4. Debt Management Policies FINLAND The Republic of Finland lost its Triple-A credit rating in the fall of 1990 when Moody's Investors Services downgraded the government's risk to Double-Al. Standard and Poor's review reaffirmed its Triple-A credit rating for Finland late in the year based on somewhat different criteria than Moody's. The source of concern which led to Moody's reclassification was a softening in Finnish export markets, a downturn in profitablity of Finnish forest industries (the main export sector), and a general loss of competitiveness abroad due to unbalanced growth at home. Net external debt in 1990 was 20.0 percent of GDP and the corresponding net debt service ratio (as a percentage of exports) was 13.7 percent. An active member of the IMF and the World Bank, Finland has concluded a framework agreement with the latter for co-financing of projects in LDCs. Finland is a member of the Paris Club as a creditor country, and has an exceptional record of repaying its foreign obligations. There are no adverse implications for U.S. trade of Finnish debt management policies. Given the low financing requirements of the government, the Moody's reclassification will not be a significant factor in official external borrowing for the near future. 5. Significant Barriers to U.S. Exports Finland has relied on import licenses and seasonal tariffs to protect its heavily subsidized domestic farm sector. U.S. products are not treated differently than other foreign agricultural producers and are actively sold here. The purpose of the licensing system, which is a relic of the post-war forced industrialization when Finland regulated all imports and exports, is to ensure that domestic supplies are used up before competing foreign products are imported. In 1989, the government made the first steps towards tarification by eliminating seasonal quantitative restriction on some fruits important to U.S. exporters. Import of coal is also subject to licensing, but in a recent change the government will not block the import of U.S.-origin coal to favor Soviet or Polish suppliers, as had been the case through the end of 1990. The United States has been a residual supplier of coal, taking advantage of unpredictable shortfalls in COMECON deliveries. Presently U.S. companies operate at a disadvantage in a wide range of service sectors, principally banking and related financial services, insurance, tourism, air transport, and telecommunications. Financial market restrictions were eased substantially during the 1980s, starting with the entry of subsidiaries of foreign banks in 1982. On January 1, 1991 foreign banks were also permitted to establish branches. Those banks which originally entered as subsidiaries may apply to convert to branch status. In the insurance sector, market reservations policies prohibit foreign companies from providing life, pension, and automobile policies. The entry of a U.S. subsidiary in 1988 was the first new foreign insurer in decades, and reflected the intent of the government to increase competition in the sector, at least in corporate and international insurance business. Official policy reserves wide range of non-financial services, such as tourism, a FINLAND telecommunications and industrial security, to Finnish nationals and/or state-owned companies. These and other sectors will undergo liberalization as part of the EES process mentioned earlier. Finland is a signatory to the GATT Standards Code and is in the process of harmonizing its technical standards, etc., with EC norms, an action which should favor U.S. exporters. In a major policy shift in 1989, the government announced willingness to consider foreign investment in all sectors, excepting natural resource exploitation (mineral extraction and forestry). In practice, there are partial restrictions on investing in shipping, other transportation, forwarding, publishing, securities brokering, and auditing activities. Furthermore, the state has reserved for state-owned companies postal and telegraph services, (excluding telephone), production and sale of alcohol, and petroleum refining. Unless waived by the Ministry of Trade and Industry, foreign ownership of voting stock is limited to twenty percent of all limited liability companies in Finland. Foreigners may own up to 40 percent of share capital; however, foreign control of real estate, either directly or through a business entity, is restricted. Foreign acquisition of real estate or a long-term lease arrangement requires the permission of a number of official entities. Finland is a signatory to the GATT Government Procurement Code. Countertrade and 'Buy National' provisions apply only to GATT-excluded sectors of defense and transportation. Competitive bidding is the rule in Finland. Finland's customs procedures are streamlined, reflecting the importance of foreign trade for this country. 6. Export Subsidies Policy The only significant direct export subsidies are for agricultural products (grain, meat, butter, cheese, eggs). At the end of the 1980s a limited program of interest-rate subsidies was initiated to aid sales of Finnish ships facing subsidized EC competition. This led to an agreement for consultations to prevent predatory subsidization between the EC and Finland. Industry "K" guarantees were made available in the 1960s to protect longterm delivery contracts for exports of metal engineering products against high inflation. Due to prevailing lower inflation and structural adjustment within the Finnish shipbuilding sector (the former major user of the fee-based guarantees), the system currently has negligible usage. 7. Protection of U.S. Intellectual Property Finland is a member of the World Intellectual Property Organization and is party to the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, the Universal Copyright Convention, the Patent Cooperation Treaty (PCT), the Strasbourg Agreement Concerning International Patent Classifications, the Geneva Phonograms Convention and the FINLAND Budapest Treaty on the International Recognition of the Finnish patent and trademark laws are similar to those of other Nordics. Finland is one of the last countries to deny product patent protection to pharmaceuticals. Legislation in 1987, however, initiated a transition period to product protection which will fully implemented in 1997. The first product patent medicines will probably not be available until the year 2000. 8. Workers Rights a. Right of Association Trade unions are constitutionally guaranteed the right to organize, assemble peacefully, and strike rights which are respected in practice. They enjoy a protected status and play an important role in political and economic life. A 1 million-member blue-collar confederation, the Central Organization of Finnish Trade Unions (SAK), dominates the trade union movement. Three other central organizations cover white-collar, professional, and technical employees. All trade unions are democratically organized and managed and are independent of the government. b. Right to Organize and Bargain Collectively The right to organize and bargain collectively exists in law and practice and is exercised extensively. Finland is a highly organized society in which more than eighty percent of both workers and employers are members of trade unions and employers' collective bargaining associations. With very few exceptions, all collective agreements since 1968 have been based on incomes policy agreements between central employees' and employers' organizations and the State. Workers are protected against anti-union discrimination and organization is encouraged in all sectors of the economy. C. Prohibition of Forced or Compulsory Labor The Constitution prohibits forced or compulsory labor. d. Minimum Age for Employment of Children While the minimum age for employment in Finland is 18, there are some paid training/apprenticeship programs starting at age 16. There is compulsory education legislation in Finland. are There is no legislated minimum wage in Finland although all employers including non-unionized employers required to meet the minimum wages agreed to in collective bargaining agreements in their industrial sector. The collective agreements cover the general level of wage and salary increases, other terms of employment, and a "social policy package" which provides for vacation, holidays, maternity and paternity leave, sick pay, travel costs, taxes, rents, etc. hours. The standard legal workweek must not exceed forty FINLAND f. Rights in Sectors with U.S. Investment A miniscule amount of U.S. direct investment is found in goods producing firms in the chemicals and related products and electric and electronics equipment sectors. The bulk of total U.S. investment is in the wholesale, banking and finance sectors. In all industries Finland consistently follows international labor standards and rights as enumerated above. In the goods producing sectors Finland upholds all of the internationally-recognized workers rights. (D)-Suppressed to avoid disclosing data of individual companies (*)-Under $500,000 Source: U.S. Department of Commerce, Survey of Current Business August 1990, Vol. 70, No. 8, Table 13 FRANCE Key Economic Indicators (Billions of French Francs (FF) Unless Otherwise Noted) France is the fourth largest industrial economy, with a GDP of around $940 billion in 1989, about one-fifth the size of the U.S. economy. As a member of the European Community (EC), imports into France are subject to the EC's common external tariff and to the restrictions of its common agricultural policy. As the EC puts in place its ambitious program to remove all barriers to the free internal circulation of goods, services, and capital by the end of 1992, competence in a growing number of economic areas, including certain aspects of fiscal policy and investment policy, will transfer to the EC. |