Speech by Minister for Foreign Trade and Development Paavo Väyrynen at Cleantech Finland Workshop

Environmental technology in Finnish trade and development policy

10.9.2008

Ladies and gentlemen,

Trade, development and environmental policy goals are more and more becoming one set of policy objectives. In many ways this policy package is decisive in paving the way for global sustainable development. I have the priviledge as the Minister of Foreign Trade and Development to be actively involved in promoting these objectives. I would like to take this opportunity to explain Finland's policy and my own views on this important topic.

In the past, trade policy was considered as a tool in gaining better market access for export industries. Opening of one's import regime was considered as a "payment" to achieve this. The so called "non-trade concerns", such as environmental goals, were kept strictly out of the negotiating tables. Today, the situation is different: there is a growing understanding that trade not only can, but that it also should be a tool in achieving development and environmental goals. Having said this, some recent examples - for example the difficulties to negotiate a tariff reduction deal on environmental goods as a part of the WTO negotiations - show that a lot needs to be done to translate these objectives into reality.

The central question in this respect is how can we contribute to the integration of developing countries into the world economy in a sustainable way. And how can we do it by utilizing our own strengths? Finland's trade and development policies promote this global economic integration. We support openness in all trade - both imports and exports.

Stemming from our long experience of environmental issues, Finland has valuable know-how and cutting-edge expertise on issues related to the environment e.g. forestry, water and watershed management and sanitation, renewable energy, solid waste management, chemicals and hazardous waste management. Also information and communication technology ICT enables to find new and innovative ways of working together towards achieving sustainable environmental, economic and social development.  ICT can make information and knowledge available, and increase communication opportunities of people especially in rural and remote locations.

These are good examples of how we can take advantage of the know-how and products of Finnish enterprises for the benefit of sustainable development. While main markets for environmental technologies are still in industrialized countries, the so-called emerging economies are the most promising new markets. They are also the ones that are in a crucial role in achieving the global environmental goals, such as reduction of greenhouse gases. Unfortunately, these countries often maintain high tariff levels and other trade barriers that hinder the market access of environmentally benefitial technologies into their markets. I would therefore particularly like to underline the importance of reaching such trade deals that lead to the dismantling of these trade barriers.

The ongoing WTO Doha Development Agenda negotiations offer a good opportunity to achieve these goals. The mandate of the DDA calls for the reduction of trade barriers in environmental goods and services. While the round has been dragging on for many years already, I am still relatively optimistic that we will reach our goal in a not too distant future.

The comprehensive liberalization of  the trade of environmental goods and services  would bring benefits to exporters and importers alike: Finland as a country with a lot of expertise to offer in this sector would gain directly from this. Equally importantly, a liberalisation package would improve the dissemination and availability of the relevant technologies, thus improving the possibilities of also emerging and developing countries to acquire clean and energy-efficient technologies.

When we talk about environmental goods and services, it is of utmost importance that the sector is not narrowed down to mere end-of-pipe technologies. Rather than being a sector among sectors, environmental business is more of a horizontal approach that cross cuts several sectors. I would in particular like to emphasize the importance of clean and energy efficient production technologies.

By promoting the implementation of new environmental technology in the developing countries we can reduce the environmental degradation caused by the processes of development. Trade policy measures can contribute greatly to this objective, but developing countries need also support for the implementation of and compliance with the multilateral environmental agreements.

The new Finnish development policy was adopted at the end of 2007. The policy is based on ecologically, economically and socially sustainable development.  Environment and especially climate change have a special emphasis in development policy.  In the context of climate change Africa is the most vulnerable continent and, therefore, special focus should be given to Africa.

It is important to notice that the work for the environment directly or indirectly improves welfare and, thus, reduces poverty. Degradation of the environment causes more serious damage to the natural and built environment than the efforts to avoid these consequences.  The poorest people usually live in the most polluted areas without safe drinking water, proper sanitation, waste management or clean air and are vulnerable to natural and man made disasters.

The private businesses have increasingly streamlined their production processes to more environmentally friendly direction. Partly, this development has come from the governments' growing concern over the environment and the climate change; partly it has taken place because consumers want more and more companies to go green; partly it is the result of companies realizing that energy-saving production technologies bring direct economic benefits. Growing competition has also led to a situation where companies with cleaner technologies and a smaller ecological footprint have become more successful and profitable.

The donor countries, including Finland, can actively support the adaptation of environmental technology. We have a role to supplement national public finance in the poorest and most vulnerable countries, to invest in production and access to global public goods and ensure international policy coherence. Environmental aspects are fully integrated in all our development cooperation.

The term "leapfrogging" is used when the new technology in developing countries is introduced by jumps. Energy is a good example; why replicate all the mistakes made by industrialised countries by excessive use of fossil energy sources, because new and more environmentally sound and energy efficient technologies are available.

The Ecologically sustainable development requires the creation of global partnerships for financing. The private sector and various institutional players have a crucial role in promoting sustainable development in developing countries. Public - private partnerships and promotion of trade and business partnerships are needed in order to contribute to economic development and poverty reduction on a sustainable manner.

The main tools of development policy are the national and regional programmes in the main partner countries of Finland. Five of our main partners are located in Africa, two in Asia and one in Latin America. In Zambia, Finland is the leading partner in the environmental sector. In Nepal, natural resource sector has increased including water, forestry, waste management and environmental administration, monitoring and industrial issues.

I would like to finish by underlining the important role of the private sector. While Finland can boast with good expertise and a high number of companies that are operating in the environmental business, a considerable amount of work remains to be done to turn this potential into wide-scale exports. I am encouraged to see that the environmental cluster is getting better organized and therefore more ready to respond to the global environmental challenges. I have promoted the Finnish expertise in my visits to other countries. I would particularly like to mention my visit to China which is by far the most promising market for Finnish environmental technologies.  

To sum up, improved dissemination of environmental technologies in the form of goods, services and direct investments is truly a win-win-win game. It brings benefit to exporters, importers and implements global objectives related to development and environmental policy goals. Consequently, the improvement of access to environmental technologies by means of trade and development policy tools is one of the priority areas of that segment of foreign policy that I am responsible for. To reap the benefits that the environmental sector offers, there, however, remains a lot of work to be done internationally, nationally and in the development of the private sector. These are only examples at the rule of environment in on development policy.