Speech by Mr Jukka Valtasaari, Secretary of State: The EU´s Northern Dimension, Union´s strategy towards Russia and our views on the forthcoming WTO Millennium Round: European Economic and Social Committee, Vaasa 6th October 1999

Speech by Mr Jukka Valtasaari, Secretary of State: The EU´s Northern Dimension, Union´s strategy towards Russia and our views on the forthcoming WTO Millennium Round: European Economic and Social Committee, Vaasa 6th October 1999

Venue: Meeting of the Section for External Relations of the European Economic and Social Committee in Vaasa, 6 October 1999

Mr Jukka Valtasaari,
Secretary of State,
Ministry for Foreign Affairs of Finland

Mr/Madam Chairman, Members of the Committee,

I appreciate this opportunity to bring to your attention our views on the EU´s Northern Dimension and the Union´s strategy towards Russia, and our views on the forthcoming WTO Millennium Round. These issues are significant to both Finland and the EU as the Union´s external relations develop. Finland is also keen to hear how the Economic and Social Committee would promote these entities as part of the Union´s policies for external relations. The Economic and Social Committee is a forum which provides a comprehensive picture of the views of various interest groups and thus contributes to transparency in the Union´s activities and brings the Union increasingly closer to its citizens.

Effective implementation of the Union´s external policies requires a wide selection of instruments. We refer to rapid and efficient response to crisis situations, such as the one in the Western Balkans, but also underline the importance of sustained activities. The issues on the agenda of this meeting fall into the latter category.

The Finnish Government´s idea of the Northern Dimension is grounded on a thorough analysis of the situation prevailing after the collapse of the East-West bloc architecture and the demise of traditional great power policy. Without a correct analysis, the new policy will fail.

The policy of the Northern Dimension is premised upon the Union´s enlargement to Poland and the Baltic States and upon Russia´s becoming a geographically more western and northern state. United Germany´s opening up in the Baltic Sea region might be considered another key point.

The Northern Dimension seeks to enhance prosperity in the region, to even out economic and social differences and to alleviate threats related to the security of citizens.

As the Northern Dimension has now been adopted as part of the EU´s agenda, it is time to concentrate on implementation. In the Cologne European Council´s Presidential Conclusions, it is noted that the possibility of drawing up an action plan for the Northern Dimension should be considered after the Foreign Ministerial Conference scheduled to convene in Helsinki in November. This is now Finland´s objective. At the Helsinki summit, the Commission should be given the assignment of preparing such an action plan.

We need to bear in mind that the Northern Dimension is part of the EU´s policies for external relations. It is an instrument which, in time, will embrace all the countries that have common interests to pursue in the north.

It has therefore been planned that for the Foreign Ministerial Conference in Helsinki in November the EU Member States and the Commission, plus international organisations and financing institutions as well as the countries of cooperation in the region, namely Norway, Iceland, Poland, Estonia, Latvia, Lithuania and Russia, would all be invited. As soon as the EU and the aforesaid countries have managed to close ranks, cooperation will be expanded to comprise all interested parties. This would involve the United States and Canada, in particular. Moreover, the Northern Dimension must not in any circumstances be understood to refer to intergovernmental activities only. No. Cooperation, co-financing, international financing institutions and the private sector are all key instruments and actors in this process.

The policy of the Northern Dimension is based on a similar principle of interdependency to that applied in connection with the post-war Marshall Plan and the economic integration of the past few decades in Europe. That is to say: security and political stability are pursued, above all, by economic means and by seeking long-term common interests.

Let us take as an example the "energy equation" of an integrated Europe in a somewhat longer time frame. Over the next two decades, the European Union´s dependence on imported gas will rise from 40% to 70%. Russia has considerably greater potential for production than any other producers. Russian gas production is now 500 million tons in terms of oil, and known reserves are 86-fold compared to that figure.

We might also consider the region´s energy network. National energy policies are naturally grounded on domestic solutions but it is important that over time Russian and European gas networks be combined and a climate-friendly alternative be introduced to replace the ageing nuclear power stations, which generate 8.000 megawatts of electric power in the region.

Considering the issue from Russia´s point of view, it is worth noting that over 40% of its trade flows via the ports of the Baltic Sea. Of this, a good two thirds are dealt with in ports in Estonia, Latvia and Lithuania; the rest in St. Petersburg, Finland and Kaliningrad. Thus, what Rotterdam means to Germany, the ports of the Baltic States signify for Russia.

When stability is sought via investments, the cart is put before the horse. Investments generate common interests and subsequently lead to stability. On the other hand, a sufficient degree of stability and an organised society are the prerequisites for investments.

This was the issue when the European Council, in the Cologne meeting of last June, decided upon a common strategy towards Russia. Finland presented the first work programme in the General Affairs Council in July. The objective is two-fold: first, the EU´s operations are to be increasingly integrated and, second, coooperation with Russia will be so structured that dialogue on political, economic and legal questions will produce results.

Dialogue related to legal and internal issues should be specifically underlined. A number of recent events highlight the need for a society grounded on rule of law in Russia. These issues mainly fall within the sphere of sovereign powers, but external interests in conjunction with cross-border cooperation in Europe or global cooperation require that common norms and rules be adopted and applied.

The run-up to the Millennium Round and decisions to be made about it in the Seattle ministerial meeting in December constitute the most significant trade policy challenge at present, both globally and as part of the Union´s policies for external relations. The idea is that while barriers to trade are being removed, the scope of application of the rules pertaining to world trade are simultaneously expanded to cover a wider range of issues linked to international trade, the environment , investments and competition.

What is the point in this new world economy?

Firstly, during the present decade the growth of direct investments has clearly outstripped the rise in the sale of goods. International capital literally moves at the velocity of light. Companies which operate internationally not only make use of rapid technological advances but also establish production processes and select their subcontractors in countries which are the most economical to themselves. The WTO Millennium Round should set as its objective an agreement concerning investments that would secure the position of international investors but also guarantee that investors act in a responsible manner.

All countries or sectors within a state are not by any means in the same position. That is expressly the reason why capital moves. That is why the WTO must take into account the special conditions of the developing countries as the obligations and concessions applying to them are being agreed upon. This is the only way to make sure that they can proceed in a flexible and sustainable manner in economic and social development. The EU has in mind programmes of technical assistance that would help developing countries upgrade their legislation and improve their administrative structures. However, additional measures are required to integrate them into world trade. The market access of developing countries has to be made easier in order to give them confidence in the benefits of the new round of trade negotiations.

The social dimension needs to be addressed both within individual countries and in intercountry relations. It is easy to see that there are major differences of opinion about this issue within the WTO. Developing countries fear that their relative competitive edge is being interfered with and they see in this industrial countries pursuing disguised protectionism. On the other hand, the industrial countries themselves need time to adjust to the economic restructuring which the new world economy requires.

The International Labour Organisation, the ILO, is mainly responsible for the norms of working life, but we are willing to accept increasing dialogue within the WTO. Sectoral or international union-based solutions are inappropriate in our increasingly horizontal and cross-sectoral world. One solution could be agreement about common principles related to competition legislation within the WTO.

When the objectives are being drafted, we need to bear in mind that a comprehensive round, advocated by the EU and meant to produce a balanced agenda and a negotiated result that is acceptable to all parties, is not yet a fully endorsed aim. It is not in accordance with the EU´s interests to negotiate only about agriculture and services which were already agreed upon in conjunction with the establishment of the WTO in 1994. So it is important that the Commission and the Member States continue to try to assure the other parties of the advantages of the EU´s approach. Flexibility will be required in the setting of objectives in any case, since the outcome of negotiations will be a compromise to be accepted by all WTO member countries.

Consequently, the Millennium Round must be based on transparency. This requirement is reinforced by the fact that the symposium of non-governmental organisations, arranged in conjunction with the Seattle ministerial meeting, will bring together nearly a thousand NGOs. Each of these has its own interests but it is to be hoped that the entire event will meet the WTO´s objectives, that is, Seattle would support a comprehensive round of negotiations, one that provides an opportunity to reconcile the aforesaid conflicting interests in a mutually beneficial manner. Each member state is mainly responsible for the realisation of transparency, which is a duty not to be transferred to the WTO or to any other international organisation.

To end this address, let me say a few words to illustrate Finland´s point of view. Geography and diversity have always been part of northern Europe. It has been noted in a number of contexts that the unification of Europe is one of the historic duties of our time. For Finland, success in this endeavour is an overriding concern.

At the global level, it is important to identify what is common to governments which no longer have their previous position, investors who are gaining a stronger hold and consumers and citizens who are worried about their position. When we in Finland speak about a strong and capable Union, we expressly mean something to which I referred earlier; namely operational capability in the new world.