Opening address by Foreign Trade Minister Kimmo Sasi at a seminar titled "Latin America: Facing the New Millennium"

Helsinki 28 November 2000

Ladies and Gentlemen,

It is a great pleasure for me to open this Latin America; Facing the New Millennium- seminar. It is particularly timely right now when Latin America is growing to a more and more exciting and interesting growing market area in the world. With a population of over 500 million, it holds a lot of promises for venturing Finnish companies as well.

Latin America is a continent undergoing dramatic change and change for the better. After serious economic crises just a few years ago most of the Latin American economies have started to recover. The GDP growth fell from 5.4 percent in 1997 to 2.1 percent in 1998, and to – 0.6 percent (expected) in 1999. By the fourth quarter of 1998, Argentina, Brazil, Chile, Colombia, Ecuador, Peru, and Venezuela were all experiencing recessions. The Asia crisis, as well as the August 1998 Russian default, contributed to this downturn, as they triggered falling export prices and volumes, along with a drop in
capital flows. These external forces, combined with deep-seated domestic problems in many countries, pushed growth rates down.

The April 2000 IMF World Economic Outlook foresees a sharp recovery in output growth in the region, after the marked setback of 1999. For the region as a whole real GDP is estimated to grow by 4.0% this year, and by 4.7% in 2001. This rebound is being fueled by a recovery in private investment and consumption. Long-term growth prospects for the region remain favorable, with 3.5-percent growth expected for 1999-2008, as efficiency gains from past reforms, including privatization and liberalization of trade, take effect. In addition, the increasing market power of Southern Cone countries through Mercosur should encourage foreign direct investment, as well as a shift in its nature from acquiring stock during privatization to investment in new capacity in services and manufacturing.

There are still, of course, weaknesses. The crisis served to make them visible. And one of the most encouraging aspects of this whole period of turmoil has been the typical reaction. Instead of trying to hide their problems or resigning themselves to live with them, most countries in Latin America have redoubled their commitment to political and economic reform, in order to consolidate past achievements and to achieve greater stability. We must remember that Finland experienced difficult time in the first half of 1990´s. The economic and financial crises made it necessary for us to become lean and efficient, even though the cuts were sometimes painful. As a result our economy is still in full swing and doing better that ever before.

Ladies and Gentlemen,

The trade relations between Finland and Latin America go back a long way. As a nation of coffee drinkers, it is hardly suprising that Finland has bought its coffee mostly from Latin America. Right after the second World War the approach and arrival of cargo ship called Herakles was followed daily in the Finnish newspapers. The cargo of Herakles was Brazilian coffee. After its arrival in the Finnish harbor of Turku the coffee was then rationed to the eagerly awaiting public.

Also traditionally, Finland has exported paper and papermaking machinery. In Brazil Valmet is a well-known trademark, Outokumpu is still a familiar name in Chile and, of course, today practically everybody recognizes the name of Nokia as the leading telecommunications equipment provider in the World.

Finland has activated its presence in the Latin America and also through the European Union. We have Embassies in Brasilia, Buenos Aires, Santiago, Mexico City, Caracas, Lima and in Managua. Finpro has its offices in Sao Paulo, Mexico City and Santiago. It is a common tendency to imagine that the relationship holds interest mainly for Spain and Portugal which is unmatched by other members of the EU. That perception is profoundly wrong. We will do our best to remain visible, productive and efficient in our relations with Latin America.

Finnish Presidency in the EU was very active in relations with Latin America. Major part of the free trade agreement with Mexico was negotiated during our presidency. We also held a follow-up meeting for Rio summit in Tuusula. Europe-Latin America business summit was held during Finnish presidency in Mainz, Germany with some Finnish companies participating. I must say however that parallel efforts (one lead by the Commission other by Spain) to convene Latin American and European business summits have not been able to live up to its potential. The future will show how this area will develop. Finland would like to see successful business dialogue between Latin American and European businesses. After all, it is the businesses that are essential in helping to identify the problem areas in the trade between the two regions.

The historical connections are important. The cultural closeness between Europe and Latin America is one of the features of the relationship which makes it most satisfying. But we do not seek to develop our links through sentimentality. The truth is that Europe has an important stake in Latin America.

First, the European Union is working to develop its capacity as a global player. We want a political role that more closely matches our commercial weight as the world's largest trading partner. Latin America is a natural partner for the EU in realizing that ambition.

And second, if we are to preserve and strengthen our own economy, the EU needs to establish solid, credible and stable links with emerging economies such as those in Latin America. The process has already gone a very long way. I would only like to mention here recently concluded free trade agreement with Mexico that entered into force July this year and the ongoing Association Agreement negotiations with Mercosur and Chile.

Ladies and Gentlemen,

Especially during this year the trade between Finland and Latin America has grown briskly. The trend, that is likely to continue. There are a lot of opportunities to expand trade and economic relations in the Latin America. I dare to say that it is very likely that Latin America will be the next place of focus for many Finnish companies. Especially interesting countries with best potential are obviously Mexico, Mercosur-countries and Chile. However, the rest of the region should not be forgotten either.

Make full use of today's seminar to get to now Latin America as a trading area better. I wish you all a successful seminar.

Thank you