Speech by President of the Republic Tarja Halonen at the Spring Meeting of the Council of Representatives of the Confederation of Finnish Industry and Employers on 22.5.2003

People want to be spared unpleasant surprises in their lives. We all try to make our world predictable to at least some degree. The terror attacks of September 11 in 2001 shook the Americans’ world and their knock-on effects are being felt all over the globe.

Ever since those events, people have been pondering their impacts on US foreign policy and the whole world.

The war in Iraq and the phase that we are currently going through in international politics tell a lot about what the United States is today. Despite all its economic and military might, it feels threatened and is trying to act to eliminate this threat – alone if needs be, and even in cooperation it wants to sit firmly in the driver’s seat.

The US economy accounts for over 30 per cent of total global production. It is bigger than the economies of Japan, Germany, France and Britain combined. It spends overwhelmingly more on defence than any other country, although less relative to GNP than ten years ago. Defence spending as a proportion of national income is only a little more than a half of what it was at its peak during the Cold War. Nevertheless, defence spending is many times greater than the figure for any other country. That is a fact with which we have to live.

Against that background, the question is not whether the USA is a genuine superpower, but rather how it will use this status. The terror attacks of September 11 were a central factor with regard to this role. What is involved is a challenge, the response to which will in the final analysis define Bush’s entire presidency.

We Europeans, who have been ravaged by wars for century after century, find it difficult at times to comprehend how profoundly the terror strikes affected Americans. It is even more difficult for Africans or Asians, whose own societies have often been caught in the maelstrom of poverty and violence.

The USA has not confined itself to action against Al Quaeda and other international terrorism. Anti-terrorism measures dominate all politics. In the Americans’ thinking, the war in Iraq eventually took its place in the same continuum as anti-terrorism action and the war in Afghanistan.

The relationship between Europe and the United States has a rich history, but it also has a future. That is because both have benefited from cooperation and equally both suffer when there is a lack of cooperation.


Europe and the United States are different, for which reason it is natural that problems crop up from time to time. The USA is a federal state and the EU is a federation of states. On the basis of their own experience, Europeans put their trust in cooperation and avoid war to the last. We have not only experienced war, but also time and time again survived it. Nowadays we are more builders than wagers of war.

Another reason why strengthening cooperation is not easy is that European structures and the forms that our cooperation takes are evolving all the time. The United States must adapt its own thinking and actions to these changes. EU enlargement, the introduction of the euro and the development of a common foreign and security policy are examples of things that require dialogue, so that the parties’ goals and intentions are understood correctly.

Europeans have a very different picture of the justification for the war in Iraq or of its usefulness. It lies in the best interests of the Iraqis and of all of us that our shared future is built under the UN’s guidance. In this sense, we are very pleased to receive advance information that the Security Council will today adopt this resolution that is so important from the perspective of rebuilding Iraq.

We Finns attach great value to transatlantic relations. Disagreements between Americans and Europeans have never advanced the Finns’ wellbeing and security. A stable relationship based on mutual respect lies in our interests.

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Despite their occasional differences of opinion, the EU and the United States must shoulder their responsibility for both the global economy and the development of the international trade system. If this relationship works, it will help pull along others, such as the EU’s and the USA’s numerous developing country partners.

A defining feature of trade and economic relations between the EU and the United States is an advanced degree of mutual dependence. The EU and US economies are highly integrated. Over a half of trade between them is accounted for by companies buying from or selling to their own subsidiaries located on the opposite side of the Atlantic.

The United States is also Finland’s most important trade partner outside Europe and the only European countries that rank higher are Germany, Sweden and Russia. However, trade is only a part of the totality: the ten biggest Finnish companies have a combined turnover in the United States that is three times the value of everything we export from Finland to there.

The broad and close relationship between the EU and the United States contains room also for problems of trade policy. However, their significance should not be exaggerated. In spite of everything, rows concern only a tiny part of the totality of trade and economic relations between the EU and the United States.

Cooperation between the EU and the United States is essential in order to advance the Doha round of negotiations. As they approach one of the main interim stages in the negotiations, the ministerial conference in Cancun next September, the EU and the United States appear to be finding common ground on several central issues. What results are achieved in the round will largely depend on these two big actors. The Doha development round poses a challenge to the effectiveness and credibility of the entire multilateral international system. We cannot afford to fail.

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Globalisation is by definition a worldwide phenomenon, but not all economic activity is global. One of the United States’ central economic advantages over Europe has been its bigger and more developed domestic market. The Single Market which the EU “opened” ten years ago has helped balance the situation and EU enlargement will further improve it. The Single Market has been one of the EU’s success stories and its flawless functioning is a central matter from Finland’s perspective.

Following the European example, efforts to build bigger and more effectively functioning common markets are now in progress also in Asia and Latin America. Similar efforts in Africa have been hampered by poverty and a dearth of economic and administrative capacity but NEPAD is encouraging.

However, the development of the EU’s Single Market has not been brought to completion even now, ten years after it was created. As elimination of barriers to trade, the single currency and other economic integration advance, they are continually revealing new things that need developing. Such fundamental questions as the development of corporate law, the creation of a single services market and even that of ensuring the free movement of goods all remain projects of topical relevance in the EU.

Efforts to create common rules will be in vain if they are not applied everywhere in the EU. This is a core matter from the point of view of Finnish companies and their employees. We Finns believe – and know – that we shall cope in competition if the rules are the same for everyone and are scrupulously observed. A lot of attention was paid, quite rightly, to this matter during the accession negotiations. It was important from Finland’s point of view that the transition periods and other special arrangements granted the applicant countries do not cause disturbances in the Single Market. In addition to the general safeguard clause, a separate Single Market clause was written into the accession treaty. This will make it possible to introduce protective measures in the event of a new member state being unable to meet its obligations with respect to the Single Market, thereby seriously disturbing its functioning.

A second matter that was important also to Finland was the regulations concerning free mobility of labour. It has been agreed in the appendices to the accession treaty that the existing member states can apply a national work permit procedure to citizens of new member states for a period of two years. This transition period can be extended in two stages to a total of seven years.

The possibility of requiring work permits has been considered important in Finland. Something that I see as even more important than this is that two labour markets, an official one and an unofficial, will not be allowed to come into being in Finland. In an official labour market, laws and collective agreements would be observed, but in an unofficial one only sometimes and perhaps. Resisting a development of this kind is not only important from the point of view of employees and employers, but also has an influence on the development of our society as a whole, and this is further in our own hands.

The work of the EU Convention has been the focus of much attention and criticism. The main discussion has centred around the new draft constitution’s articles concerning the institutions and external relations.

A desire on the part of the big countries to increase their own power at the expense of communitarianism can be seen in the work of the Convention from time to time, but I hope that this will not lead to an erosion of what has been achieved on the Single Market side. A strengthening of this development would be ruinous for a country like Finland.

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Finland has in recent years performed excellently in various international comparisons with focuses varying from education and competitiveness to sustainable development and exiguity of corruption. We have benefited from the Single Market and succeeded in availing ourselves of the opportunities that globalisation has brought. Finland’s success is the object of great interest, wonder and even admiration when I meet my foreign counterparts and other partners. The positive feedback we get is sometimes nearly embarrassing to someone accustomed to the unassuming nature of us Finns.

Fifteen months ago, the International Labour Organisation ILO appointed its World Commission on the Social Dimension of Globalisation, which I have the honour to co-chair along with President Benjamin Mpaka of Tanzania.

Our intention is to present a realisable vision of a globalisation that is fair, has a sustainable foundation and corresponds to people’s needs. Our goal is a globalisation that is more humane, promotes growth, prosperity, employment and development as well as reducing poverty. Thus what we are aiming for is not a paradise but a globalisation conducive to a decent life.

Our work in the Commission has included studying and pondering the prerequisites how the nation-state could succeed in a globalising world and we have identified three totalities which are central:

A) Building a national capacity is a prerequisite for being able to seize global opportunities. This includes strategies for developing technical and industrial capacity, education and competence policies to accumulate intellectual capital as well as building social security networks to make it easier for people to adjust to constant change.

B) Creating regulations and the conditions necessary for economic activity. Regulations must be such that they ensure the operation of market mechanisms and that markets implement both economic and social goals. The economic policy practised must be on a healthy basis and take both stability- and growth-related goals into consideration.


C) The foundation for all of this must be a functioning democracy, respect for human rights and implementation of the rule of law.

For Finns, the things that I have just mentioned are familiar and even taken for granted. It is with the aid of these principles and practices that we have created the foundation for our success in international competition. Our great challenge is to do well also in tomorrow’s globalisation.

In my view, it is absolutely important to maintain and improve social cohesion in our country, to be Team Finlandia. This presupposes mechanisms to even out the distribution of incomes, taxation and income transfers. What does not belong to it is widening income differences and the creation of a working-poor class. A socially stable situation facilitates stable management of the economy, and vice versa. I am convinced that a stable social development, the blessings of which are quite familiar to us, lies in the interests of also Finnish companies.

Another central matter is education and competence. Finland cannot rest on her laurels; our educational system and the contents of education and training must be constantly developed to meet the challenges of the future. The members of the Council of Representatives of the Confederation of Finnish Industry and Employers know well how important competent men and women are to companies and for Finland’s wellbeing. I am glad that your Confederation often draws attention to the importance of vocational training and exerts its own influence to boost esteem for this training. This esteem should also be more evident in practical working life. It is futile to suppose that young people would want to go into a sector in which wages are small and the other terms of employment likewise bad.

In this context it is appropriate to express my concern at the decline in research and development inputs in Finland. The news that the Technical Research Centre of Finland VTT has had to temporarily lay off staff is a signal that ought to worry all decision makers and citizens who care about the wellbeing of the Finns. I hope that both the public authorities and companies will increase their spending in this respect.

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Promoting employment is one of the principal goals of the new Finnish government, as it was with the last government as well. However, this is not just a Finnish matter, but also a universal goal.

In our globalisation commission we have been considering elevating the promotion of employment to the status of a goal in all international economic and development policy. Promoting employment and often even assessing impacts on employment have remained a matter of secondary importance in international trade negotiations, the activities of international financial institutions and bilateral development cooperation.

However, promoting employment is often the best development policy and has a central role in reducing poverty. Of course, work is a lot more than an economic unit of quantity. It has a central role in building people’s self-respect, and also as a channel for social interaction. Decent work reduces marginalisation.

In recent times, however, there have been positive trends of development in relation to the importance of employment. With the aid of the Lisbon Strategy which it adopted in 2000, the European Union plans to become by 2010 “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.”

The World Bank, the International Monetary Fund and regional development banks have been taking employment more carefully into account when giving support and guidelines to developing countries. The Millennium development goals, which include also promoting employment, have been incorporated into national development strategies. In March this year, agreement was reached in the ILO on a global employment programme, in which promotion of employment is accorded a central role in both economic and social policy. Implementing this programme will require political will; contributions by governments, business, the trade union movement and civil society.

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This event is a good demonstration of Finnish strengths. In addition to political democracy, a developed democratic society also features a sophisticated labour market.

I want to express my esteem for your Confederation and all of its affiliated companies. One of the reasons for Finland’s success is our ability to act in unison to achieve common goals. We are able to agree on things and make compromises. A central part of this is the willingness of the labour market partners to resolve matters in a way that brings all of them the greatest benefit. Your Confederation’s role in representing the interests of industry and employers is in this respect a central one. In the same conjunction, I want to express my respect for the small and medium entrepreneurs who are present here today.

Enterprise is irreplaceable as the engine of the Finnish economy and as a job creator.

I want to thank all of you for your interest and wish you the best for the remainder of the spring and a sunny summer!