“European Union and Finland are very much in favour of rules-based multilateral trade… we are especially keen on how to avoid all kinds of trade barriers. And we know that when it comes to India, there are certain custom tariffs, there are some difficulties in public procurement for global companies and then investment protection issue is also very important for companies,” Virolainen said in an interview with The Indian Express during a recent visit to India. Edited excerpts:
Can you give an update on the India-EU trade agreement, which has been pending for nearly a decade now?
We are part of the European Union, so we are not doing any bilateral trade agreements. We give mandate to European Union and I feel sorry that we could not continue those negotiations and probably we need to think once again about both the potential areas. And European Union has been very active lately when it comes to free trade agreements. You probably have noticed that we have done that already with Singapore, Japan, Vietnam and then (with) Mexico we have political agreements. With MERCOSUR (South America trade bloc) countries, they are in the final stage. Then we have started (discussions) with Australia and New Zealand. So I would like to say that India (is) in that list also. European Union and Finland are very much in favour of rules based multilateral trade. You can understand we are little bit over five million people and if we are trading with big partners, we need to understand that there are rules and we all obey the rules. And especially we are keen on how to avoid all kind of trade barriers. And we know that when it comes to India, there are certain custom tariffs, there are some difficulties in public procurement for global companies and then investment protection issue is also very important for companies.
India has recently increased custom duties. Does this impact Finnish business and would you argue for some relaxation?
First, it affects the mentality. If you think that in this environment there will be more and more duties, then probably those businessmen would think is this environment reliable for my business? But then if we think about the big picture, we live in a world where we have global value chains. So if Finnish companies have production sites in this country, but they need to buy components, if you don’t have the components in this country then you will buy from all over the world, so there comes the difficulty. If you realise that there would be skilled people, you could recruit (here). But when we talk about cost effectiveness, then it becomes difficult.
Would you like to see some easing there?
Yes, especially when you import the components.
You mentioned about investment protection. What is the status of such agreement between India and Finland?
Yes, we have (investment protection agreement). But it will last till start of October 2019. So this has validity of about nine months and then there is a period of 15 years (sunset clause for existing investments).
Do you plan to renegotiate the investment protection agreement with India?
When European Union negotiates, the investment protection clauses are in it. In my opinion, it will be very good if India starts to negotiate again with the European Union, because then we could see the whole package. We have around 100 Finnish companies established in India and they employ, directly or indirectly, almost 30,000 people and they are local people. So it would be easier for Finnish companies to grow in this country. They will always be be recruiting local people and at the same time help build capacity in this country also.
Will such an agreement with EU provide sufficient protection for Finnish companies?
Yes, because we are part of the European Union. In my opinion that will be very good. Of course, it is always the companies who make investment decisions. They are very keen on what happens to their money and investments.
Are there any other areas where Finnish companies want some changes from the Indian side?
Mostly it is about the trade barriers. I mentioned about custom tariffs, but I also mentioned about public procurement. There are some problems there and it is also about how much of the production needs to be localised. We believe that if Finnish companies could be part of the public procurement process, that would be beneficial for both sides.
Is Finland trying to attract Indian companies or professionals?
We believe there are a lot of very good ICT experts in India. And I guess we need Indian professionals. We have a talent boost and start-up programme. If you are an Indian start-up, you get a licence to work in Finland easily. So we try to get Indian people (to work in Finland).
What are the focus areas for Finland government?
The main focus is to promote our trade and economic relations, because we have many companies who have been in India for many years. In business, they always want to expand and some other companies are looking at this market, which is a huge market. Last year, our Prime Minister launched the Indo-Finnish energy partnership, so we are supporting that. We will have innovation cooperation between Finland and the state of Karnataka. So, three main focus areas are business relations, energy partnerships and innovation cooperation. Some people call it ‘innovation corridor’.
Trade analysts say that India-Finland bilateral trade is below potential.
It is, and I think we both understand it. When it is below potential, we both need to cooperate more and identify areas where we could both benefit. For example, we have the traditional sectors, pulp and paper, heavy machinery and equipment, and then we have lot of ICT cooperation. Then there are new potential avenues such as digital solutions, artificial intelligence and digital education.