(Translation)

SPEECH BY THE PRESIDENT OF THE REPUBLIC OF FINLAND,
MR. MARTTI AHTISAARI AT AN ECONOMIC SEMINAR
IN KYIV ON 1.4.1998

It gives me satisfaction to be able to attend this high-level economic seminar, which is the first to be arranged between our two countries. These premises offer an excellent setting for our gathering. I wish to extend my thanks to all who have contributed to the arrangements for the seminar.

Unprecedentedly rapid globalisation has been the characteristic feature of the world economy in the present decade. New markets have been opening up everywhere. The European integration process has been continuing. Finland has been a member of the European Union since 1995 and at the recent Luxembourg summit we agreed on how the next round of enlargement of the Union should begin. Ukraine has chosen a market economy and democracy as the course to follow.

This is the dynamic, constantly changing environment in which we operate.

The abandonment of central planning has given companies the power to decide on economic matters. The development of trade between our countries likewise depends on the interest and skill of these hundreds of large and small enterprises. Our trade is still very modest given the geographical proximity of our countries and relative to the potential that exists. Nevertheless, a sound foundation has been laid down in the past five years and trade between us has trebled in that time. The large attendance at this seminar and the high level that it represents indicates that companies believe growth will continue.

Efficient physical communications are a basic prerequisite for trade. They include direct air links.

In a market economy, the role of the authorities in trade is confined to creating a framework. However, for governments to be able to carry through essential reforms they must have a clear conception of goals and work hard to achieve them.

The direct trade links that were revived between our countries in 1992 rest on a long tradition. The Vikings' route to the East ran along the south coast of Finland, reached the Black Sea through the Ukrainian rivers and then continued to Byzantium. Our shared history as part of the Russian Empire also created new economic relations. In 1918, before the consolidation of Bolshevik power in Ukraine, newly-independent Finland tried to ensure that those trade ties would remain permanent. A Finnish embassy was briefly located in Kyiv. Then direct trade links were severed for the following 75 years.

Finland is no longer the "country standing on wooden legs" as which we have been describing ourselves for decades. Although the wood-processing and paper industry still makes a major contribution to our export earnings, the 1990s have seen metal products clearly outstrip it as the leading industrial sector and export locomotive. The electronics industry has grown especially fast and in this field it has taken Finland only a few years to become one of the leading countries in Europe. This change is influencing also trade relations between our countries.

Finland is now one of the foremost users of information technology and its advanced telecoms networks are among the densest on Earth. We have invested heavily in research and training, which we see as the surest ways to support our competitiveness.

As internationalisation goes on, one has to take care that one gets the same rights as everyone else. At the same time, naturally, one must undertake to respect common ground rules. In the sector of trade and economic activity, this is done through the World Trade Organisation.

Ukraine has set itself the goal of attaining membership of the WTO. We can note with satisfaction that good progress has been made in negotiations, although a number of matters are still open. Finland and the other EU countries consider it very important that Ukraine is admitted as soon as possible. It would be important for Ukraine to be a member when the new global round begins after the turn of the millennium. In our assessment, there are real prospects of this happening.

Finnish membership of the European Union means that trade relations between Ukraine and ourselves are regulated by the Partnership and Cooperation Agreement that came into force at the beginning of March.

This agreement creates a solid foundation for trade and economic relations between the European Union and its members, on the one hand, and Ukraine, on the other, over the next few years. Finland and the other EU members are prepared to push to ensure that the agreement is implemented as quickly, effectively and comprehensively as possible. The cooperation council provided for in the agreement is due to meet before the end of spring.

The agreement creates a content for relations between the European Union and Ukraine and will guide them also over the longer term. It provides for the possibility of creating an EU-Ukraine free-trade area. Ukraine has also undertaken to align her economic legislation more closely with that of the EU.

The enlargement of the EU will bring it closer to Ukraine also in the geographical sense, because Poland and Hungary, both of which will be in the next wave of countries to accede, share borders with Ukraine. Already now, many Finnish companies are operating in the Ukrainian market through Poland and the Baltic States. Enlargement will further increase the European Union's interest in Ukraine.

Globalisation means a more unimpeded flow of capital from one country to another. There is constantly intensifying competition for investment. Ukraine has good prospects of using its central location to advantage in attracting investors. A domestic market with 50 million consumers and trade arrangements with Russia and other neighbouring countries make Ukraine even more interesting.

During this visit, as a concrete measure to promote trade and investment, we have signed a package of guarantee and financing agreements negotiated in the course of the spring.

Strengthening trade relations is the peace process of our time. Finland's experience tells us that foreign trade creates prosperity. We have opened our market to tougher competition and stepped up the efficiency of our production. This has created new opportunities, even though adjustment has not always been easy.

Not even in the case of the largest countries do introversion and protectionism offer a solution. That China has embarked on the market-economy road is an excellent example of this.

Ukraine's alternatives on the road of economic reforms have not been easy. A lot has, of course, been achieved and I believe that the road of economic reforms chosen is leading to results, which are reflected in a rising level of economic activity and prosperity. I wish Ukrainian and Finnish companies success and good results in the development of their mutual trade relations.