Address by Norwegian Minister of Trade and Industry, Mr. Lars Sponheim.

Seminar on Investment and Business Opportunities in Latvia

Seminar on Investment and Business Opportunities in Latvia,

Oslo, 6 November 1997.

Mr. Prime Minister, Excellencies, Ladies and Gentlemen,

It is a great pleasure for me to address this seminar on investment and business opportunities in Latvia, and I am pleased to do so in the presence of Prime Minister Krasts.

Several hundred years ago trade flourished between Norway and the Baltic countries. Riga was for centuries among the most prosperous and well-known cities in North-Eastern Europe, like our own Hanseatic town of Bergen was on the North-Western side. Scandinavian seafarers and traders were well aware of the fact that Latvia is situated at the cross-roads between Eastern and Western Europe.

Since 1990 we have embarked on a voyage of rediscovery. We share a common ambition to re-establish our bilateral ties, not only in terms of trade and business relations, but also in terms of political, cultural and human ties.

Indeed, our two countries have quite a lot in common. We share some fundamental values and perspectives. We are small nations with big neighbours, situated at the edge of continental Europe. We face some of the same challenges, issues related to security and issues of economic development in a globalized economy.

Probably the most important trend in today's world, is the globalization of the economy. In addition to the flow of goods and capital, we see an increasing flow of information, knowledge, culture and people across national borders. Trade in services is growing more rapidly than trade in goods. New media and channels of communication reduce the significance of national borders. No part of society is left untouched. Our future ability to improve the welfare of our people, and to protect the environment is strongly affected by the globalization of the world economy.

As small nations, we cannot hide or isolate ourselves. We have no choice but to embark on an ambitious program of internationalisation and international cooperation in order to meet the new challenges.

In Norway, priority will be given to make our small and medium sized companies more able to compete in an international environment. These companies represent the bedrock of our economy. They are of vital importance in terms of employment, in terms of maintaining the vitality and viability of rural districts, as well as in terms of innovative capability.

Indeed, in a fast changing world, our ability to adapt to new challenges and to be in the technological forefront, probably is crucial. Therefore, we have to stimulate the process of innovation in the companies through cooperation with the universities and the research community.

Very few companies, even in the most remote areas of our country, can exist in isolation, unaffected by the surrounding world. Because the small and medium sized companies have limited capabilities to meet the challenges on the international marketplace, They need Government support.

Government support does not mean Government subsidies. The Government can, however, secure that adequate financial instruments are in place, tailored to the needs of small and medium sized companies. We can offer information and advice at the various stages of the internationalisation process. We can stimulate the creation of networks and alliances in order to create synergy and to ease the burden for each individual company.

And last, but not least, the Government can create, through international cooperation, a stable, fair and predictable framework for international trade wherein our companies can operate on equal terms with their competitors. For a small country like Norway, so dependent on international trade, the World Trade Organisation (WTO) is the most important instrument in order to secure an open, fair and multilateral trading regime. Furthermore, as a member of the European Economic Area (EEA), Norway is fully integrated in the European internal market, which receives around 70% of our exports.

The bilateral trade agreement between our two countries which was later amended into a free trade agreement between the EFTA countries and Latvia, is another good example in this context. This agreement is an important step toward establishing a multilateral trading system in Europe - embracing the EU, EFTA, the Baltic states and the countries of the Central European Free Trade Area.

It goes without saying that Norway fully supports the endeavours towards closer integration between the Baltic states. I would also like to use this opportunity to reaffirm the Norwegian Government's wholehearted commitment to the Baltic Sea Cooperation, a cooperative venture which benefit all parties in the Baltic Sea region. Along the same lines, we welcome Latvia's access to the WTO in the future.

Let me add that we are impressed by the dedication of your reform process and encouraged by the progress made so far. From our side, we wish to contribute to the implementation of these complex and difficult changes. The Norwegian Action Programme for Central and Eastern Europe is a practical tool in this respect, providing «seed money» to interesting business projects.

Projects supported under this programme involve mainly transfer of knowledge and competence, as well as investment grants. Priority is given to industrial development, infrastructure, environmental protection, building of democracy, education and research, health and social welfare. In Latvia, Norwegian grants have contributed to industrial projects as well as projects in the finance sector, agriculture and fisheries.

In addition, the Norwegian company Alcatel Norway has established the Norway-Latvia Business Development Fund with support from the Norwegian Government, with about 3.4 mill USD available to support Latvian or joint Latvian - Norwegian projects. I would like to use this opportunity to urge both Norwegian and Latvian companies to use these facilities in relevant cooperation projects.

Let me end my intervention on an optimistic note. Although bilateral trade and industrial cooperation have been marginal up to recently, we are now seeing an encouraging development. Exports from Norway to Latvia represented as little as 3 mill. USD in 1993, increasing to about USD 67 mill. last year. At the same time we have seen a significant increase in our imports from Latvia, although last year saw a decrease compared to the previous year.

I addition, we see an impressive increase in activity from Norwegian companies in Latvia in a broad range of areas, from construction of wooden houses to banking software. Over the last few years Norwegian companies have invested more than 100 mill. USD in Latvia, and are planning to expand further in the years to come. Statoil's petrol stations, Norsk Hydro's ammonia plant in Ventspils, Alcatel Norway's engagement in the telecommunications sector, the broad-ranging activities of the Varner/Hakon-group, and the upcoming establishment of Narvesen in Riga, are but a few examples of Norwegian companies' activities in Latvia.

This seminar, and your visit Mr. Prime Minister, thus take place at a stage in our bilateral relations that gives reason for great hopes for the future. Our political, economic and cultural relations are rapidly becoming closer. It is my sincere belief that this seminar will further strengthen this process by bringing the business communities of our two countries even closer together. I wish you all the best in your joint endeavour.

Thank you for your attention.