On my own behalf and as a representative of the Finnish State, I would like to thank the organisers of this Brazilian-Finnish economic seminar: the São Paulo Industry Federation and the Confederation of Finnish Industry and Employers, for the opportunity to speak at this important gathering. It is gratifying and encouraging to see Brazilian economic life and industry represented by such a large and prestigious group.

The choice of São Paulo as the venue for this seminar was natural, given the key position of the city and its surrounding state as a centre of Brazilian industry, trade and banking. As I was arriving here from Brasília yesterday, I was immediately impressed with the striking dynamism and vitality of this metropolis.

The bulk of the foreign direct investment in your country is concentrated in São Paulo. In that light, it is not at all surprising that also Finnish companies have been establishing and making their industrial investments mainly in this region. In this respect, I would like to make special mention of the first Finnish industrial investment in Brazil over thirty years ago. It happened when the large state-owned company Valmet built a tractor factory at Mogi das Cruzes in the state of São Paulo. The decision to invest in such a far-away country was in many respects pioneering and farsighted at a time when the attention of Finnish industry was focused on markets close to home much more than is now the case. The factory is now called Valtra do Brasil and remains a good example of both our industrial sector's high level of technical know-how and fruitful Finnish-Brazilian cooperation.

Relations between Finland and Brazil span a period stretching back 78 years. In 1919, Brazil recognised Finland two years after we had proclaimed our independence. A Finnish legation was opened here in 1929, mainly for trade-related reasons. A Finnish shipping line had just inaugurated a cargo and passenger service to South America, to which there had also been a certain level of migration from Finland.

When the second world war had ended and the Finnish vessel s/s Hercules arrived with the first cargo of coffee to reach us for several years, Brazil gained a fabulous reputation in our nation of big coffee consumers as a friend of Finland and source of our favourite everyday beverage.

Brazil is by a substantial margin our most important trading partner in Latin America, quite understandably given your country's large size and economic power. It is, however, obvious that trade between us does not come even close to its potential level. More than half of our imports from you still consist of agricultural produce and raw materials, whilst nearly half of our exports to you are paper and other forest products. However, the proportion of high-technology products in both flows has been growing at a gratifying rate. Indeed, one of the goals that this seminar is intended to achieve is an acceleration of this trend and diversification of our trade.

Accompanying me on this first - and therefore historic - state visit to Brazil by a Finnish president is a very high-level and representative industrial delegation. That fact underscores the central importance of commercial interests in relations between our countries. It also indicates the Finns' keen interest in Brazil's rapidly developing market.

I am convinced that cooperation of this kind between the state authorities and the private sector will help make commercial and economic relations between Finland and Brazil even closer. The purpose of this seminar is to make leading representatives of Brazilian economic life more aware of the high technological level of Finnish industry and of what we can offer to satisfy your needs. Correspondingly, the Finnish participants will learn more about the products and opportunities for cooperation that Brazil has to offer.

Distinguished Audience,

The international trade system has undergone major changes in recent years. Business has globalised rapidly, goods and services are produced in the locations that companies find the most advantageous options in the light of their overall interests. More and more, business flows are between companies and their subsidiaries or subcontractors. The importance of trade in services, investment and local establishment has grown, whereas tariffs are less and less a problem in the way of goods flows compared with non-tariff barriers and standards. All this underscores the need to strengthen the multilateral trade system and the set of norms that govern it.

The first ministerial conference of the World Trade Organisation in Singapore last December demonstrated the vitality of the WTO and its member countries' strong commitment to respecting collectively-adopted rules. As a staunch champion of free trade, Finland is generally satisfied with the results that the conference produced, and which naturally reflect the member countries' different levels of development and the diversity of their interests.

Alongside globalisation, regional economic integration has been taking place at a rapid pace in several parts of the world. Finland herself joined the European Union at the beginning of 1995, and this is obviously our most important market region. The most successful example of integration in South America is MERCOSUR, within which Brazil, Argentina, Paraguay and Uruguay have formed a common market. In only a short period, MERCOSUR has become a regional power factor and a locomotive of economic development.

In order for world trade to function smoothly, it is essential that regional integration projects be implemented in accordance with the rules of the multilateral trade system and in a manner that helps rather than hinders the functioning of the system. At the same time as they increase trade and other economic cooperation between the participating states, customs unions can generate trade flows also with outside countries without becoming discriminatory barriers. The welcome decision gradually to lower MERCOSUR's external tariffs is a good example of this.

From the perspective of outside states, MERCOSUR is greater than the sum of its parts. Together with South America's rapid economic development and opening of markets, it has strongly increased interest in the region and its commercial opportunities. In Madrid in December 1995 the European Union and its member states signed a comprehensive cooperation agreement with MERCOSUR. This is intended to achieve a gradual liberalisation of trade and eventually free trade. I was personally present at the signing ceremony together with President Cardoso.

Finland was the first EU country to give this agreement national ratification. We intend to continue to participate actively in its implementation, especially with a view to liberalising trade between the parties within as brief a transition period as possible. Finnish industry sees MERCOSUR and our EU membership in general as providing companies with new commercial opportunities in South America.

Economic growth in Latin America has been quite rapid in the 1990s, and for the most part stable in comparison with the development in the previous decade. When the countries of the region have opened up their economies to international competition, they have had to carry out extensive structural changes in their industrial sectors at the same time. That in turn has enhanced their own companies' prospects of success both at home and abroad. South American countries are gradually adopting a more active role in world trade, a development that we greet with satisfaction.

We in Finland understand quite well that in Brazil the transition to the new market situation created by stiffer competition can not have taken place in every sector without difficulties. Our society has had the painful experience of similar adjustment difficulties, especially in the form of an intractable problem of high unemployment. I am, nevertheless, convinced that opening up markets and abolishing competition-distorting subsidies is, in the long run, the only right way to make an economy healthy and strengthen its international competitiveness.

The privatisation programme that your government has carried through and your plans for infrastructural development make Brazil particularly interesting for foreign companies, including Finnish ones. Their small average size notwithstanding, our companies can prove suitable cooperation partners for Brazilian ones intent on raising their technological level and improving their international competitiveness.

Both the State and the private sector in Finland have traditionally channelled considerable resources into high-standard basic and applied research and industrial development. This spending currently represents slightly over two per cent of GDP and the intention is to increase it by the end of the decade to about three per cent, which would be one of the highest figures of any country. We regard the unbroken chain of innovation that links our universities, research institutes and industrial sector as a cornerstone of our national competitiveness. I believe that Finland's positive experience could provide a foundation for mutually-beneficial cooperation between authorities, research institutes and companies in our countries.

Distinguished Audience,

The Finnish government is encouraging companies to supplement their normal export efforts by establishing in other countries and transferring technology to them. Only in that way will they be able over the longer term to strengthen their position in potential markets. The Finnish Foreign Trade Association recently began implementing its new export-promotion strategy in Latin America. This has involved identifying the most promising markets in the region and within them the sectors that will be the foci of special efforts in the future.

An export centre was recently opened in São Paulo to help Finnish companies push their exports and establish a more permanent presence in the country. It has been calculated that our best prospects for cooperation with Brazilian partners lie in the sectors in which we have traditionally possessed special expertise; these include forestry and forest products, mining, energy generation and distribution, telecommunications and transport. The same sectors feature prominently in Brazil's development plans, because of their key role in building up efficient production infrastructure. In those sectors, Finland possesses a lot of know-how, broad experience and, through a combination of both, can offer competitive products.

Forest products is a sector where the needs of your industry and the advanced technological expertise of Finnish companies match each other well. The Brazilian pulp and paper sector's expansion and modernisation plans are impressively ambitious. Finland has across-the-board expertise in this sector. An integral aspect of that expertise is comprehensive acceptance of responsibility for the environment in accordance with the principles of sustainable development. Since forests are the most important - indeed nearly the only - natural resource that we have in Finland, we have been accustomed for decades to taking good care of them.

The need to protect our forests has forced our industry to develop technologies that both increase wood yields and lessen the burden on the environment. Thanks to that, we are today one of the world's leading manufacturers of machinery and equipment for the wood-processing industry. Finnish expertise in this sector is well-known in Brazil. That creates a good basis for a further diversification of cooperation with you.

The Brazilian mining sector seems to have almost unlimited development potential and can be expected to attract major foreign investment. Finnish mining technology has been in use in this country for many years. Finnish companies in this sector are closely watching the opportunities for investment, technology transfers and equipment deliveries that flow from the expansion of mining in Brazil.

Without good infrastructure, neither an economy nor its industrial sector stand on a sustainable foundation. That fact has been recognised also here in Brazil, where safeguarding the supply of energy, dependable telecommunications networks and an efficient transport system have been designated as areas of development requiring large-scale investment.

Difficult climatic conditions and the energy-intensive character of our industry have forced Finland to develop efficient energy-generation and distribution systems. Since in addition to that we have to import most of our fuels, we have always paid a lot of attention to getting the maximum amount of energy out of them and using it as economically as possible. The diversified character of our energy-generation sector gives us expertise and experience spanning a comprehensive range encompassing everything from diesel generators that can be rapidly brought on line to very large power stations.

Efficient and dependable telecommunications systems are particularly important in a country like Brazil where distances are vast. In only a brief period mobile phones have revolutionised international telecommunications by becoming the everyday work and communication tools of first businesspersons and then ordinary people. One Finn in four nowadays has a mobile phone and Finland is a world leader in telecommunications-related research and industrial development.

Finland is particularly strongly positioned in the market for mobile phones, which is advancing by technological leaps and bounds and growing rapidly all over the world. In addition to manufacturing equipment and systems, Finnish companies have enjoyed success as network operators in several countries. Through the subcontracting work that it provides, the information technology sector has furthermore offered a lifeline to many small and medium enterprises struggling for survival.

Finland's high dependence on foreign trade and the difficulties that have had to be overcome to ensure dependable transport to and from our country have necessitated exceptionally efficient technology for materials handling in harbours and elsewhere. It enables cargoes to be handled swiftly and safely, using both labour and machines with optimal efficiency. Modern Finnish cargo-handling equipment is in service in nearly all of the world's major ports.

Ladies and Gentlemen,

That opportunities exist to increase trade and economic cooperation between Finland and Brazil, and indeed considerably, is obvious. However, results will not happen by themselves nor without efforts being made. Finnish and Brazilian companies must learn to know each other's product palettes and strong points better and in that way be able to identify the most appropriate, mutually-beneficial forms of cooperation. That is why we are here today.

The task of governments and public authorities is to create the most auspicious framework and a level playing field for trade and investment. I can assure you that the governments of Finland and Brazil are cooperating well in this respect. Now the ball is in the court of industrial and business leaders; in other words, at your foot.

Many thanks.