41% Finnish companies face barriers to Int´l trade: Govt study

As many as 41% of Finnish companies have experienced trade barriers in their international operations in recent years, according to a government analysis.

Most of the examined trade barriers between 2019 and 2022 occurred in countries outside the EU, especially in Russia, the United States and China, said a joint press release jointly issued by the Ministry for Foreign Affairs, Ministry of Economic Affairs and Employment and the Prime Minister's Office on Monday referring to the study conducted by ETLA Economic Research for the Finnish Government.

Finnish companies also encountered trade barriers in the EU, said the study.

Companies engaged in international trade still face various trade barriers, that is, regulations or practices by authorities that make it difficult for services and products to enter the market.

Trade barriers include customs duties, import restrictions and subsidies directed only at domestic operators.

However, not all trade barriers are detrimental to society – they can also contribute to the safety of products for people and the environment.

Within the EU, companies encountered the most trade barriers in Sweden and Germany. According to Jyrki Ali-Yrkkö, Research Director at ETLA, the Russian invasion of Ukraine has increased trade barriers.

“The probable cause of the increasing trade barriers can be found in the sanctions imposed on Russia due to the invasion as well as in Russia’s retaliatory measures. Although the vast majority of trade barriers were encountered outside the EU, some were also encountered in the EU single market. In the framework of the study, it is difficult to say whether Sweden and Germany stand out in this because they actually have a lot of trade barriers or because Finnish companies trade a lot in these two countries. In any case, it is significant that companies also encountered barriers to trade in the EU,” said Ali-Yrkkö, who was in charge of the research project.

The barriers encountered by companies in the EU were most often technical barriers to trade. As many as a third of trade barriers relate to, for example, local standards, technical regulations or country-specific testing and certification requirements. In this case, it may also be a question of promoting product safety.

In countries outside the EU, export and import bans were most common, but there were also high or discriminatory customs duties.

According to the company survey conducted for the study, as many as half of Finnish companies encountered availability problems in purchasing materials, parts or components in 2019–2022.

All types of companies were affected, regardless of size and sector, but their responses varied: medium-sized companies increased purchases in Finland, while large companies started buying from neighbouring countries.

Jyrki Ali-Yrkkö warns against drawing too many conclusions too early, emphasising that the results of the survey indicate the nature of the change but not its intensity.

The study was conducted as part of the implementation of the Government Plan for Analysis, Assessment and Research for 2022. The study is a continuation of the surveys on trade barriers carried out in 2016 and 2013.