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DE RUEHTL #0030/01 0151500
ZNR UUUUU ZZH
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FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 0335
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHHE/AMEMBASSY HELSINKI 0027
RUEHRA/AMEMBASSY RIGA 0073
RUEHTL/AMEMBASSY TALLINN
RUEHVL/AMEMBASSY VILNIUS 0075

UNCLAS TALLINN 000030 
 
SIPDIS 
DEPARTMENT FOR EB/IFD/OIA, EUR/NB 
DEPARTMENT PLEASE PASS USTR FOR JKALLMER AND OPIC FOR O'SULLIVAN 
TREASURY FOR DO/JMACLAUGHLIN 
USDOC FOR ITA/DERSTINE 
HELSINKI FOR SCO 
 
E.O. 12958: N/A 
TAGS: ECON EFIN BEXP ETRD EINV ELAB KTDB OPIC USTR PGOV EN
SUBJECT: 2010 INVESTMENT CLIMATE STATEMENT - ESTONIA 
 
REF: 09 STATE 00124006 
 
A.l Openness to Foreign Investment 
 
 
 
As a member of the EU, the Government of Estonian (GOE) maintains 
liberal policies in order to attract investments that could produce 
exports.  Foreign investors are treated on an equal footing with 
local investors.  While the GOE's focus in the mid-1990s was to 
attract foreign direct investment (FDI) into Estonia, finding new 
export markets for Estonian goods and services is the GOE's current 
priority.  Creating favorable conditions for FDI and openness to 
foreign trade has been the foundation of Estonia's economic 
strategy. 
 
 
 
Estonia's government does not screen foreign investments, nor has 
it set limitations on foreign ownership.  It does, however, 
establish requirements for certain sectors.  These requirements are 
not intended to restrict foreign ownership but rather to regulate 
it and establish clear ownership responsibilities.  Licenses are 
required for a foreign investor to become involved in the following 
sectors: mining, energy, gas and water supply, railroad and 
transport, waterways, ports, dams and other water-related 
structures and telecommunications and communication networks.  The 
Estonian Financial Supervision Authority issues licenses for 
foreign interests seeking to invest in or establish a bank. 
Additionally, the Estonian Competition Authority reviews 
transactions for anti-competition concerns.  Government review and 
licensing have proven to be routine and non-discriminatory. 
 
 
 
Estonia's privatization program is now complete.  Only a small 
number of enterprises -- the country's main port, the power plants, 
the postal system, and the national lottery -- remain wholly 
state-owned.  The GOE is a minority shareholder in Estonian Air 
with 34 percent of shares (SAS Group is the largest shareholder, 
with 49 percent).  In January 2007, the government also repurchased 
the 66 percent of shares of the Estonian Railway which had been in 
the hands of private investors since 2001, claiming the need to 
maintain control of this key part of Estonia's national 
infrastructure. 
 
 
 
During the last decade, Estonia has been one of the leading 
countries in Central and Eastern Europe in terms of inward 
investment per capita.  Some general facts concerning foreign 
direct investment inflows into Estonia include: 
 
 
 
- There is a trend towards cross-border acquisitions; 
 
- Greenfield investments are increasingly rare; 
 
- FDI is expected to jump if Estonia meets all the Maastricht 
criteria by spring 2010 and adopts the euro as planned in January 
¶2011. 
 
 
 
Estonia by international indexes/rankings: 
 
 
 
year                 Index/Ranking 
 
--------------------------------------------- ------------- 
 
TI Corruption Index                             2009 
27 
 
Heritage Economic Freedom 2009                13 
 
World Bank Doing Business   2010                24 
 
MCC Govnt Effectiveness                 2008                1.1488 
 
MCC Rule of Law                               2008 
1.0544 
 
MCC Control of Corruption    2008                0.94 
 
MCC Fiscal Policy                              2008 
1.28E-02 
 
MCC Trade Policy                              2009 
87.48 
 
MCC Regulatory Quality                    2008                1.47 
 
MCC Business Start Up                     2009                0.99 
 
MCC Natural Resource Mgmt           2009                98.4 
 
 
 
More on rankings: 
 
 
 
TI Corruption Index: 
http://www.transparency.org/policy_research/s urveys_indices/cpi/200 
9/cpi_2009_table 
 
 
 
Heritage Economic Freedom: 
http://www.heritage.org/index/Ranking.aspx 
 
 
 
World Bank Doing Business: 
http://www.doingbusiness.org/economyrankings/ 
 
 
 
MCC: 
http://www.mcc.gov/search/results.php?q=FY10+ codebook&Submit=Go&cli 
ent=default_frontend&output=xml_no_dtd&proxys tylesheet=default_fron 
tend&site=mcc&num=10&filter=0 
 
 
 
A.2 Conversion and Transfer Policies 
 
 
 
Estonia has been under a currency board arrangement since 1992. 
Initially pegged to the German mark, the Estonian kroon (EEK) has 
been fixed to the euro at EEK 15.65 since January 1999.  Estonia 
joined the Exchange Rate Mechanism II (ERM II) in June, 2004. 
Estonia is on track to join the Eurozone in early 2011. 
 
 
 
The Estonian currency has no restrictions on its transfer or 
conversion.  Similarly, there are no restrictions, limitations or 
delays involved in converting or transferring funds associated with 
an investment (including remittances of investment capital, 
earnings, loan repayments, or lease payments) into other currencies 
at market rates.  There is no limit on dividend distributions as 
long as they correspond to a company's official earnings records. 
If a foreign company ceases to operate in Estonia, all its assets 
may be repatriated without restriction.  These policies are all 
long-standing; there is no indication that they will be altered in 
the future.  Foreign exchange is readily available for any purpose. 
 
 
 
A.3 Expropriation and Compensation 
 
 
 
Private property rights are observed in Estonia.  The government 
has the right to expropriate in the case of public interests 
 
related to policing the borders, public ports and airports, public 
streets and roads, supply to public water catchments, etc. 
Compensation is offered based on market value.  Post is not aware 
of any expropriation cases involving discrimination against foreign 
owners. 
 
 
 
A.4 Dispute Settlement 
 
 
 
Investment disputes concerning U.S. or other foreign investors and 
Estonia are rare. Estonia's judiciary is independent and insulated 
from government influence.  Property rights and contracts are 
enforced by the courts. 
 
 
 
Estonia's commercial law has proven extremely effective and is 
often cited as one of the components of Estonia's successful 
economic reforms.  The Commercial Code, as a part of the overall 
commercial law, is consistently applied.  The Obligation Law, 
enacted in 2002, is the basis for all commercial agreements.  A 
Bankruptcy Act was adopted in 2004.  The full text of these laws 
can be found at: http://www.legaltext.ee/en/.  Estonia has been a 
member of the International Center for the Settlement of Investment 
Disputes (ICSID) since 1992 and a member of the New York Convention 
of 1958 on the Recognition and Enforcement of Foreign Arbitral 
Awards since 1993. 
 
 
 
Recognition of court rulings of EU Member States is regulated by EU 
legislation. 
 
 
 
The Arbitration Court of the Estonian Chamber of Commerce and 
Industry is a permanent arbitration court which settles disputes 
arising from contractual and other civil law relationships, 
including foreign trade and other international economic relations. 
 
 
 
A.5 Performance Requirements/Incentives 
 
 
 
A fundamental principle of Estonia's economic policy is equal 
treatment of foreign and domestic capital.  No special investment 
incentives are available to foreign investors, nor is any favored 
treatment accorded them.  Similarly, there are no specific 
performance requirements for foreign investments that differ from 
those required of domestic investments. 
 
 
 
Estonia continues to refine its immigration policies and practices. 
U.S. citizens are exempt from the quota regulating the number of 
immigration and residence permits issued, as are citizens of the EU 
and Switzerland. 
 
 
 
Estonia has a long-standing system of low, simple, flat-rate taxes, 
in particular, a 21 percent income tax.  To encourage companies to 
expand their business, all reinvested profits are exempted from 
corporate income tax.  However, any redistributed profits, such as 
dividends, are taxed at 21 percent.  This tax strategy was designed 
to promote business and accelerate economic growth by making 
additional funds available for investment. 
 
 
 
Generally, the government does not impose "offset" requirements on 
major procurements. There are no government imposed conditions to 
invest. 
 
A.6 Right to Private Ownership and Establishment 
 
 
 
Private ownership and entrepreneurship are respected in Estonia. 
In most fields of business, participation by foreign companies or 
individuals is unrestricted.  As provided for by the Law on Foreign 
Investments, foreign investors have the same rights and obligations 
as Estonian citizens.  Foreign investors may purchase buildings and 
land for production purposes and establish, buy, and fully own 
companies. 
 
 
 
Government approval is required for foreign investment and 
participation in only a handful of sectors (see section A.1). 
 
 
 
Competitive equality is the official standard applied to private 
enterprises in competition with public enterprises.  Private 
companies do not face discrimination in relation to state-owned 
companies. 
 
 
 
A.7 Protection of Property Rights 
 
 
 
Secured interests in property are recognized and enforced. 
Mortgages are quite common for both residential and commercial 
property and leasing as a means of financing is widespread and 
efficient. 
 
 
 
The legal system protects and facilitates acquisition and 
disposition of all property rights, including land, buildings, and 
mortgages.  The long and complicated process of property 
restitution (begun when the Principles of Ownership Reform Act came 
into force June 20, 1991) is almost complete, including the area of 
non-residential real properties. 
 
 
 
The Estonian legal system adequately protects property rights, 
including intellectual property, patents, copyrights, trademarks, 
trade secrets and industrial design.  Estonia adheres to the Berne 
Convention, WIPO and TRIPS, the Rome Convention and the Geneva 
Convention on the Protection of the Rights of Producers.  Estonian 
legislation fully complies with EU directives granting protection 
to authors, performing artists, record producers, and broadcasting 
organizations. 
 
 
 
Protecting Your Intellectual Property in Estonia 
 
 
 
Several general principles are important for effective management 
of intellectual property ("IP") rights in Estonia. First, it is 
important to have an overall strategy to protect your IP.  Second, 
IP is protected differently in Estonia than in the U.S.  Third, 
rights, except for copyright, must be registered and enforced in 
Estonia under local laws.  In Estonia, equal protection of 
copyright is provided via international conventions and treaties to 
foreign and Estonian authors.  Your U.S. trademark and patent 
registrations will not protect you in Estonia.  Protection against 
unauthorized use depends on Estonian normative regulations that 
adhere to international laws and directives of the European Union. 
 
 
 
Registration of patents and trademarks is on a first-in-time, 
first-in-right basis, so you should consider applying for trademark 
and patent protection even before selling your products or services 
in the Estonian market.  It is vital that companies understand that 
 
intellectual property is primarily a private right and that the 
U.S. government generally cannot enforce rights for private 
individuals in Estonia. It is the responsibility of the rights' 
holders to register, protect, and enforce their rights where 
relevant, retaining their own counsel and advisors.  Companies may 
wish to seek advice from local attorneys or IP consultants who are 
experts in Estonian law.  This list is available on the embassy 
website: http://estonia.usembassy.gov/local_attorneys. html. 
 
 
 
While the U.S. Government stands ready to assist, there is little 
we can do if the rights' holders have not taken these fundamental 
steps necessary to secure and enforce their IP in a timely fashion. 
Moreover, in many countries, rights holders who delay enforcing 
their rights under the misconception that the USG can provide a 
political resolution to a legal problem may find that their rights 
have been eroded or abrogated due to legal doctrines such as 
statutes of limitations, laches, estoppel, or unreasonable delay in 
prosecuting a law suit.  In no instance should U.S. Government 
advice be seen as a substitute for the obligation of a rights' 
holder to promptly pursue its case. 
 
 
 
It is always advisable to conduct due diligence on potential 
partners.  Negotiate from the position of your partner and give 
your partner clear incentives to honor the contract.  A good 
partner is an important ally in protecting IP rights.  Consider 
carefully, however, whether to permit your partner to register your 
IP rights on your behalf.  Doing so may create a risk that your 
partner will list itself as the IP owner and fail to transfer the 
rights should the partnership end.  Keep an eye on your cost 
structure and reduce the margins (and the incentive) of would-be 
bad actors.  Projects and sales in Estonia require constant 
attention.  Work with legal counsel familiar with Estonian laws to 
create a solid contract that includes non-compete clauses and 
confidentiality/non-disclosure provisions. 
 
 
 
It is also recommended that small and medium-size companies 
understand the importance of working together with trade 
associations and organizations to support efforts to protect IP and 
stop counterfeiting. 
 
 
 
IP Resources 
 
 
 
A wealth of information on protecting IP is freely available to 
U.S. rights holders.  Some excellent resources for companies 
regarding intellectual property include the following: 
 
 
 
--For information about patent, trademark, or copyright issues 
-including enforcement issues in the U.S. and other countries - 
call the STOP! Hotline: 1-866-999-HALT or register at 
www.StopFakes.gov. 
 
--For more information about registering trademarks and patents 
(both in the U.S. as well as in foreign countries), contact the US 
Patent and Trademark Office (USPTO) at: 1-800-786-9199. 
 
--For more information about registering for copyright protection 
in the U.S., contact the U.S. Copyright Office at: 1-202-707-5959. 
 
--Estonian Patent Office: http://www.epa.ee/ 
 
--Estonian Organization for Copyright Protection: 
http://www.eako.ee 
 
--Estonian Association of the Phonogram Producers: 
http://www.efy.ee 
 
A.8 Transparency of the Regulatory System 
 
 
 
The Government of Estonia has set transparent policies and 
effective laws to foster competition and establish "clear rules of 
the game."  However, due to the small size of Estonia's commercial 
community, instances of favoritism are not uncommon despite 
regulations and procedures designed to limit them. 
 
 
 
Tax, labor, health and safety laws and policies have been crafted 
to encourage investment.  They appear to have been successful, 
given the relatively high level of foreign direct investment per 
capita. 
 
 
 
All proposed laws and regulations are published for public comment 
on the website: http://eoigus.just.ee/. 
 
Also, the public can comment on draft laws and propose changes to 
the government regulations at: www.osale.ee. 
 
 
 
Estonia's bureaucratic procedures are generally far more 
streamlined and transparent than those of other countries in the 
region and are among the most streamlined and transparent in the 
EU. 
 
 
 
International institutions and organizations give Estonia's 
economic policies high marks.  The U.S.-based Wall Street 
Journal/Heritage Foundation's 2009 Index of Economic Freedom ranked 
Estonia 13th in the world.  The index is a composite of scores in 
monetary policy, banking and finance, black markets, wages and 
prices. Estonia scores highly on this scale for investment freedom, 
fiscal freedom, financial freedom, property rights, business 
freedom, and monetary freedom. 
 
 
 
A.9 Efficient Capital Markets and Portfolio Investment 
 
 
 
Estonia's financial sector is modern and efficient.  Government and 
Central Bank policies facilitate the free flow of financial 
resources, thereby supporting the flow of resources in the product 
and factor markets.  Credit is allocated on market terms and 
foreign investors are able to obtain credit on the local market. 
The private sector has access to an expanding range of credit 
instruments similar in variety to those offered by banks in 
Estonia's Nordic neighbors Finland and Sweden. 
 
 
 
Legal, regulatory, and accounting systems are transparent and 
consistent with international norms. 
 
 
 
The Security Market Law complies with EU requirements and enables 
EU securities brokerage firms to deal in the market without 
establishing a local subsidiary.  The NASDAQ OMX stock exchanges in 
Tallinn, Riga and Vilnius form the Baltic Market, which facilitates 
cross-border trading and attracting more investments to the region. 
This includes sharing the same trading system and harmonizing rules 
and market practices, all with the aim of reducing the costs of 
cross-border trading in the Baltic region. 
 
 
 
Estonia's banking system has consolidated rapidly.  Total assets of 
the commercial banks were approximately USD 30 billion at the end 
of 2009.  Two Swedish-owned banks (Swedbank and SEB) control over 
70 percent of the market.  More information is available at: 
 
http://www.pangaliit.ee/eng/Info/. 
 
 
 
The Scandinavian-owned Estonian banking system is modern and 
efficient, encompassing the strongest and best-regulated banks in 
the region.  These provide both domestic and international services 
(including internet and telephone banking) at very competitive 
rates.  Both local and international firms provide a full range of 
financial, insurance, accounting, and legal services.  Estonia has 
a highly advanced internet banking system: more than 87 percent of 
internet users make their everyday transactions via internet 
banking. In Estonia over 71 percent of the population between the 
ages of 16-74 uses the internet. 
 
 
 
The Central Bank and the government hold no shares in the banking 
sector. 
 
 
 
In 2001, the Estonian government created a consolidated Financial 
Supervisory Authority (FSA) under the auspices of the Central Bank. 
The FSA conducts financial supervision independently on behalf of 
the state and has a separate budget. The FSA was established to 
enhance the stability, reliability, transparency, and efficiency of 
the financial sector, to reduce system risks, and to prevent the 
use of the financial sector for criminal purposes. 
 
 
 
Takeovers in Estonia are regulated by the EU Takeover Directive 
2004/25/EC.  More information is available at: 
http://eur-lex.europa.eu/LexUriServ/LexUriSer v.do?uri=CELEX:32004L0 
025:EN:HTML. 
 
 
 
A.10 Competition from State Owned Enterprises 
 
 
 
Only a small number of enterprises -- the country's main port, the 
power plants, the postal system, railway and the national lottery 
-- are state-owned (SOEs). Public enterprises operate on the same 
legal bases as private enterprises without any advantages. 
 
 
 
Each of the SOEs' management reports to an independent supervisory 
board consisting of government officials, politically-affiliated 
individuals and also prominent members of the business community. 
 
 
 
There are several sovereign wealth funds (SWFs) in Estonia.  They 
have similar corporate governance to SOEs. 
 
 
 
Both SOEs and SWFs are required to publish their annual reports 
(usually available on the internet also in English) and submit 
their books for independent audit. 
 
 
 
A.11 Corporate Social Responsibility (CSR) 
 
 
 
The majority of OECD Guidelines for Multinational Enterprises are 
incorporated into Estonian legislation.  2005 saw the start of a 
non-profit organization, Responsible Business Forum in Estonia, 
with an aim of furthering CSR in Estonian society. Responsible 
Business Forum in Estonia is a partner in the CSR360 Global Partner 
Network.  CSR360 (www.csr360gpn.org) is a network of independent 
organizations, who work as the interface of business and society to 
mobilize business for good. 
 
In 2008, the Tallinn City Council began its Responsible Business 
Award competition to recognize entrepreneurs' social and 
environmental innovation and entrepreneurship. 
 
 
 
A.12 Political Violence 
 
 
 
Civil unrest generally is not a problem in Estonia and there have 
been no incidents of terrorism.  Large public gatherings and 
demonstrations may occur on occasion in response to political 
issues, but these have proceeded, with few exceptions, without 
incident in the past. 
 
 
 
A.13 Corruption 
 
 
 
Estonia has laws, regulations, and penalties to combat corruption 
and, while corruption is not unknown, it has generally not been a 
major problem faced by foreign investors.  However, foreign 
companies have found it difficult to become part of the local 
commercial community because many Estonian executives have known 
one another since childhood and often help one another out in ways 
that make it difficult for outsiders to compete effectively. 
 
 
 
Both offering and taking bribes are criminal offenses which can 
bring imprisonment of up to five years.  While "payments" that 
exceed the services rendered are not unknown, and "conflict of 
interest" is not a well-understood issue, surveys of American and 
other non-Estonian businesses have shown the issues of corruption 
and/or protection rackets are not a major concern for these 
companies.  In 2009 Transparency International (TI) ranked Estonia 
27th out of 180 countries on its Corruption Perceptions Index.  The 
Estonian Ministry of Justice invited TI to take a lead role in the 
drafting of the country's new anti-corruption strategy 
 
 
 
In 2004, the GOE instituted the "Honest State" program, an 
anti-corruption platform which included specific policies to reduce 
the risk of corruption in government.  These included auditing 
local governments (widely seen as the greatest source of corruption 
in Estonia), requiring public servants to file electronic 
declarations of their economic interests, setting up a National 
Ethics Council, increasing the number of specialized investigators 
and prosecutors who focus on corruption, and setting up an 
anonymous hotline for people to report corruption cases. The 
principles of the "Honest State" program continue to be an embedded 
part of GOE best practices. 
 
 
 
The Security Police Board has shown its capacity to deal with 
corruption offences and criminal misconduct, leading to the 
conviction of several high-ranking state officials.  Estonia 
co-operates in fighting corruption at the international level and 
is a member of GRECO (Group of States Against Corruption). Many 
European countries are parties to either the Council of Europe 
(CoE) Criminal Law Convention on Corruption, the Civil Law 
Convention, or both.  The Criminal Law Convention requires 
criminalization of a wide range of national and transnational 
conduct, including bribery, money-laundering, and account offenses. 
It also incorporates provisions on liability of legal persons and 
witness protection.  The Civil Law Convention includes provisions 
on compensation for damage relating to corrupt acts, whistleblower 
protection, and validity of contracts, inter alia.  GRECO was 
established in 1999 by the CoE to monitor compliance with these and 
related anti-corruption standards. Currently, GRECO comprises 46 
member states (45 European countries and the United States). As of 
December 2009, the Criminal Law Convention had 42 parties and the 
Civil Law Convention had 34 (see www.coe.int/greco. 
 
 
 ) 
 
 
 
Estonia began as a full participant in the OECD Working Group on 
Bribery in International Business Transactions (the Working Group) 
in June 2004, and deposited its instruments of accession on 
November 23, 2004.  The Convention entered into force in Estonia on 
January 22, 2005.  The Convention obligates the Parties to 
criminalize bribery of foreign public officials in the conduct of 
international business.  The United States meets its international 
obligations under the OECD Anti-bribery Convention through the U.S. 
Foreign Corrupt Practices Act. 
 
 
 
It is important for U.S. companies, irrespective of their size, to 
assess the business climate in the relevant market in which they 
will be operating or investing, and to have an effective compliance 
program or measures to prevent and detect corruption, including 
foreign bribery.  U.S. individuals and firms operating or investing 
in foreign markets should take the time to become familiar with the 
relevant anticorruption laws of both the foreign country and the 
United States in order to properly comply with them, and where 
appropriate, they should seek the advice of legal counsel. 
 
 
 
U.S. Foreign Corrupt Practices Act:  In 1977, the United States 
enacted the Foreign Corrupt Practices Act (FCPA), which makes it 
unlawful for a U.S. person, and certain foreign issuers of 
securities, to make a corrupt payment to foreign public officials 
for the purpose of obtaining or retaining business for or with, or 
directing business to, any person.  The FCPA also applies to 
foreign firms and persons who take any act in furtherance of such a 
corrupt payment while in the United States.  For more detailed 
information on the FCPA, see the FCPA Lay-Person's Guide at: 
http://www.justice.gov/criminal/fraud/docs/do jdocb.html. 
 
 
 
UN Convention:  The UN Anticorruption Convention entered into force 
on December 14, 2005, and there are 143 parties to it as of 
December 2009 (see 
http://www.unodc.org/unodc/en/treaties/CAC/si gnatories.html).  The 
UN Convention requires countries to establish criminal and other 
offences to cover a wide range of acts of corruption.  The UN 
Convention goes beyond previous anticorruption instruments, 
covering a broad range of issues ranging from basic forms of 
corruption such as bribery and solicitation, embezzlement and 
trading in influence, to the concealment and laundering of the 
proceeds of corruption. 
 
 
 
Estonia's signing of the UN Anticorruption Convention is currently 
on the Estonian Parliament agenda and has passed the first reading. 
 
 
 
Local Laws: U.S. firms should familiarize themselves with local 
anticorruption laws, and, where appropriate, seek legal counsel. 
While the U.S. Department of State cannot provide legal advice on 
local laws, the embassies can provide assistance with navigating 
the host country's legal system and obtaining a list of local legal 
counsel.  The embassy can also provide services that may assist 
U.S. companies in conducting their due diligence as part of the 
company's overarching compliance program when choosing business 
partners or agents overseas.  For more information, go to: 
http://estonia.usembassy.gov/polecon/companie s/us-companies.html. 
 
 
 
The Departments of Commerce and State provide worldwide support for 
qualified U.S. companies bidding on foreign government contracts 
through the Commerce Department's Advocacy Center and State's 
Office of Commercial and Business Affairs.  Problems, including 
alleged corruption by foreign governments or competitors, 
encountered by U.S. companies in seeking such foreign business 
opportunities can be brought to the attention of appropriate U.S. 
 
government officials, including local embassy personnel and through 
the Department of Commerce Trade Compliance Center "Report A Trade 
Barrier" website at: tcc.export.gov/Report_a_Barrier/index.asp. 
 
 
 
Anti-Corruption Resources 
 
 
 
Some useful resources for individuals and companies regarding 
combating corruption in global markets include the following: 
 
 
 
--Information about the U.S. Foreign Corrupt Practices Act (FCPA), 
including a "Lay-Person's Guide to the FCPA" is available at the 
U.S. Department of Justice's website at: 
http://www.justice.gov/criminal/fraud/fcpa. 
 
 
 
--General information about anticorruption initiatives, such as the 
OECD Convention and the FCPA, including translations of the statute 
into several languages, is available at the Department of Commerce 
Office of the Chief Counsel for International Commerce website: 
http://www.ogc.doc.gov/trans_anti_bribery.htm l. 
 
 
 
A.14 Bilateral Investment Agreements 
 
 
 
Estonia has investment promotion and protection agreements with the 
Belgium-Luxembourg Economic Union, China, Czech Republic, Denmark, 
Finland, Greece, Israel, Italy, Latvia, Lithuania, Netherlands, 
Norway, Poland, Spain, Sweden, Switzerland, Turkey, Ukraine, UK and 
the United States.  A Bilateral Taxation Treaty with the U.S. came 
into force on January 1, 2000. 
 
 
 
A.15 OPIC and Other Investment Insurance Programs 
 
 
 
Estonia is a member of the Multilateral Investment Guarantee 
Agency. 
 
 
 
Estonia joined the Exchange Rate Mechanism II on June 28, 2004. 
The Estonian kroon is fixed against the euro at 1 EUR = 15.65 EEK. 
The Estonian banking and financial sector are judged generally 
stable, though they have endured stresses during the global credit 
crisis which began in 2008. 
 
 
 
Estonia is working diligently to meet all the Maastricht criteria 
by spring 2010 in order to be invited to join the euro-zone on 
January 1, 2011. There are no indications that the proposed 
exchange rate of the Estonian kroon to euro would differ from the 
current fixed rate. 
 
 
 
A.16 Labor 
 
 
 
Estonia has a very small population - only 1.34 million people. 
The average monthly Estonian salary at the end of 2009 was about 
USD 1,100. The world economic crisis and contracting domestic 
economy have also brought a decrease in salaries (about -4.5 
percent in 2009) and an increase in unemployment (2009 estimate 
around 15 percent). 
 
The influence of trade unions, which tend to take a cooperative 
approach to industrial relations, is increasing.  Estonia adheres 
to ILO Conventions protecting workers' rights. 
 
 
 
With an aging population and a negative birth rate, Estonia, like 
many other countries of Central and Eastern Europe, faces serious 
demographic challenges affecting its long term supply of labor. 
Improving labor efficiency is a key focus for Estonia in the 
short-to-mid term. 
 
 
 
A.17 Foreign Trade Zones/Free Ports 
 
 
 
According to the Customs Act, free zones can be established on the 
customs territory by order of the government.  Goods in a free zone 
are considered as being outside the customs territory, for the 
purposes of import and export duties.  As a rule, customs 
procedures are not applied to goods in a free zone.  In free zones, 
VAT and excise duties (as well as possible fees for customs 
services) do not have to be paid on goods brought in for later 
re-export. 
 
 
 
In Estonia, there are free zones at the Muuga port (near Tallinn), 
the Sillamae port (northeast Estonia), and in Valga (southern 
Estonia).  All free zones are open for FDI. 
 
 
 
The main supervisory authority responsible for monitoring the 
movement of goods in or out of free zones is the Estonian Tax and 
Customs Board (governed by the Ministry of Finance). There are ID 
requirements for companies and individuals using the zone.  The 
U.S. Department of Homeland Security (Coast Guard) has inspected 
Estonia's ports and determined that the Republic of Estonia has 
substantially implemented the International Ship and Port Facility 
Security (ISPS) Code at all facilities visited. 
 
 
 
A.18 Foreign Direct Investment Statistics 
 
 
 
According to the Bank of Estonia (see the link below), by the end 
of Q3 2009, the cumulative stock of FDI amounted to USD 15.6 
billion.  Roughly 30 percent of FDI has been invested into 
financial intermediation and the same amount in real estate, 
renting and business activities.  Manufacturing is in third place 
with 15.5 percent of total FDI.  Wholesale and retail trade has 
attracted 11.4 percent of the foreign direct investment stock. 
 
 
 
Scandinavian countries are the largest foreign direct investors in 
Estonia.  Sweden has 37 percent of the total, followed by Finland 
with 25 percent, and the Netherlands with 9 percent. The United 
States accounts for 1.7 percent of foreign direct investment stock 
(10th overall).  The inward FDI stock in Estonia is about 78 
percent of GDP. 
 
 
 
In Q3 2009, Estonian DI abroad was about 73 billion EEK, which is 
about 7 billion USD. 
 
 
 
For the value of inward and outward FDI (position, stock, and flows 
in recent years by the commodity group, as well as country of 
origin) please go to: 
 
http://www.eestipank.info/pub/en/dokumendid/s tatistika/maksebilanss 
/statistika/statistika.html?objId=292616. 
 
 
 
The ten largest FDI companies in Estonia in terms of total 
investment and influence on the Estonian economy are: 
 
 
 
SEB Pank AS 
 
Foreign Shareholder: SEB AB 
 
Country of origin: Sweden 
 
Sector of operation: banking 
 
 
 
Swedbank  AS 
 
Foreign Shareholder: Swedbank 
 
Country of origin: Sweden 
 
Sector of operation: banking 
 
 
 
Eesti Telekom AS 
 
Foreign Shareholder: TeliaSonera AB 
 
Country of origin: Sweden 
 
Sector of operation: telecommunications 
 
 
 
ABB AS 
 
Foreign Shareholder: The ABB Group 
 
Country of origin: Switzerland 
 
Sector of operation: power and automation technologies 
 
 
 
Ericsson Eesti AS 
 
Foreign Shareholder: Ericsson 
 
Country of origin: Sweden 
 
Sector of operation: telecommunications equipment 
 
 
 
Skype Technologies OU 
 
Foreign Shareholder: Skype Technologies S.A. 
 
Country of origin: Luxembourg 
 
Sector of operation: telecommunication 
 
 
 
Stockmann AS 
 
Foreign Shareholder: Stockmann 
 
Country of origin: Finland 
 
Sector of operation: retail 
 
Genovique Specialties AS 
 
Foreign Shareholder: Genovique Specialties Holdings 
 
Country of origin: USA 
 
Sector of operation: chemicals 
 
 
 
Balti Spoon AS 
 
Foreign Shareholder: Mohring Group of Companies, 
 
Country of origin: USA 
 
Sector of operation: veneer 
 
 
 
Estonian Cell AS 
 
Foreign Shareholder: Heinzel Group 
 
Country of origin: Austria 
 
Sector of operation: pulp mill 
POLT