SPEECH BY THE PRESIDENT OF THE REPUBLIC OF FINLAND, MR. MARTTI AHTISAARI,
AT THE KEIDANREN LUNCHEON ON 25 SEPTEMBER 1997

Dr Toyoda, Excellencies, Gentlemen,

Let me first warmly thank Keidanren and especially its Chairman, Dr. Toyoda, for the hospitality you have shown us and for the valuable opportunity you have given us to exchange ideas with Japanese business representatives.

Japan is by far Finland's biggest trading partner in Asia. Trade between our two countries has grown rapidly in recent years, and particularly since 1993. In fact, the value of Finnish exports to Japan doubled in 1994 and 1995. Forest industry goods have always been key Finnish exports to Japan, as elsewhere, though in the mid 1990s exports of machinery and equipment, including telecommunications products, increased greatly. In the early months of this year this trade stopped growing, but hopefully only temporarily.

We trust that we can jointly find new ways of increasing business between our two countries during this visit to Japan. The Finnish Foreign Trade Association has named the week 'Finnish Business Week in Japan'. Yesterday, a business seminar was organized in Osaka to find new areas of co-operation and new business partners. In addition, a business seminar is to be held here in Tokyo this afternoon, in co-operation with JETRO (the Japan External Trade Organization). Alongside well-established trading sectors, Finnish companies hope to find new potential for cooperation in environmental technology and care for the elderly, among others.

The areas for cooperation that I just mentioned would also seem applicable in the planning and preparations for the EXPO world fair in Aichi in 2005. Our Embassy in Japan has already made some initial contacts with the local authorities in Aichi. Here again, I would like to congratulate Japan and Keidanren, which played a particularly active role in the campaign, for obtaining the right to host the fair. Finnish authorities and business representatives wholeheartedly supported the choice of Aichi as the EXPO setting.

We in Finland have observed the progressive deregulation of the Japanese market with great satisfaction during the last few years. The three-year deregulation programme has also helped other EU countries, and the USA, to voice their opinions and fulfil their own wishes. Finnish companies have also benefited from deregulation, which has helped them gain a better foothold on the Japanese market. We hope that the current policy of freer trade will continue and that European views on the matter will be heard. We know that Keidanren is an active advocate of deregulation in Japan, and we wish you continued success in this important endeavour.

The Finnish economy has recently come out of the deep recession it faced in the early '90s, and is now mostly on a steady growth track, driven by a rapid increase in exports. This is thanks to the restructuring our industry has undergone in order to improve its competitive edge, and our continued investment in research and development. Furthermore, Finnish companies have met the challenges of globalization by going increasingly international.

Our GDP will grow this an estimated 4.6% this year - one of the highest figures in the OECD. The inflation rate is around one per cent, there is a clear surplus in our current account, and the remaining indicators also demonstrate that the Finnish economy is on the right track. Our biggest problem during the last few years has been the high unemployment level. Though this is now showing definite signs of decreasing, the rate of improvement is slow, a fact which taxes society's resources excessively. Unemployment is a problem shared by all the industrialized countries. Solving it means we must also expand international trade in a way that helps improve working conditions in developing countries.

Finland has been a member of the EU since the beginning of 1995, and this has helped to establish our standing in international affairs, also giving us new opportunities to develop bilateral trade and co-operation with third countries like Japan. Our position in an increasingly unified and dynamic European market has made Finland an even more interesting business partner.

The European Union itself is taking a decisive step towards greater integration by implementing the third stage of Economic and Monetary Union, involving transfer to a single European currency, the euro. This is a logical extension of the existing policy of greater European integration, particularly the formation of an internal market, and it will have significant impact on European economic development. EMU is a way of promoting economic growth, competitiveness and employment goals. Since Member States are required to maintain low inflation and to control public spending, companies based in Europe will have a better chance of succeeding in the increasingly competitive global marketplace. One aim of monetary union is to stabilize the global currency system.

For Finland, membership of the Economic and Monetary Union will undoubtedly be a good thing, and we want to be in the first 'wave' of EU Member States to enter the third stage of EMU at the beginning of 1999. We will certainly meet the current convergence criteria. The final decision will be made by the Finnish Parliament next spring. I am convinced the decision will be in favour of joining.

The other great challenge facing the EU is enlargement. In December, EU Member States will decide in Luxembourg whether to start negotiations with several countries seeking EU membership. We in Finland look upon EU enlargement favourably because we see it as increasing European stability, security and well-being. The negotiation process will undoubtedly be a long one, as the candidate countries will require a transition period for their economies to adjust to the demands of membership. Finland will actively promote these negotiations during its EU Presidency the second half of 1999.

EU membership has offered Finland new channels and ways of developing its relations with third countries. During the last few years, Europe in general has started to develop its ties with Asia vigorously. The ASEM process which started in Bangkok has rapidly brought participating countries closer together and has set numerous joint projects in motion. Although we consider the comprehensive development of ties among countries important, Finland currently sees enhanced economic cooperation as the best way to achieve concrete results. This explains our great expectations concerning the meeting of finance ministers hosted by Japan at the end of the week — a meeting which also will be attended by our own Minister, Ole Norrback.

We also consider co-operation in the private sector, as set out in the ASEM Business Forum, to be critically important. This will generate recommendations and information for the various authorities on ways of removing barriers to trade and investment. In fact, the finance ministers will already be considering the Investment Promotion Action Plan and Trade Facilitation Action Plan, compilation of which has involved the active input of business representatives.

We are pleased to note Japan's active role in promoting economic co-operation, particularly within ASEM, and in charting opportunities for synergy between European and Asian economies. As there is still considerable room and scope for synergy between nations, we must together pursue this common goal.

I would ask you to raise a toast to the further development of trade and economic co-operation between Japan and Finland.