Doral Resort & Country Club, Miami
Ladies and Gentlemen,
When the Finnish government, last May, took the decision to procure 64 fighter aircrafts, it was not an easy task. You are all aware that purchases of this character and magnitude involve major technical and economic considerations.
For my government the difficulties were beyond the average. Finland had entered her worst economic recession since the Second World War. Drastic measures to cut public spending were called for. Important decisions to that effect had already been taken and new cuts were to be expected.
I take some pride in stating that under those circumstances the Finnish government was able to
decide on this huge fighter deal. And not only to decide, but to follow the time schedule that had been announced when the competition started.
One of the key factors making this decision possible was offset. Without being convinced that the sellers of the aircraft would redeem their firm engagement to provide 100 % worth of offset I think the issue had never stood a chance of being accepted under the prevailing difficult economic conditions.
Finland, like many other countries who are net buyers on international defence material markets, requests economic offset from the suppliers of major defense equipment packages. It is a measure to alleviate the economic burden caused by the defense procurement to our national economy.
The Finnish government is, of course, fully aware of the risks that the implementation of a large scale offset program could imply. At worst it could create rigidities that - instead of boosting business - would make it more difficult. This is why we have, during the fifteen years that the Finnish offset program has existed, tried to keep in mind the very basics of a fruitful offset program. I will sun. up them in three principles.
First. Offset should promote sound business, not the bad one. It is not meant to subsidize companies with non-competitive products, or with no readiness to export, in other words business which is not commercially viable. There are enough healthy business concepts which would only need a good introduction, a chance to compete under equitable conditions on foreign markets.
Second. Offset transactions should benefit both parties. We are basically aiming at long-term relations between a Finnish company and a foreign one. And there we come back to our first principle, the business has to be sound, in order to be of interest to both the Finns and the foreign partner. This would also mean that after the introductory phase and maybe some warm-up- period no more offset should be needed to keep the business going.
Third. Offset procedures should not be so cumbersome as to complicate the business. At the same time they should provide guarantees to the political decision makers that the basic compensatory aims of offset programs are reached. At the time of deregulation in public administration we do not want to set up a new offset bureaucracy. And whatever rules and procedures for offset we have, we must keep in mind that the primary objective is not in scrutinizing but in promoting business opportunities and in promoting economic intercourse.
Based on these three principles we have developed the Finnish Offset Program. In a minute the Chairman of the Finnish Offset Committee, Mr Wihtol is going to explain in more detail the main characteristics of that program. Let me, however, take this opportunity - recognizing the great number of representative from small and medium-sized companies here today - to underline the importance that I see in a large participation of the SME:s in the offset activities. The special role of these small and medium-sized enterprises has been explicitly stressed by the rules of the Finnish Offset Program.
Although the Finnish Offset Program is administrated by the authorities the substance
itself - the commercial transactions - are naturally in the hands of the business community. I would very much urge the Finnish companies to actively pursue this possibility for new business opportunities. On the other hand I would also address my words to the offset actors, McDonnel Douglas and its team members to take all efforts for intensifying these business possibilities. It is a common undertaking that should benefit us all.
Ladies and Gentlemen,
I started by referring to the severe economic difficulties that my country is facing today. I should, however, conclude with a somewhat more positive note. Due to important - and I would say radical - economic decisions taken by the government of Finland there now exist several signs of more favourable development. We can look forward to the coming years with moderate optimism. This is the economic background against which our offset cooperation has to be seen.
A long road lies ahead. The offset agreement between my government and McDonnel Douglas takes us to the next millenium. This is a great possibility to intensify trade and other economic relations between Finland and the United States. The framework exists, it is now up to interested companies to take advantage of it. I wish all the success to the companies represented here in their efforts.
Thank you, Ladies and Gentlemen