlantic cooperation today is one part of a larger exercise, which includes all areas of EU-US trade and investment relations. The green area being one of the most important.

Let me stress that an agreement between the US and the EU should not be a replacement for a broader multilateral trade framework that also includes the developing countries. Rather, I see the launching of US-EU negotiations as an icebreaker for new momentum in the multilateral negotiations.

I look forward to your questions and ideas on how the EU and the US – both business and governments – can work together in promoting this agenda:

Both in view of the larger Transatlantic relationship, and more specifically with regards to the green area, which is so important to confront the rising challenges stemming from Climate Change.

Thank you!

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