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Minister for Foreign Trade and Development Ville Tavio's speech at the 2023 annual meeting of Heads of Mission

Ministry for Foreign Affairs
Publication date 21.8.2023 11.27
Speech

The focus of the Government Programme is on promoting exports and investments, which will support the access of Finnish companies to the growing markets, says Minister for Foreign Trade and Development Ville Tavio in his speech.

Esteemed Heads of Missions, dear colleagues and friends,

First, I want to thank you all for the warm welcome and expert assistance you have given me as I joined the ministry. Your help has been priceless to me in making it possible to gather an understanding of the very extensive content of my minister’ portfolio as rapidly as possible. I am impressed with your professional way of doing things and your proactive approach to setting off to implementing the new Government Programme. I am sure our cooperation will be good and run smoothly.

The world situation today is quite different from what it was still like at the beginning of this decade. The Russian war of aggression against Ukraine has meant, among other things, the return of geopolitical tensions and the acceleration of the competition between the major powers and the positioning of countries on the East-West axis. We are living in an era of strategic great power rivalry.

Global polarisation, increasing tensions between the great powers and technological race have a significant impact on the Finnish security, economy, technology, security of supply, industry and trade.

The Finnish foreign and security policy is facing challenges posed by, for example, the crumbling of the rules-based world order, increasing power politics, obstacles to free trade, uncontrollable immigration, extremist movements and terrorism.

Finland’s foreign and security policy is based on the rule of law, human rights, equality and democracy. Close cooperation with partners, good bilateral relations, and respect for and strengthening of multilateral international law are the cornerstones of Finland’s international relations. The European Union and the NATO defence alliance form the core of Finland’s cooperative foreign policy.

In accordance with the Government Programme, a strong and committed Finland is an open and international country. Finland will work with other countries and peoples in communities dedicated to European and western values and security. We will be active and take the initiative in NATO, the European Union, the United Nations and in other international contexts. Close Nordic cooperation will be particularly important. Finland's NATO membership will probably further deepen Nordic cooperation.

Sweden is Finland's closest partner. Our economic relations with Sweden are closer and more diversified and extensive than with any other country. Concrete cooperation is done in sectors such as the development of security of supply, Baltic Sea cooperation and defence industry.

Finland's NATO membership will also further deepen the bilateral relations between the United States and Finland. There is a lot of potential for enhancing the trade relations between our countries, which I hope we will be able to leverage.

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The Finnish and European security environment changed radically when Russia attacked Ukraine in February 2022. Today, the Russian war of aggression against Ukraine has lasted for 544 days. The Russian attack has united Western countries and the EU, and it has strengthened the transatlantic cooperation. Finland gaining a full membership in NATO is a historical culmination of this cooperation: NATO membership strengthens Finland’s security in the changed security environment and also improves stability and security in the Baltic Sea region and Northern Europe. The relations between the EU and the U.S. are also closer than ever, and the collaboration has increased in many ways.

In accordance with the Government Programme, managing risks in times of great power rivalry calls for a new approach to collaboration with like-minded partners, such as Australia, South Korea, Japan and Canada.

Finland develops its relations with African countries with an aim to strengthen fair partnerships. We emphasise enhancing mutually beneficial trade relations. We continue to pursue the goal of doubling the trade between Finland and African countries and increasing investment in both directions.

China is an important trading partner for Finland, and Finland will maintain functioning relations with China. Finland’s China policy is determined through Finland’s membership in the European Union and NATO. Strategic dependencies on China must be reduced both nationally and at the EU level. One example of reducing strategic dependencies is the debate about economic security within the EU. In the EU policy, China is considered a partner, a competitor and a systemic rival.

We live in the world of interdependencies shaken by crises. The COVID-19 pandemic reduced well-being around the world. Other challenges include environmental problems, the Russian war of aggression against Ukraine and the global crisis caused by the rise of costs and energy prices.

If protracted crises are to be dealt with effectively, there has to be good coordination between peace mediation, humanitarian assistance, development cooperation and trade policy. In this government term, the link between trade and development is even closer than before. The Government has already started to prepare a report outlining Finland’s international economic relations and development cooperation. It will be presented next spring.

In the current geopolitical situation, we should also note the importance of digitalisation and the opportunities it offers to Finland. Finland is still a forerunner in this sector. The Commission has turned its eyes on Finland and Finnish enterprises, so that we can respond by providing responsible digital solutions with global foreign and security policy relevance. There is demand for reliable network devices on the developing markets. Finland has also special expertise on disruptive technologies, such as quantum technology, and on Arctic cooperation.

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Ladies and gentlemen,

International economy and bilateral economic policy in particular are currently undergoing a deep transition. The reason at the core of the change is the increasingly close link between the economy and geopolitics, deriving from such issues as the transfer of production from Western countries to developing countries, and the deterioration of the rules-based system and multilateral cooperation. The international economy is being divided into blocs as countries are strengthening their partnerships with their ‘friends’ in particular. Economic dependencies are no longer regarded a positive thing only. We now understand that such dependencies also generate risks.

As a result of the change, almost all major international conflicts are linked to the economy. For example, the strategic economic and technological competition between China and the U.S. will greatly affect the direction in which the international system will develop. The way the affairs related to production of cleaner energy are arranged and what kind of tensions this may generate will also have an impact.

The contributing factors to the increasing importance of economic security include the geopolitical great power rivalry and the Russian was of aggression. The EU has been intensively debating the Economic Security Strategy based on a statement the EU Commission published on the matter in June. More and more attention is being paid to economic security and acknowledging the risks related to it also among the EU's key partner countries. Japan named economic security and resilience to crisis as some of the priorities of its 2023 presidency of the G7.

The rules-based international system and multilateral trade system keep the operating environment more stable and predictable, which promotes economic security. Any ongoing EU free trade agreement negotiations should be concluded, and the closed agreements should be brought into force as soon as possible.

In trade policy, the importance of taking account of the risks created by dependencies becomes emphasised. In the world of interdependencies, separating the EU or Finland from global production chains is neither realistic nor desirable. However, in order to strengthen strategic autonomy and resilience to crisis, dependencies need to be reviewed in the most critical sectors in particular. To reach this goal, it is important to develop the EU and Finland's existing partnerships and to try to create new ones.

This is especially important in the areas of technological development and digital transition, including critical raw materials, capital goods, semiconductors, digital products, health and food security. The question of reducing energy dependency is also related to this. At the same time, of course, we must ensure that the development does not lead to countries turning inwards, markets being closed and trade tensions at the global level increasing. As a small operator, Finland cannot afford this, considering the structure of Finnish economy and its dependency on foreign trade.

In the world of interdependence, the EU trade policy is in a point of transition. It is important for Finland to influence this debate actively and in a frontloaded manner. The measures must be appropriately dimensioned, and they must be based on research data. From the point of view of Finland and other small countries, the functioning of the internal market plays a key role. It is also important for Finland to take advantage of the clout provided by the EU in a situation in which the world is increasingly being arranged through the technical and political competition between the great powers, such as China and the U.S. According to the Government Programme, at the EU level, Finland will advocate for new and comprehensive trade agreements with non-EU countries and groups of countries. The Union must promote an open and fair trade policy.

The tasks of the Ministry for Foreign Affairs within the Team Finland network are to identify changes in the global operating environment and to exert influence on them, for example, by removing trade barriers and by supporting an open international operating environment that promotes competition.

A large part of the Finnish foreign policy is covered by the EU's joint trade policy, even though influence related to the economic operating environment and preconditions of business activities of Finnish enterprises is also exerted at the national level. However, in an era of increasingly closer link between the economy and geopolitics, it is important for Finland to make use of the joint leverage the EU has in the competition between great powers.

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Development policy is an integral part of Finland's foreign and security policy. As I already mentioned, in this government term, trade and development are closely linked. Finland supports an open global trade system, while also promoting the opportunities of European actors to participate in international cooperation in a fairer manner and at more strategic conditions.

Finland's post-pandemic trade policy will focus on the sustainability of public finances and rehabilitating the economy. The public finances will set the limits for all government operations, which will also be visible as cuts being made in development cooperation. I have high confidence in your professional competence in setting the priorities and implementing the political guidance.

On the other hand, I have also confidence in continuity and the long-term priorities in development policy. The priorities of the Government’s development policy will include improving the position, right to self-determination, and sexual and reproductive health of women, which are also key to curbing population growth. Education and climate measures will also be a priority.

To ensure continuity, the necessary cuts will be implemented progressively. It is also clear that development policy is based on the principles of sustainable development jointly agreed with the UN and the Secretary-General's global agenda of action “Our Common Agenda”.

Public development funding only meets a small share of the needs, but it functions as an incentive for private investments. The use of development policy investments as a tool will increase, because by means of appropriate targeting of capital investments we can support the business activities of developing countries in a sustainable manner. This is basically the most effective way of helping countries generate tax revenues and stand on their own feet. We will build the Country Programmes in such a manner that they support generating more added value through Finnish policy and export promotion. We will make full use of the instruments and financing the EU provides to its Member States. Finnish companies must gain access to the investment projects included in the Global Gateway Initiative in an early stage.

Development cooperation is carried out in countries where the administration is often weak. Development cooperation specifically aims to stabilise and strengthen societies and enable governments to look after the citizens in the future.

Finland supports cooperation with developing countries especially in fields where we have special expertise to offer. We support the stabilisation of developing countries by focusing on promoting matters of strategic interest to Finland and on the strengths that have advanced Finland's development into a stable democracy and state governed by the rule of law, including the position and right to self-determination of women and girls, equality and local democracy.

In this government period, the focus of Finland’s development cooperation will shift from bilateral Country Programmes to development cooperation engaged in by Finnish civil society organisations. This will mean a smaller number of Country Programmes than before.

The Country Programmes and longer-term development cooperation will focus specifically on those countries that take account of the Government Programme entries concerning the readmission of their own nationals, support the international rules-based order and do not support Russia’s war of aggression in Ukraine. I have launched preparation by public servants on how to observe these conditions in future programmes, and I will be actively highlighting these issues in international contexts.

Finland's support for Ukraine will remain stable and unwavering. Ukraine is also fighting on Finland's behalf for maintaining the democratic values. Supporting Ukraine also enjoys broad public support of the Finns. In this government period, Ukraine will become Finland's most important Country Programme partner. The Government will prepare a national plan on the participation in the reconstruction of Ukraine in cooperation with business and industry and the Team Finland network. We will also appoint a high-level special representative for Ukraine in the Ministry for Foreign Affairs.

In development policy, it is key to ensure that Finnish companies can become a part of the success stories of developing countries and succeed themselves as well. Finland's strengths, such as digital solutions, innovative energy solutions, the circular economy and meteorological expertise, should be utilised effectively. The Government Programme also recognises the development of sustainable solutions and their export to world markets as important goals.

In Finland, this creates opportunities for both large companies and the SME sector, as long as we ensure that our national financing remains competitive in relation to our reference countries.

For this reason, we will reform the development cooperation administration and make the necessary changes to legislation to ensure that development cooperation funding can serve the needs of Finnish companies and leverage private financial flows in the best possible way. Finnfund and funding in the form of loans and investments will be at the core of this work.

Conflicts, financial shocks and population growth worsen the global food crisis. The deteriorating food security situation hits hardest the developing countries in particular.

By contributing to building stable living conditions and societies on site we can manage migration flows and prevent poverty. One concrete action is the School Meals Coalition, established at the initiative of Finland and the UN World Food Programme, which promotes the global reach and resourcing of school meals. I will continue as co-chair of the coalition with France.

The need for humanitarian assistance is not going away or even about to start declining. According to the UN, this year 339 million people are in need of humanitarian assistance. In accordance with the Government Programme, Finland will continue to provide humanitarian assistance with a focus on helping the most vulnerable people. In humanitarian crises, Finland is profiled especially as a country committed to ensuring that assistance reaches persons with disabilities. It is important that we continue this work with determination.

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Promoting the exports and internationalisation of Finnish companies is one of the Foreign Service's most important tasks. Finnish exports and our commercial ties with the other countries of the world determine our national well-being.

In the Government Programme, the highest priority will be given to investing in promoting exports and investments by which we support the access of Finnish companies to growing markets. The goal of the export promotion activities will be to open up new markets for growth-oriented companies, especially small and medium-sized ones.

The Government will evaluate the effectiveness of Finland’s export promotion activities, including trade missions and the export financing system, in relation to the Swedish and Danish models, for example.

Finland's economic situation and changes in the global economy require that the weaknesses detected in the Team Finland network be corrected without delay. This will mean, for example, identification and elimination of overlapping management and steering structures.

The Government Programme will reform the operations and management of the Team Finland network in cooperation with business and industry to support Finland’s strategic interests. The Government will strengthen the role of the Ministry for Foreign Affairs in the public activities to promote exports and internationalisation and examine whether Business Finland’s activities abroad could be incorporated into Finland’s network of diplomatic and consular missions.

This Government Programme entry is sure to raise some questions. Therefore, under the coordination of the Department for International Trade, the Government has launched a review and investigation process on the issue in preparation by public servants. The goal is to harmonise the steering of the Ministry for Foreign Affairs and Business Finland to create synergies and enhance the efficiency of exports. The change is not being carried out for its own sake, but its aim is to clarify the operations and make them more efficient. The key objective is to remedy the detected problems. Export promotion cannot be efficient if Business Finland and the Ministry for Foreign Affairs operate in the same target countries but steer the activities using strategies that differ from each other. The Foreign Service needs everybody's contribution to the reform work. I am open to hearing any opinions you might have of workable models.

We have identified challenges in export promotion: the exports are reliant on a narrow selection of products, and they are concentrated in the hand of large companies. One of the key goals during this government period is to activate operators in the SME sector. The foundation of export efforts must be strengthened by committing ourselves to measures that double the number of growth-seeking medium-sized entrepreneurial companies (‘Mittelstand firms’) by 2030. The Team Finland organisation and cooperation should create a clearer path to an access to markets in developing countries for SME sector companies as well.

The role of export promotion should be emphasised in the Finnish Foreign Service in a broader sense – starting from, for example, the international affairs training programme (KAVAKU). In this government period, we should also further specify the indicators by which we monitor the effectiveness of export promotion in foreign affairs administration.

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Dear friends,

Finland's country brand is the result of long-term efforts. Especially in times like these, Finland should continue to profile itself as an advocate for the rules-based international order, the rule of law and equality. This will also be an important part of the international work carried out by our network of foreign missions.

We remain one of the best functioning societies in the world, we have strong comprehensive security, top-level technological solutions and disruptive innovation activity. Finland must emphasise its own strengths and display them worldwide.

Successful country branding requires strategic influence, marketing and communications. It also promotes Finland's success in the economic and commercial arenas. Finland's country branding strategy describes the goal as follows: Finland is known for embracing demanding challenges; when the situation looks impossible, we are at our best. This is a very fine challenge for us in the prevailing world policy situation! Finland's NATO membership is also enhancing Finland's country image and investment potential, as it places Finland among the full-fledged operators in the transatlantic cooperation.

In international communications, we should avoid deliberately spreading only negative news about us, such as needing to make cuts to rehabilitate our economy. Instead, we should communicate that we are even more strongly involved than before, prioritising our own strengths.

In this situation, our country brand is best enhanced by Finland focusing on its strengths and boldly displaying these strengths worldwide. The better our strengths are known, the better Finland and the Finns fare from the perspective of our political and commercial interests. It is good for Finland to be engaged in international dialogue and to seek solutions together, relying on its own strengths.

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Dear friends,

In this time and age, the efficient allocation of resources, prioritisation and strategic and pragmatic solutions become emphasised. In the middle of changes, we should also invest in well-being at work. It is important that we all define collaboratively what is being done in each unit and what each party is expected to do. Only that way we can achieve synergies.

The work of foreign missions in the world political situation coloured by crises requires a new kind of capability to keep a finger on the pulse of what is going on. The foreign missions are Finland's eyes and ears in the world, and the importance of this role has become even more emphasised than before. I have confidence that you as heads of mission are capable of navigating through these challenges.

I want to express my sincere thanks for the warm welcome you have given me to the Ministry for Foreign Affairs. Enjoy your Annual Meeting of Heads of Mission.