Discours de Lydie Polfer lors de sa visite officielle en Pologne

Speech by H.E. Mrs Lydie Polfer Vice-Prime Minister and Minister of Foreign Affairs and External Trade

Business seminar at Warsaw Chamber of Commerce Poland, 13th April 2000

Dear Minister,
Mr President,
Ladies and Gentlemen,

It is a great pleasure and honour for me to be in Warsaw today to open this seminar on business opportunities between Luxembourg and Poland. I would first of all like to thank the Chamber of Commerce for organising this event, which hopefully will contribute to bring the business communities between our two countries closer together.

Let me also thank the representatives of the Polish business community which are present in this room for coming and thereby showing their interest in what the Grand Duchy of Luxembourg and its companies have to offer.

As you may know the present official economic promotion mission is not the first visit by a Luxembourg business delegation to Poland. A rather successful commercial mission has actually taken place only four years ago and was led by His Royal Highness Prince Henri of Luxembourg. It was closely followed by a visit of an important Polish business delegation to Luxembourg.

So why did we decide to come back to Poland after a relatively short period of time ? The answer to this question is in fact a very simple one. In a recent survey we have been conducting with Luxembourg’s business community, Poland appeared to be their top priority in Eastern and Central Europe.

I personally understand the choice they made and believe that there are a number of reasons why our companies would like to do business in Poland. Politically and historically, Poland has always played a central role in Europe. With its 40 million inhabitants, it represents a huge and interesting market for our products. Its location at the crossroads of Central, Northern and Eastern Europe, at the brink of the Russian market, is of course another asset, which will develop its full potential in an enlarged Union.

The good overall performance of the main economic indicators in Poland is encouraging, and I would like to commend Poland on this particular point. We took note of preliminary estimates, which forecast GDP growth over 5% for the coming two years. The substantial annual inflow of foreign direct investments demonstrates the persistent confidence of international investors. As inflationary pressures and the growing current account deficit could pose a threat to the macro-economic stability, I encourage the government to remain on the track of economic and structural reform.

The perspective of Poland becoming a member of the European Union in a foreseeable time frame is of course another explanation for the strong expression of interest of our companies. As a representative of a member state of the European Union, which has always adopted a very open attitude towards the enlargement process, I would like to elaborate a little bit on this point.

In February 1998, official accession negotiations started in Brussels. At this point in time, out of a total of 31 negotiation chapters, 9 have already been agreed upon, whereas 14 are still under discussion. By June, all the remaining chapters will have been opened for negotiation. This clearly demonstrates that the process is proceeding and actually on track.

Poland has set 2003 as a target date for accession. This is an ambitious objective which I welcome. But it means that the government needs to accelerate its preparatory work. This is all the more true as we will shortly start negotiations on the most difficult chapters, like agriculture, free movement of persons or justice and home affairs. Problems will have to be addressed and hard work will be required on both sides. But I have no doubt, that if the necessary efforts are made by both parties, all the problems ahead of us can be solved. Negotiations will progress, perhaps sometimes at a slower pace than some would like it. But what is essential is that the direction is clearly set and that this process is irreversible.

Poland is already now a fully functioning market economy. It will be able to cope with competitive pressures and market forces in an enlarged Union, provided the pace of economic restructuring and trade liberalisation is maintained. Crucial sectors in this regard are of course coal, steel and agriculture.

With regard to the adoption of the acquis communautaire, major achievements have been realised in key areas of the Internal Market and I encourage the government to pursue its efforts with the aim of guaranteeing the full functioning of the internal market upon accession.

As a small country with a limited administrative capacity, we are perfectly conscious of what it means to adopt more than 80.000 pages of European legislation in a relatively short period of time. Furthermore, it is clear that adoption alone is not sufficient. An appropriate administrative and judicial capacity is necessary to ensure its implementation and enforcement. In areas like the environment, this represents of course an enormous workload. We are conscious of it and we are ready to provide assistance if required by the Polish authorities.

The threat of declining support of the population towards membership is an issue which has to be addressed. As politicians we should always remember that enlargement can’t be made against the people but only with them. This is not only true in the candidate states, but also in the member states.

I am aware that the ongoing economic and structural reforms are severely affecting a considerable part of the Polish population. For many of your citizens, there are hard times to go through. Therefore we have to keep explaining the long term benefits of our common endeavour, especially in the social and economic fields. They will foster sustainable growth and prosperity and thus pay off for Poland, for its companies and for its citizens.

The progress towards accession lies in the hands of Poland. Poland is in the driver’s seat. It will not be easy nor simple, but I can assure you that the European Union will do all it can to assist Poland in confronting this challenge. The process should in no way be slowed down. On the contrary we should intensify our preparatory work with the objective to meet the ambitious targets we have set ourselves.

Personally, I strongly believe in the success of this process. I consider it to be a unique historical opportunity to reconcile the history with the geography of our continent and eradicate forever the tragic division of Europe. From a political perspective, enlargement will bring us the invaluable advantage of peace and stability for the whole continent. From an economic standpoint, it will offer us the potential of an internal market of more than 500 million consumers. Enlargement is a chance for our continent and a threat for nobody.

Dear Minister,
Mr President,
Ladies and Gentlemen

Let me turn back now to our bilateral economic relations.

As far as economic ties between Poland and Luxembourg are concerned, I would like to stress that trade between us has witnessed considerable growth during the last years. The bilateral trade volume in fact doubled between 1997 and 1999. It is higher than for any other Eastern or Central European country.

Exports from Luxembourg to Poland increased by 350% since 1996, while imports from Poland increased by 220% during the same period. Even if serious foundations have been laid and if the general trend can be qualified as being positive, there is certainly room for improvement. This is the main reason why we are here today.

The speakers following me will give you a more detailed and complete picture about all aspects of Luxembourg’s economy. For my part I would like to draw your attention to some features which are essential to understand what Luxembourg and its business environment are all about. It will allow you to learn more about our economic structure and to understand what are the main factors of our economic success and prosperity.

Luxembourg is located in the heart of Europe, sharing borders with France, Belgium and Germany. It offers excellent transport and communication links with neighbouring countries and the rest of Europe. Beyond that, a modern air cargo terminal serves as a hub for distributing all kinds of products coming in from and going out to other continents.

The international orientation which characterises the policies of the successive governments since the second world war is a key element of our economic policy. Luxembourg has systematically supported efforts aiming at intensifying international co-operation in a multilateral context. It is a founding member of many international political and economic organisations : the United Nations, the Organisation for Economic Co-operation and Development, the North Atlantic Treaty Organisation and of course, the most important for us, the European Union. Being one of the six founding members, Luxembourg has always been able to influence its policies and structures.

The multilinguism of our population, its openness to foreign cultures, combined with the existence of a hard-working and highly skilled work force, whose high level of productivity and co-operative spirit are acknowledged by many business leaders, are certainly other key elements for our outstanding economic performance.

Building on these assets, Luxembourg evolved from an agrarian structure in the 19th century to a balanced economy built on a long industrial tradition and a clearly defined policy of diversification over the past 50 years in both the industry and service sectors. After undergoing a deep restructuring process in the seventies, Luxembourg’s steel industry has developed to a highly specialised and competitive player on the world steel market. With a production capacity of 20 million tons, our national steel producer ARBED has become a truly multinational company, which is now ranking number three among the world biggest producers.

The industrial diversification policy supported by the government has lead to the setting up of a number of major international companies in Luxembourg. They produce all kinds of exportable goods, such as chemicals, plastic, rubber and glass. Together with the steel sector and the constructing industry, they account for some 20% of GDP.

But lacking natural resources and a large domestic market, Luxembourg turned to providing international services very early on and transformed itself over the years into a mainly service oriented economy. The financial centre, where growth really took off in the beginning of the nineties, is today representing about 20% of GDP. More than 200 major foreign banks have set up subsidiaries and branches in Luxembourg, among them also one Polish bank.

Let me finally mention the communication and media sector, which is today considered to be one of the pillars of the country’s economic development. The Luxembourg based CLT-UFA is one of the largest multimedia groups in Europe, whereas SES, the owner of the ASTRA satellite system, is the largest private satellite company in Europe. It is currently operating 9 satellites covering more than 80 million households.

Representatives of all these different sectors are with me here today and will be happy to tell you more about their respective activities.

The success of the restructuring process in the steel industry combined with the industrial diversification efforts, the rapid development of financial services and the emergence of sophisticated service activities of the "New Economy" are the result of strategic decision making over the years. The result today is a strong and healthy economy, which throughout the last ten years has generated a higher growth rate and, in relative terms, more jobs than any of our European partners.

Allow me to give you just a few figures to underline the economic performance of Luxembourg :

  • Real GDP growth was 5% in 1999. We forecast that it will expand by about the same figure this year
  • The core inflation has remained low at 1,4% in 1999 ;
  • Public debt is virtually inexistent in Luxembourg ;
  • Unemployment has been below 3% in 1999
  • Whereas the trade balance shows a deficit, the current account surplus amounts to some 8% of GDP, versus 1,9% for the Euro zone.

This confirms what I told you about the orientation of Luxembourg’s economy. The surplus of the current account is largely due to the importance of financial services, which contributed last year by two thirds to the total value of exported services.

Adding to the assets I mentioned before, it was essentially creativity, innovative legislation, a small chain of command, involving fewer people than in larger countries, and thus the ability to rapidly adapt to changes, which allowed Luxembourg to experience a long period of sustainable growth. But we cannot take it for granted that this situation will last forever. In an international economic environment characterised by globalisation, where capital flows can change direction instantly, we permanently have to adapt to new circumstances.

Because of its size and history, I can say that Luxembourg has acquired some experience in this field. I firmly believe we are well prepared to the new challenges ahead of us. We are ready to seize opportunities that emerge.

Let me finish by wishing you good business contacts today and tomorrow. I expect them to be mutually beneficial and to contribute to a further strengthening of the bilateral relations between Poland and Luxembourg. Allow me finally to take the opportunity to invite you, the representatives of the Polish business community, to the Grand-Duchy of Luxembourg, so that you can find out by yourselves what Luxembourg has to offer.

Thank you for your attention.

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