Finnish firms worried about competition with Estonians

The Finnish government should lower the value-added tax rate to keep Finnish goods competitive after European Union enlargement, the head of a Finnish trading house said.

Osmo Laine, manager of the Paivittaistavarakauppa trading house, said cheap Estonian foodstuffs present the main threat to Finnish producers. The government in Helsinki is seeking an exemption from the EU that would let Finns bring cheap Estonian food into Finland duty-free.

Laine says the government should be equally concerned, though, about the effect it will have on local producers.

"The question of VAT on essential consumer goods is of particular importance," Laine told the daily Helsingin Sanomat.

Even though many companies in Estonia are based on Finnish capital, it is difficult for Finnish firms to compete with Estonians because of tax differences. This will continue after the Baltic state becomes an EU member, he said.

Finland must upon Estonia's entry into the EU press its demand for Estonian excise taxes and VAT to be brought into line with the Finnish rates, Laine said.

The EU, fearing the spread of the foot-and-mouth disease, plans to forbid individuals to bring meat and other animal foodstuffs from outside the EU, a ban that is likely to stop Finnish tourists from making frequent trips to Tallinn.

Finland has asked the EU not to apply the ban to candidate countries or ease the rules for countries where animal diseases do not pose a problem. The European Commission, the union's executive arm, has so far been reluctant to make an exception for Finnish-Estonian trade relations.