Finland concludes investment protection agreements with the Dominican Republic and Costa Rica


Foreign Minister Erkki Tuomioja has signed two new agreements to protect and promote investments between Finland and the Central American states of the Dominican Republic and Costa Rica.

Mr Tuomioja and his counterpart Hugo Tolentino Dipp signed the agreement between Finland and the Dominican Republic on Tuesday, 27 November. The agreement between Finland and Costa Rica was signed by Mr Tuomioja and Foreign Minister Roberto Rojas in San José the following day, 28 November. The agreements were negotiated at the initiative of the two Central American states.

Through the agreements Finland aims to safeguard its industrial general operational preconditions in the two countries. The agreements protect investments from political risks and increase the predictability of the investment environment. They provide that Finnish investments would not be excluded by those of other countries or by the country’s enterprises, even though conditions may alter. Under the agreements the transfer to and from the country of invested assets and their proceeds is secured. The signatories are responsible for the compensation of losses due to expropriations, embargos and resultant damage. Disputes may be settled by international arbitration tribunal instead of by a national court, if the investor so wishes.

Finland supports the safeguarding of foreign investments by multilateral agreement, based on absolute non-exclusion. But in the absence of such agreements Finland, as other EU countries, negotiates bilateral agreements. These are primarily negotiated with countries where there are already Finnish businesses investments, where they are expected or where it is hoped investments will be made in Finnish enterprises. Finland has agreements of this kind with 36 countries and is negotiating with many others.

Since the beginning of the 1990s the Dominican Republic has followed a clear policy of economic structural adjustment and openness. State enterprises, such as power plants and hotels, have been privatised. Prices have been liberalised and inflation brought under control by a strict fiscal policy. Trade has been opened up to international competition and the country has attracted foreign investments. Growth has increased to the 7-8 percent level but social conditions remain bad, especially in rural areas. The most important source of income, tourism, depends on cyclical trends, and industrialization is based greatly on the tax-free zone of textile production.

Finnish exports to the Dominical Republic amounted to under FIM 300 million last year, while imports from the country were FIM 130 million. Finnish industry has long been involved in the development of the country’s energy supply.

Finland’s annual imports from Costa Rica have been about FIM 300 million, and exports some FIM 30 million. Turnover is nevertheless much greater than with many other countries of the same size.

The most well-known Costa Rican export is coffee, though in recent years this has been overtaken by exports of bananas. In 1996 Costa Rica exported its first significant amount of telecommunications equipment, and since then exports in this area have grown considerably. Finnish imports to the country mainly comprise paper, machinery and equipment.

Costa Rica favours foreign investments although it has only a few bilateral investment protection agreements. The oldest of these was agreed with Switzerland at the beginning of the 1960s. For the moment Finland has invested rather little in Costa Rica. Foreign investors are attracted to the country by its trained workforce, abundant raw materials and extensive information technology industry.

Further information: Counsellor Jukka Nystén ([email protected]), tel: (09) 1341 5071