Address at Norwegian Business Day

It is a great pleasure for me to welcome you to this seminar and to address such a distinguished audience of the Norwegian and Latvian business communities. It is a particular pleasure to do so in the presence of Prime Minister Skele. This seminar completes the return to normalcy in relations between Norway and Latvia. It marks the permanent presence and interests of Norwegian business in this metropole of the Baltic area.

Trade between us started on a very modest scale following your independence. Exports from Norway to Latvia reached a tiny 15 mill kroner or about USD 2,2 mill in 1992. Last year's export figures were 178 mill NOK or about 27 mill USD, an increase of almost 60 per cent compared to 1994. Our imports from Latvia, in turn, increased by more than 235 per cent last year, reaching 504 mill NOK or about 78 mill USD.

These are encouraging figures. I propose that we consider it an established tradition between Norway and Latvia to expand our trade with figures of this magnitude.

Norwegian business representatives have come here to look for new opportunities. I hope that the Latvian side will, indeed, look to Norway.

Ahead of us lies a prosperous future. And when we celebrate the anniversaries of our future relations, there will be enough historic ramifications to grace the occasions.

I am thinking, not least, of Latvian contacts with the Vikings in the 9th and 10th centuries. They resulted in both trade and battle.

Several hundred years ago, trade flourished between Scandinavia and the Baltic states. Riga has been among the most prosperous and well- known cities of Northeastern Europe, much like our own city of Bergen has been in the Northwest. Both Riga and Bergen were once precious jewels in the Hanseatic crown.

Scandinavian seafarers and traders have always been attracted to Latvia because of the country's central location at the crossroads of Northern, Eastern, and Western Europe.

Geography also explains Latvia's often tragic fate. The drama of European history took our nations on different paths. Old networks and trade routes were reduced to a minimum.

Since 1990 we have embarked on a voyage of rediscovery, seeking to revive mutually beneficial trade and business ties. Neither of us can say that our economic relations have been fully developed. We both see potential which has not yet been fully utilized. We both want to see more trade, industrial cooperation, and investments.

A hundred years ago, Norway was among the poorest countries in Europe, with little or no industry. We were not even a fully sovereign nation. But we had a large merchant marine, a fishing industry, timber and an abundance of waterfalls. On those pillars we built our prosperity.

Today, Norway is a highly developed and industrialized country heavily dependent on international trade. Norway's merchant fleet is one of the largest in the world. Our marine insurance market is second only to Lloyd's of London. Oslo is home to many of the world's largest ship- broking firms. Norwegian shipbuilders and marine equipment manufacturers enjoy the highest standing. Det Norske Veritas, Norway's international ship classification society, provides statutory certification and material or component certification worldwide.

Natural resources have been central to Norway's economic development. Hydroelectric power has provided a basis for production of fertilizers, aluminium, nickel and ferro alloys. Cheap electricity and vast forests have proved a winning combination for our pulp and paper industry. Over the last 25 years, oil and gas riches have assumed an ever increasing role in our national economy.

Although Norway's natural resources have been and will remain a solid foundation for economic growth, the challenge today is to continue to develop knowledge-based industries and to increase the degree of processing of raw materials.

Norway is sparsely populated - 4,3 million people on an territory six times the size of Latvia. The relatively small domestic market has forced Norwegian industry to go international. Norway's total exports equal about 40% of our GNP. Norway's trade balance has shown a surplus since 1987 and public foreign debt has been eliminated. It is justified to say that Norway's economy is in sound shape.

As our industry has matured, Europe has remained Norway's main marketplace. The 15 countries of the European Union, including our Nordic neighbours, receive more than 80% of our exports. Norway is fully integrated into the European internal market. The agreement on the European Economic Area provides the same rights and obligations for all economic actors in a market covering 18 Western European countries.

The most important objective of this seminar is matcmaking. Bringing prospective business partners together. Finding ways of making money and creating jobs by matching the resources, technology and manpower of Norway and Latvia. Seeking a more diversified trade relationship. diversification in the composition of our mutual trade. Finding investment opportunities which carry long-term promise.

Norwegian companies are already finding Latvian partners in fields ranging from construction of wooden houses to developing banking software. I should also mention the Latvian activities of the two largest Norwegian companies, Statoil, which has nine petrol stations here, and Norsk Hydro, which exports large quantities of ammonia from Ventspils.

Modern telecommunications are a prerequisite for modern business and a major growth industry. Telecommunications are also a sector where Norway is in the forefront. Several Norwegian companies are involved with the Baltic states in this field. The largest projects have been undertaken by Alcatel Norway here in Latvia.

Today there are few barriers to trade between us. A bilateral free trade agreement has been in force since July 1993. Last December this agreement was developed into a free trade agreement between the EFTA countries and the Baltic states. We expect the free trade agreement between Latvia and EFTA to be ratified and enter into force shortly. This would mark another important step towards establishing a multilateral trade system in Europe - embracing the European Union, the EFTA countries, the Baltic states and the countries of the Central European Free Trade Area.

Transition to a market economy and integration into the world economy constitute an important challenge for Latvia. It is certainly no easy task. We are impressed with your dedicated reform efforts and encouraged by the progress made so far. Latvia can count on Norway being a partner in reform, business, and prosperity.

The Norwegian Action Programme for Central and Eastern Europe gives support to the introduction of market economies in the Baltic region. The programme is also a practical tool to promote cooperation between companies in Norway and the three Baltic states. It provides "seed money" to business projects which carry a lot of promise.

In developing the programme, we have attached importance to concrete projects put forward by the Norwegian companies themselves. Most of the projects funded involve transfer of knowledge and competence, as well as investment grants. Norwegian grants go to a wide variety of industrial projects, to developing agriculture and fisheries, and to the financial sector.

Norway is a significant contributor to the Baltic Investment Programme, which has successfully launched investment banks in all three Baltic states.

The Norwegian company Alcatel Norway has established the Norway Latvia Business Development Fund, with an initial capital of 15 million NOK. The Norwegian Government has contributed about 7 million NOK to this fund. In total, the fund thus has about 3,4 mill USD to support Latvian or joint Latvian - Norwegian business projects. I encourage the businessmen gathered here to think creatively about how these funds can be utilized. This very point will, as I understand, be raised in one of the working groups today.

In addition to my own official delegation of 10 businessmen, there is an additional 20 or so important Norwegian companies represented here today.

It is my sincere hope that this seminar will result in expanded business cooperation between Norway and Latvia. I thank The Norwegian Export Council and The Latvian Chamber of Commerce for their efforts in bringing us together. And I am pleased to wish all those engaged in trade and business between our two countries the best of luck.