SPEECH BY THE PRESIDENT OF THE REPUBLIC OF FINLAND, MR. MARTTI AHTISAARI
AT A BREAKFAST MEETING IN MONTERREY, MEXICO ON 25.2.1999

I would like to begin by thanking the Finnish and Mexican organisers for the opportunity to attend this meeting. The Confederation of Finnish Industry and Employers, with CAINTRA’s valuable support, has brought together a very representative cross-section of the industrial and business elite of Nuevo León and Monterrey

When we began planning the programme for this state visit, it was self-evident that Monterrey would have to feature on my itinerary. Nuevo León is one of this country’s leading industrial areas, where people have never waited around for the central government to introduce measures to support economic endeavour. The private sector here has taken the reins in its own hands and, with the help of the state government, created a strong cluster of leading companies in the heavy-industry sector. Monterrey is at the same time rapidly developing into one of the country’s leading high-tech centres. The city’s superb technological institutes have contributed a great deal to making this success possible. It has been very gratifying to note that there is a regular exchange of students between the Monterrey Tech and Finnish universities.

The favourable climate for investment here has attracted the leading Finnish electronics company Elcoteq, whose new factory we shall be inaugurating in a couple of hours’ time. Yesterday, a new monitor factory belonging to our flagship company Nokia was opened in Reynosa. It is Nokia’s second industrial facility in Mexico; the company began manufacturing cellular phones here a couple of years ago. I believe that other Finnish technology companies will be establishing in this region in the future. Monterrey has good prospects of building up its high-tech cluster to the critical mass needed to ensure competitiveness far into the new millennium.

Relations between Finland and Mexico go back many decades. In November this year it will have been fifty years since we established diplomatic ties. In those days, geographical distance was a natural impediment to closer contacts, but now - thanks to rapid development of air transport and telecommunications - it has lost its significance.

My visit to Mexico is historic, because I am the first President of Finland to come here on a state visit. During my discussions with President Zedillo on Monday, we were able to note with great satisfaction that relations between our countries are excellent and just now developing dynamically in many different areas.

It is the task of governments to create the most favourable framework possible for trade and economic cooperation. Towards that end, we signed an agreement providing for the promotion and protection of investments three days ago. This, along with the agreement preventing double taxation that we signed in 1997, will provide a solid legal foundation for companies wishing to invest or establish in either country.

The opening up of the Mexican economy in the 1990s, the structural reforms that you have instituted and the rapidly advancing privatisation of the state-owned sector have increased Finnish industry’s interest in your country. A good demonstration of this is the high-level delegation accompanying me. It represents the strongest parts of our industrial and commercial sectors: electronics and telecommunications, papermaking, energy generation and distribution, mining technology, mechanical engineering and the distributive trades.

Our bilateral trade doubled in both directions last year and totalled about $140 million. As encouraging as that trend is, it stills fall short of realising the industrial and technological potential of both countries. On the other hand, trade statistics do not nowadays accurately reflect the volume of trade and investment, because products are often manufactured in a third country and exported from there. We estimate that at least twice as many Finnish products are exported to Mexico from North America and European countries than directly from Finland.

Finland’s accession to membership of the European Union four years ago has added a new dimension to our relations with Latin American countries. This region is a clear priority for the EU and its members. A good indication of this importance is next June’s first summit, in Rio de Janeiro, between the EU and Latin American and Caribbean countries. It will bring our continents closer together and plot the course that strengthening cooperation between us will follow in the next millennium.

I believe we now have a unique opportunity to make relations between the European Union and Mexico closer and richer in diversity. Both parties have a strong political will for that. The agreement on economic association, political coordination and cooperation signed in December 1997 created a solid foundation on which dialogue and cooperation between us can continue to develop and flourish. I am proud to be able to say that Finland was the first country to ratify this important document.

A free-trade agreement aimed at facilitating exchanges of goods and services on a broad front is currently being negotiated between the EU and Mexico. The Finnish Government strongly supports the rapid conclusion of a comprehensive and balanced agreement. Finland will hold the Presidency of the European Union for the second semester of this year and will then make every effort to bring the negotiations to a successful conclusion.

As an economy with only five million inhabitants, Finland has tried to specialise in certain key sectors where we have international-class know-how and advanced technology. The majority of the Finnish industries that have enjoyed most success already base their operations on specialisation and global reach. Thus more than half of our industrial output is destined for international markets, in addition to which production is being located outside Finland in important markets like the NAFTA countries.

Competitiveness and economic growth nowadays depend more and more on technological development and innovation. New technologies are spawning applications that are regulating the development of both business and the whole of society. Those companies and nations that are quickest to sense which way the wind will be blowing in the future and target their investments correctly will reap the greatest rewards. Correct timing is important, because the first into a market is usually able to get a good grip on it before anyone else arrives. Because a deep understanding of the present state of technology, business, markets and the central factors influencing development is so essential, education and lifelong learning are of key importance.

Finland has been pursuing a very focused technology policy for 20 years. Our research and development inputs have been increased in line with clear goals and channelled into sectors of technology that we judge important for us. Last year, the amount we spent on research and development came to 3.1 per cent of gross domestic product, which put us among the group at the very head of the world league. The results of our sustained efforts are now showing themselves in a diversification of the structure of production and exports. The importance of advanced-technology products has increased, exports are growing rapidly and our competitiveness has been improving enormously. Our concentration on technological training has made valuable human resources available to companies and society.

Throughout this decade, growth in the Finnish economy has been powered largely by globalisation. Electronics has come up strongly to take its place alongside forest products and then even surpass it. In fact, the electronics industry now accounts for a quarter of our total exports, which in turn have doubled in value in less than ten years. The share of advanced technology in our exports has grown faster than in any other industrial country and was 16 per cent in 1997. Telecommunications equipment accounted for two-thirds of that.

Finnish investment abroad has been growing strongly. This is only natural as companies seek new markets and merge in response to the challenges of internationalisation. We have also tried to make Finland a good base from which to conduct global business operations. We have put considerable resources into infrastructure, education and training. We have increased the availability of labour, built more incentives into our tax system and revised our legislation to bring it more into line with changed needs

Regional integration gives the nation-state a better opportunity to relate to and manage rapid change in the international economic climate. The constantly deepening integration in Europe - for example our Economic and Monetary Union and the new currency unit the Euro - are a good example of this. For Finland, EU membership is an opportunity to have a real influence on the decisions that this major economic power arrives at, thereby considerably improving our ability to look after our national interests.

Finland and Mexico are irreversibly part of the new global economy. We have both foreseen the challenges and problems that it would bring and implemented the structural changes in our economies, at the same time throwing our industrial sectors open to international competition. Mexico’s membership of NAFTA and Finland’s membership of the European Union since 1995 have integrated both of us into a pattern of broader and more solid cooperation, something that has had clear positive effects on the development of our economies.

I wish you all the very best of success in your business operations. I am convinced that this meeting will increase knowledge of Finland and of our industry on the part of the Mexican business leaders present here this morning. The Finnish representatives of business and industry will, in turn, gain new insights into the opportunities that Nuevo León and Monterrey offer. I urge all of you to avail yourselves of the opportunities that this meeting offers to establish new business contacts. I likewise ask representatives of industry and business in this region to examine the opportunities that Finland offers in the sectors of trade, technology and investment.

Thank you.