Minister of Trade and Industry, Lars Sponheim

Barriers to trade and investments

10 July 1998, Vilnius

Ministers, Ladies and gentlemen,

Allow me first to join the previous speakers in expressing my thanks to our Lithuanian hosts for the warm hospitality extended to us all here in Vilnius.

The issue of barriers to trade and investments represents indeed an important challenge for all of us if we are to achieve the objective envisaged in the Visby-declaration of a regional market around the Baltic Sea in which trade, investments and cross-border cooperation between enterprises can flourish.

The focus on small and mediumsized enterprises in this context is also of great importance, for several reasons:

• Small and mediumsized enterprizes represent the bedrock of not only Norway's economy, but of most other countries in the region as well. They are of vital importance in terms of employment as well as for maintaining the viability and vitality of our local communities. Stimulating trade and cooperation between SMEs will therefore be beneficial to us all.
• While small businesses may have the flexibility to quickly adjust to changing market conditions, they are also very vulnerable due to their small size, limited human resources and limited capital base. This vulnerability is becoming even more apparent in the increasingly globalized economy of today. An increasing number of SME's are faced with the reality of the global market, whether they are operating in their home market, or whether they are themselves operating abroad. Hence, both national policies and cooperation at the international level should take into account the special needs of the SME's.

Permit me in this context to refer to a White Paper on Industrial Policy that my government presented to our Parliament in May. Many of the issues discussed in the White Paper are parallel to the challenges we are facing in the Baltic Sea context, including the issue of facilitating the growth of small and mediumsized businesses. The White Paper will be followed by a special plan of action for small enterprises to be presented in the fall.

The White Paper outlines four strategic priorities:

• First of all - the Government wants to simplify the business environment, by making it easier to establish and run businesses. Simplification of laws and regulations, reduction of administrative burdens and stimulating the availability of venture capital are some of the factors that we will address in this context.
• Secondly - the Government wants to stimulate the development of knowledge, competence and innovation through education, research and development, and through a more flexible labour market.
• Thirdly - the Government wants to facilitate diversified and sustainable businesses all over the country, by focusing on energy, environmental issues and infrastructure, including the utilisation of information technology to stimulate business activities in remote areas.
• Last, but not least - the Government aims at meeting the challenges and reaping the benefits of the global economy by securing market access through multilateral and bilateral instruments, by making financial instruments available in order to facilitate trade and investments abroad, and by offering information, advise and support to businesses at the various stages of the internationalization process.

I do not think that the challenges we are facing in Norway are very different from what other countries in this region are facing. While some issues may require distinctly national policies and solutions, other issues may require efforts at both the national and the international level. If we are to come closer to the vision of Visby of a prosperous and secure Baltic Sea region, we have to address these issues in earnest - both in our respective capitals as well as jointly in foras like this.

One of the most important challenges in this respect is to establish a stable and long-term economic and legal framework for business activities, including a predictable and transparent tax system. Without such a framework in place, we -as governments - can not expect businessmen to take risks and business to flourish.

We have to address technical barriers, like certain national quality standards and safety regulations, as well as various kinds of import duties, restrictions on foreign investments etc, which hamper our economic cooperation. While such measures may seem beneficial in the short run in order to protect national businesses, history has demonstrated beyond any doubt that such measures hampers economic growth and development in the long run.

Furthermore, all business activity, and in particular cross-border business cooperation, require a well functioning infrastructure, both in terms of transportation, energy supply and financial services. Finding viable solutions to the problem of inadequate infrastructure should be given high priority in our future work.

Lack of information is another problem that may hamper the development of economic cooperation, especially between countries where extensive commercial contact is a relatively new phenomenon, thanks to certain historical facts that we are all aware of. Thanks to the information age, this problem can be overcome by relatively simple means. We therefore welcome the establishment of the "Baltic Sea Information Network" - BASIN - by the Baltic Chamber of Commerce, which will provide an important instrument to help companies identify partners for business cooperation throughout the Baltic Sea area. However, access to information regarding official support programmes, financial facilities, trade and investment legislation, public registers etc. - should be further improved. I hope the special meeting related to this issue - as recommended by the Ministers - will contribute to such an improvement.

Access to risk capital is another challenge. While the ordinary capital market should be regarded as the normal channel in order to finance trade and investments, we must recognise the need for supplemental facilities in order to stimulate economic cooperation in new markets where the private market actors may be more hesitant to engage themselves. As a consequence of my Governments objective to stimulate economic cooperation with the Baltic Sea region, we have established both a special investment fund and a special export credit guarantee facility, as well as a special Cooperation Program for Central and Eastern Europe. Through these means we may - to a certain degree - also support financially the development of SMEs in the countries in transition of this region and their co-operation with Norwegian SMEs.

Finally, I would like to focus on the very practical challenges related to border crossings. Although many actions have been undertaken, border crossings in the region remain time consuming and costly, representing a real barrier to trade and development in the region. This has also been stressed by the Baltic Advisory Council, which represent the businesses in the Baltic Sea Region. A constant increase in traffic between the countries in the region makes it necessary to establish more efficient procedures for border crossing and customs clearance, and to extend the use of modern technology in the field of transport operations. In the years to come, special priority should be given to further improvement of the border crossing situation in the Baltic Sea Region, for instance by setting time limits and quality goals for customs clearance and border crossings.

As Governments, our responsibility is to facilitate business activity and trade. I am looking forward to making full use of this opportunity, provided by today's meeting, to further discuss how we together can stimulate the development of small businesses and cross-border cooperation between small business in the Baltic Sea Region.

1. Thank you very much for your attention.