untapped potential: exploring the benefits of a u.s.- Greenland trade agreement

This paper invites policymakers to begin a thoughtful examination of a future U.S.-Greenland trade agreement from the standpoint of its potential benefit both to countries and its contribution to the broader shared goal of a free and stable Arctic - without discounting the political and structural challenges inherent in such a project.

Greenland is politically part of Europe, but geographically part of North America. Despite Greenland’s geographic proximity to Canada and the United States, Greenland has surprisingly weak trade links to North America.

Greenland wants a trade agreement with the United States. An agreement could catalyze new investment, which the government is actively seeking to fulfill its domestic development goals. It would also help diversify Greenland’s import sources and export markets, adding needed resilience to its economy. A bilateral agreement would enhance opportunities for Greenland’s young people as well.

For the United States, gains would be both geopolitical and economic. A U.S.-Greenland trade agreement would deepen the bilateral political relationship with an important Arctic partner and ally that hosts one of the most strategically important overseas U.S. military bases (Thule Air Base). It would also be a tangible manifestation of the U.S. commitment to the Arctic - a region of growing strategic importance, according to the White House’s National Strategy for the Arctic Region. A trade agreement would also expand two-way trade with a friendly democratic neighbor within the North American hemisphere – a neighbor which happens to have abundant natural resources including the critical minerals that are key to a greener energy future. While Greenland’s population is very small, a trade agreement with market access would nevertheless over time confer some notable benefits to U.S. manufacturers of consumables and vehicles. An agreement that deepens bilateral trade ties could be particularly beneficial to Maine and Alaska.

To be sure, there are challenges to achieving a U.S.-Greenland trade agreement: there are capacity issues on the Greenland side; certain sectors of its economy would need to be more open to competition; Greenland’s close association with the EU means that regulatory issues and agriculture could be a challenge in negotiations, as they were for the failed U.S.-EU Transatlantic Trade and Investment Partnership (TTIP). A bilateral trade agreement also must take into account – and not interfere with - the complex historical, political, and economic relationship between Greenland and Denmark – a close U.S. ally. Finally, the political environment in Washington has not been conducive to new free trade agreements for the past two years. That said, offering Greenland market access is a low-threat proposition in terms of its potential impact on sensitive U.S. industries. This makes a negotiation with Greenland a good place to restart the trade agenda for policymakers who are inclined to do so.

The roadmap to a U.S.-Greenland trade agreement might begin with a joint mapping exercise, followed by the signing of a Trade and Investment Framework Agreement (TIFA), leading to negotiations. Of course, this process should include Congressional buy-in and must be conducted in a transparent manner that involves non-governmental stakeholders. The agreement should be modern and innovative, reflecting both the significance of the green energy economy and the importance of protecting the fragile Arctic environment for our shared future.

An agreement could take a variety of forms: it could be a stand-alone bilateral pact, it could be paired with a U.S.-Iceland free trade agreement (which Iceland has requested), it could be added on to a future U.S.-UK trade agreement, or Greenland could be invited to join the U.S. Mexico Canada (USMCA) regional agreement.

To develop this paper’s findings, we interviewed officials from the U.S. government, the Government of Greenland, as well as non-governmental experts in the United States, Greenland, and Europe.