"American investments in Sweden have increased..."

   

Sweden's Trade Minister, Leif Pagrotsky, Shares His Views

By: Lois Lindstrom • Photo: Henrik Alexanders

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The AMCHAM Magazine -No 1-1999

Sweden and the United States see eye-to-eye on which way the economy is growing. Both countries are moving quickly toward the service industry and away from manufacturing raw materials into products.

That's the belief of Sweden's Minister for Trade, Leif Pagrotsky, in describing Swedish - American trade relation trends.

"Sweden and the U.S. are developing and promoting online access business and cyber opportunities," explained Mr. Pagrotsky. Within Europe, Sweden boasts among the highest number of internet connections and the most mobile phone subscriptions per capita.

Noting that Sweden is home base for a striking number of large, global enterprises, Mr. Pagrotsky said, "it was natural that Sweden should become one of the world leaders in the IT field, from tele-communications and specialized software development to the Internet and e-commerce."

Close relations

Speaking in his Stockholm office, Mr. Pagrotsky emphasized that Sweden and the U.S. have always had good trade relations and mentioned that "Sweden is closer to the U.S. than to the European Union on matters of free trade."

Did the recent so-called "banana war" shake those stable relations between Sweden and the United States?

Arguing that Sweden joined the EU after the contro­versial import decisions for bananas were made, Mr. Pagrotsky said, "Sweden has a quota system for bananas which we don't like because now bananas cost more

Mr. Pagrotsky, 48, supports "pursuing active measures for the liberalization of world trade," and he "encourages American investments in Sweden."

"American investments in Sweden have increased in the past five years. Companies like Sweden's talented labor force, efficient and cheap telephone lines and electricity and advantageous geographical position," he explained.

"Geographically, we are near the Baltic countries and Poland, all excellent new markets for all types of products. In fact, the nearest capital to Sweden is Tallinn. It's faster to go to Tallinn than to Sweden's other two largest cities: Malmo and Goteborg."

Emphasizing the importance of the Baltic region, Mr. Pagrotsky said," One of my main tasks involves trade matters between Sweden and countries in the Baltic Sea region and Central and Eastern Europe.

Looking very pleased, he observed, "Sweden's trade with the new democracies on the Baltic rim has increased dramatically in recent years."

He added that statistically it appeared that trade between Sweden and the Baltic rim would soon equal Sweden's level of trade with the U.S. in its significance for Swedish companies.

Towards lower taxes?

Overall, Sweden has certain advantages for American companies. However some corporations have had difficulties recruiting American managerial talent to Sweden because of the Swedish tax system.

While corporate taxes are low at 28 percent, personal taxes can climb to 60 percent, a big bite for someone who only plans to be in Sweden for two or three years because of job assignment reasons.

Mr. Pagrotsky was quick to comment that his office was well aware of the problem. "We are lobbying to promote lower taxes," he explained. "I'm quite optimistic that we can get a package approved that will lower tax rates for foreign experts and specialists working in Sweden for a limited period of time."

Unwilling to elaborate further, he said, "I can't give you any more information than that." Showing a business-like smile, he said, "I'm optimistic."

The Automobile Market

Major companies in Sweden and the U.S. have joined together in this decade. Investor AB, the owner of Saab -Scania, split its automotive interests in 1995 to allow its car and truck operations to pursue divergent strategies. Saab Automobile was bought by the American automotive giant, General Motors. Last year Ford purchased the automobile division of Volvo.

Mr. Pagrotsky believes the experience has been very positive.

"These companies had to face economic reality," he stated. "Without outside help, Saab would have disappeared. Now Saab is a smaller, but profitable division of GM."

On other subjects, Mr. Pagrotsky was optimistic about the upward movement of the Swedish economy and dismissed the notion that Swedish executives are less positive about the business climate than representatives of foreign companies working in Sweden.

"Foreigners working in Sweden are more neutral and not as emotionally involved as Swedes," Mr. Pagrotsky explained.

I don't understand why Swedes from major companies are complaining."

The Trade Minister shook his head with an expression of disbelief. "I don't understand this discontent although representatives from some of the big companies might have a private political agenda," he said cautiously.

Another subject dear to Leif Pagrotsky's heart is Sweden's position as a net exporter of music.

Swedish artists earn more money than other European artists for their music. A Swedish vocalist won the European Music Festival in 1999. Mr. Pagrotsky said that Swedish musicians are even a big hit in Japan.

It is Trade Minister Pagrotsky's conviction that the music produced in Sweden contributes to its image. "It shows that Sweden is exceptionally modern and creative."

   

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