Speech Business Forum, CBSS summit in Riga, Latvia 04 June 2008
Fredrik Reinfeldt, Prime Minister

A Competitive Baltic Sea Region - a vision within reach

Excellencies, Ladies and Gentlemen,

It is an honor to be here today.

The Baltic Sea region has undergone a tremendous development since the beginning of the 1990s.

Today 10 out of the 11 CBSS (Council of the Baltic Sea States) countries are completely integrated in the internal market of the European Union, with its 550 million consumers and 20 million companies.

Today some of the fastest growing export markets for Swedish companies are found in the region.

Sweden's trade with other states around the Baltic Sea increased by 20 per cent in just the last year.

A closely integrated Baltic Sea Region has been a clear vision for our generation, and it is our responsibility to take integration and cooperation even further.

The four freedoms - the free movement of
people,
goods,
services
and the free circulation of capital -
is the platform for the Baltic Sea Region's emergence as an important economic engine of Europe.

The region is one of the strongest growing regions in the world.
But in order to reach the next level, the remaining trade and investment barriers need to be overcome and conditions created for further economic integration.

Last year, the Swedish National Board of Trade stated that the gross regional income would increase by 30 billion USD or one percent of GDP if trade in the Baltic Sea Region was fully liberalized. As a comparison, 30 billion USD is equal to Lithuanias GDP in 2006.

All countries in the region would gain from further trade liberalization;

Russia the most,

followed by Lithuania and Estonia.

So there is still a strong untapped potential for growth and integration through further dismantling of trade and investment barriers in our region.

As is often the case in free market economies, there are examples of how the private sector has taken a lead in this respect.

A number of bigger companies are already making the Baltic Sea part of the EU internal market into one single home market for them.
The banking and telecom sectors, the stock exchanges, and the airline industry are among them.
Many of them have also entered the Russian market and help creating bridges in the market between the EU and the non-EU parts of this region.

Investment flows to the countries in the region are growing rapidly. In the last three years, inflows increased from 30 to 140 billion USD. Some of the investments are related to an ongoing integration of business communities in the region: in the banking sector, in forestry, in IT/telecom.

Swedish and Finnish companies are dominating the scene so far, but companies from other Baltic Sea region economies are expected to catch up.

On the other hand, there are very few Russian companies established in Sweden. This exceptional situation is telling of both the long road to go and the range of opportunities, should soon be remedied.

It is now high time for us politicians to make sure that the Baltic Sea Region will become a true home market for all of our companies.

An effective and uniform implementation of the Services Directive can give the services sector a well-needed.

We will improve growth opportunities also for small and medium-sized enterprises, which actually dominate our region and which are extremely important for innovation and competitiveness.
This should be one key objective of the European Union Baltic Sea Strategy which is now being developed under the leadership of the European Commission.

The launch of this strategy will also be one of the top priorities for next year's Swedish Presidency of the EU.

Innovation and research are at the core of the competitiveness of our region. The European Spallation Source (ESS) will provide an important boost to the region in this field.

There is also need for political leadership to stimulate and facilitate trade and investment between Russia and the other countries of the Baltic Sea Region.
A WTO membership for Russia would be the single most important step.

History has taught us the importance of extending free trade and economic integration.

A prosperous and competitive Baltic Sea Region is an illustration of this.