Estonian-British trade developing rapidly

TALLINN – President Lennart Meri's visit to Great Britain back in March and his meeting with Queen Elizabeth II and Prime Minister Tony Blair was a significant foreign relations moment for Estonia. The visit's importance was enhanced by the high-level Estonian economic delegation as well as by the Estonian economic conference arranged in the London Chamber of Trade and Commerce, which attracted more than 100 leading businessmen.
Though Great Britain will presumably never reclaim its position as Estonia's number one trade partner, a status it enjoyed before World War II, Estonian business contacts have been developing at a fast pace after the reclamation of independence and the British are showing an ever growing interest in participating in Estonian economy. During the past four years, Estonian-British trade has more than tripled.

Wood has replaced butter
Great Britain is currently eighth among Estonia's export partners with a share of 3.7 percent. Imports from Great Britain formed 3.1 percent (Estonia's seventh largest import partner).
Before World War II, one of Estonia's main export articles to England was Estonian butter, but now 48 percent of Estonia's exports to Great Britain is made up of timber and wood products. Textile and textile products account for 21 percent, metal and metal products ,16 percent, electronics and technical devices and chemical products follow with 12 percent and 6 percent respectively.
Last year imports from Great Britain were divided between electronics and machine industry products, 23 percent, food products, 22 percent, chemical products, 20 percent, followed by textile and textile products, 11 percent and transport vehicles, 6 percent.
With the rapidly developing economic co-operation between the two countries, the British interest in the Estonian economic conference seemed logical.
The Estonian delegation at the conference consisted of the leaders of companies like Hoiupank, Kreenholm and Baltika (both textile companies), Saku Olletehas, Balteco, Liviko (all liquor producers), Wermo and Motorex (machine industry-linked firms) and the heads of the Estonian Chamber of Trade and Commerce.
The already successful co-operation was confirmed by the meetings of the company heads with their business partners.

Bigger investments
By September 1997, the largest chunk of British investment in Estonia was in the area of retail and wholesale trade (31 percent), hotels and restaurants (31 percent) and industry (25 percent). Transport and communications (4 percent), real estate and business consultations, and finance followed with 4 percent and 3 percent respectively.
This listing is about to change though, as the British giant Shell has decided to purchase the EK gas stations, which lifts Shell to the top place among foreign investors in Estonia. Prior to World War II, Shell was also one of the largest foreign investors in Estonia.
Noteworthy of the more recent British investments is also the large investment in Rakvere Dairy, made by the British company Alpamayost last year.
In 1997, the British fashion organisation Next increased its share on the Estonian market, successfully co-operating with Baltika for years already. Meelis Milder, the director of the textile company, was one of the participants at the conference.
Besides Shell Estonia Ltd., Rakvere Dairy and Next Estonia, the larger companies in Estonia based on British capital are Baltic Business & Trade Ltd., Britannic Group and Baltic Forest Lines, all of which export timber. Inpass Estonia Ltd., connected with British capital, is running all operating and servicing structures for Visa cards in Estonia.

Foreign investments as a protective shield
"Eighty years ago, an external factor the British Armada – played an important role in Estonia's aspirations for independence, and when Estonia regained its independence, the foreign investors were of considerable help to us," said Juri Sakkeus, head of the Estonian Investments and Trade Development Organization. Sakkeus was the main speaker of the Estonian economic conference at the London Chamber of Trade and Commerce.
Sakkeus, who commended Estonia on its' open economy and its' investment climate favorable to the British business world, accompanied the president in London with the official delegation. Sakkeus stated at the economic seminar that beginning in 1987, when the Soviet Union passed a law allowing the establishment of joint ventures with foreign companies, about 10,000 firms from abroad have invested in Estonia.
The amount of the foreign investments in Estonia during the past 10 years exceeds $1.2 billion. In terms of foreign investments, per inhabitant, Estonia is second among the Central and East-European countries, after Hungary.
Sakkeus emphasized that one-third of Estonia's economic turnover is made up of companies with foreign capital, but for Estonian exports, the corresponding share is more than 50 percent.
Sakkeus reminded the British that the Wall Street Journal and the Heritage Foundation have put Estonia in 17th place in terms of the level of economic freedom.
Sakkeus commented on the economic conference: "About five or six years ago, some went along with the delegation just in order to travel, but today all these visits have been very professional."
At the Estonian economic conference in the London Chamber of Trade and Commerce, various questions arose, mostly concerning the Estonian free trade zone and the competitiveness of Estonian agricultural products.
But there were criticisms. The British were eager to know why a competition, which followed all the rules can be annulled in Estonia. The reference was to the competition for the Katariina dock rental contract, which was won by an English company only to be annulled later.
According to Sakkeus, the main Estonian export articles in Britian in the future will still be timber and timber products. Both our neighbors (Finland and Sweden) export wood to Britian, and considerably more than Estonia. According to Sakkeus, there is no need to worry that the Estonian forests would be cut down.
Sakkeus couldn't predict, however, which other Estonian export articles could find their way onto the British markets, but added that hopefully the share of processed wood and furniture will increase with time.
"Other possible products could be Estonian textiles and paper, when the paper industry finally gets on its feet," Sakkeus said.
Sakkeus also hoped out loud that the Estonian financial sector will start providing more interesting opportunities for British businessmen.
"I think that Estonia's ambition is to become the Baltic financial center (which in addition to the Baltic states would include the St. Petersburg region) and improve contacts and co-operation with the financial institutions of Great Britain, which is one of the worlds' leading financial centers," Sakkeus said.

(This article originally appeared in the Estonian newspaper Sonumileht)