Speech by President of the Republic of Finland Tarja Halonen at the Conference "A Social Europe: Let's Deliver" in Rotterdam on 8 November 2004

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It is a great pleasure and honour for me to speak here in Rotterdam. I wish to thank the Government of the Netherlands and especially the Ministry of Social Affairs and Employment for arranging this very timely conference.

The legitimacy of European integration depends entirely on the support of Europe's citizens. And this support depends to a large extent on whether integration promotes people's welfare and social cohesion. The name of our conference, "A Social Europe: Let's Deliver", could not be more fitting.

My main theme today will be globalization, especially the work of the World Commission on the Social Dimension of Globalization. The International Labour Organization established this commission two and a half years ago and I had the privilege to co-chair it with President Benjamin Mkapa of Tanzania.

The commission's origins date further back, however. There had been talk in the international community for several years about the need to move from confrontation to dialogue in the globalization discussion. The social dimension of globalization had been a topic in the ILO for some time and subsequently the organization decided to establish an independent commission to deal with the matter. Let me say here in Rotterdam that one of the most active member of the World Commission was Eveline Herfkens from the Netherlands.

After two years of work our commission of "not like-minded people" was able to agree on a unanimous report, "A Fair Globalization - Creating Opportunities for All", which was published last February. All in all the report has been quite well received around the world. One of the main tasks, to move from confrontation to dialogue, was accomplished well. This is clear if one considers the composition of our commission.

Our view of globalization is critical but positive. Globalization has huge potential to improve people's lives in many ways, but today it falls short of this promise. Too few are benefiting and too many are suffering or are excluded from globalization.

We also tried to avoid getting trapped in the "single truth" syndrome. People's perception of globalization varies greatly depending on their own experiences. This multitude of opinions and views was clearly present in the national and regional dialogues as well as other meetings organized by our commission.

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The nation state is still the main actor in globalization. People's ability and possibility to take advantage of globalization depends greatly on the policies of their government. A nation state should provide an encouraging environment for the self-fulfilment of its people, starting with democracy, the rule of law and respect for human rights.

It is possible to combine the effective use of national resources with the traditional demand for fairness. Good governance, social justice and gender equality are central responsibilities of the nation state. Yet corruption is widespread, it seriously hampers economic activity and it is especially detrimental for the poorest and the weakest. A wide income gap weakens society as a whole. Human resources are becoming increasingly important in a globalizing world, and it is therefore essential to provide girls and women equal opportunities for education and careers.

The nation state is also instrumental in providing an efficient market mechanism. Markets can benefit everyone only when their proper functioning is secured by appropriate legislation and the implementation of norms.

In addition to providing an enabling environment, the nation state is a key provider of social, health and educational services. These services can be complemented but not replaced by private service providers.

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Since the ILO established the World Commission, it is clear that we took a special look at how globalization has affected employment. This proved to be a difficult task, as always when dealing with statistics from around the world. Open unemployment seems to have increased globally over the past two decades. However, employment performance has varied in different regions and countries, even in the European Union, so it is hard to draw definite conclusions about globalization and employment.

All the same, there are clear trends in global employment. Production has become more global. The growth in global production systems has been most pronounced in high-tech industries and labour-intensive consumer goods. It is also becoming more significant in some services.

Although the internal dynamics vary between these sectors, they have something in common. Jobs are disappearing in some places and being created in others. Unskilled workers stand to lose the most, but not even skilled workers can be sure about their positions in this global competition. This is far too evident in most of the member countries of the EU. At the same time it has became evident that employees' negotiation position vis à vis employers has been weakened.

Employment is probably the most important thing affecting how people experience and react to globalization, both in the South and in the North. Therefore accepting globalization depends very much on its employment performance. It is no accident that globalization is perceived as a positive term in China while it seems to be a negative term in many other places.

Governments and the European union as a whole should pay better attention to economic and trade policies' impact on employment. Short-term job losses seem to be unavoidable. In these cases governments need to implement active policies like job training and promoting entrepreneurship, which can lead to new employment opportunities. Here I wish to underline the importance of preventive measures - sound domestic and fair regional policies - whether they concern education, the economy or social security. It is always more difficult, more painful and more expensive to take corrective measures afterwards.

A nation state should provide sound economic policies to achieve sustainable growth. Special attention should be paid to promoting employment. The Lisbon Strategy of the European Union is a good example of a regional attempt to combine improved competitiveness, economic growth, social cohesion and promoting employment, though its implementation has been slow.

In this respect the recent Report from the High Level Group chaired by Wim Kok is an extremely important contribution to the implementation. As they say in the report “To achieve the goals of higher growth ans increased employment in order to sustain Europe´s social model will require powerful, committed and convincing political leadership”.

In Finland we taken into account the essential points of the Commission’s report. One of the recommendations was to establish national programmes on globalization. The Finnish government will publish tomorrow a national report on the effects of globalization in Finland.

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Competition for foreign direct investment has intensified in the era of globalization. One implication of this is increased tax competition. This can lead to the better allocation of resources, but in the worst case it can lead to an unhealthy tax competition, where the cost of attracting investments becomes higher than the benefit acquired by investments.

Many local authorities in Finland have found this out when they have in the 1990s tried to attract investments by providing premises, industrial plants, for new businesses. Some of these businesses moved quickly to another place when they were provided even better premises and other benefits. Similar development has taken place and will now take place in the European Union, and this trend seems to be on the rise after the latest enlargement.

At any rate, the purpose of foreign direct investment should be to promote sustainable economic growth and development. It is certainly in the interest of governments to attract foreign investments, but this should be done within an agreed framework that will provide benefits for society as a whole.

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In today's world capital, goods and services are moving around ever more freely. The same does not apply to the cross-border movement of people. Fair rules for trade and capital flows need to be supplemented by fair rules for the cross-border movement of people.

Every country stands to benefit from an orderly and managed process of international migration and other forms of working abroad that can enhance global productivity and eliminate exploitative practices. This is not an easy issue, but it will not become easier by waiting and doing nothing. The ageing EU societies should make us all understand the importance of this issue.

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One of the most controversial aspects of globalization - and for good reason - is trade liberalization. Since World War II the world community has embarked on the path of liberalizing international trade. The trade agenda has been expanded from lowering tariffs on manufactured goods to trade in services and to areas that cannot be considered trade issues in the traditional sense.

The motive behind this trend has been to foster economic growth and employment - in other words to improve people's material well-being. It is clear that trade liberalization has been successful in many respects, but it is also clear that the benefits of trade liberalization have been unequally distributed both between and within countries.

There are many challenges and problems. First of all the international trade agenda has for decades been determined by the industrialized countries, which by their sheer negotiating power have also dictated the outcomes. Many developing countries feel that the international trade regime is therefore slanted in favour of the industrialized countries.

One example of this is the very modest progress in liberalizing trade in agricultural products. Many countries are seriously limiting market access for foreign agricultural products and engage in trade-distorting subsidies for exports and domestic production.

It has become clear that the Doha Development Round cannot be concluded unless agriculture is addressed in a serious way. The Cancún setback last year was a vivid reminder of this.

We need to proceed with the gradual elimination of trade barriers. I sincerely hope that the Doha Round will live up to its promise and provide a more equitable international trade regime - one that is also sensitive to the needs and interests of developing countries.

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Globalization strongly affects the European Union and on the other hand the EU is a strong actor in globalization. The Union offers a big enough home market in many fields of life, cooperation makes it easier for the member states to succeed in a globalizing world and together we can influence the course of globalization much better.

European integration and the European Union are a great peace project. A peace project that is much more than the absence of war. A peace project that means genuine cooperation on a voluntary and democratic basis. It is important that basic values are respected.

The first stage was to move from confrontation to the perception of common interests. The development of the economic cooperation has been an important part of this process.

Other forms of cooperation have developed and are developing alongside economic cooperation. Developing this cooperation is not always easy, nor is it by any means rapid in every sector. Different nations' special features and traditions are very much alive, and for good reasons. It is easier to agree on ways to facilitate economic dealings than on harmonizing educational requirements, for example.

Cooperation is steadily developing, however. Deepening integration in many sectors does not appear to prevent the spread of cooperation to new areas. This is clearly visible in the EU's day-to-day activities. Integration should not mean just new high-sounding declarations. Many times it is more important to implement decisions that have already been agreed.

The fundamental reasons for integration must be clear. The point of departure is citizens' common will and the member states' fair and equal treatment. All the member states' voice should be heard and their opinions should have an influence in common decision-making.

The foundation of the Union's internal cooperation is democratic decision-making and respect for human rights and the rule of law in the member states. The accession criteria for new members were approved at the Copenhagen summit in 1993. These criteria must be met. On the other hand we must honour our promise to allow European countries that meet the criteria to join the Union. This also applies to Turkey.

A key part of lively cooperation is respect for human rights, and this includes constantly strengthening and developing social and cultural rights. These rights are given a stronger place in the Union's new constitutional treaty.

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The European Union wants to be a credible and strong multilateral actor. Credibility requires a strong economy and strong social structures - setting a good example.

Globally sustainable cooperation can only be built on the basis of common values - democracy, respect for human rights and the rule of law. It requires fairness and equality.

Economic cooperation is the first step to other cooperation. The European Union's own development is a proof of this. Cooperation can gradually be expanded to other fields of life.

At the global level, the most comprehensive and farsighted political commitment on cooperation is the Millennium Declaration, which was approved at the UN Millennium Summit in 2000. World Commission on the Social Dimension of Globalization is one concrete indication of the desire to implement the Millennium Declaration. More concrete examples and means are needed, and for this, we should strengthen the faith of the people.