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HomeBilateral RelationsFinland and Estonia Deepen Cross-Border Digital Partnerships

Finland and Estonia Deepen Cross-Border Digital Partnerships

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European neighbours Finland and Estonia are both global tech leaders and they are increasingly sharing their expertise through cross-border partnerships.

The latest agreement is an ambitious new cross-border collaboration to develop joint digital technology solutions and support the digital transformation of small to medium-sized enterprises (SMEs) in the countries.

The first stage of the plan, which is covered by a memorandum of understanding (MoU), is focused on advancing digital transformation within logistics to drive greater efficiencies in cross-border transport and trade. A further objective of the MoU is to promote the “green transition”.

A central feature of the cross-border cooperation will result in Finland and Estonia establishing a capital funding plan by June 2023 that will cover different but specific projects. Finland will contribute over 60% of the required seed capital, with Estonia providing additional capital.

Digitisation of logistics partnership

Embedded in the MoU is a joint strategy to create an exchange of information conduit between the two countries that supports the development of added-value, digitisation-enhanced transport logistics solutions.

The different projects to be run as part of the collaboration will be managed and staffed by special teams formed within Finland ’s Ministry of Transport and Communications and Estonia ’s Ministry of Entrepreneurship and Information Technology.

“The MoU is a giant step forward for Estonia to help develop new solutions to accelerate the digitisation of logistics and make it a more important part of the real-time economy. Countries are increasingly moving towards real-time business data exchange. To this end, digitisation in transport directly contributes to the efficient functioning of logistics and helps with green transition and sustainability,” said Kristjan Järvan, Estonia’s minister of entrepreneurship and IT.

Finland and Estonia view the “digitisation of logistics” co-venture as having a much broader reach in terms of the innovation value of new solutions. Knowledge harvested from future projects will be shared with fellow European Union (EU) member states, said Timo Harakka, Finland’s transport and communications minister.

“A major incentive for us is that other EU countries can make use of the knowledge and expertise we create in developing advanced digital solutions. This latest form of digital cooperation with which Estonia aims to increase efficiency in international transport, deliver new business opportunities and promote the achievement of emission-reduction targets,” said Harakka.

The digitisation of a logistics-driven MoU represents a strengthening in the long-standing digital-based cross-border partnership between Finland and Estonia.

Since gaining its independence from the Soviet Union in 1991, Estonia has fostered a reputation within the close-knit community of Nordic and Baltic states as being Finland’s “little brother”.

In the years after 1991, Finland played an instrumental role in developing key areas of Estonia ’s economy, including banking, food processing, agriculture, forestry, healthcare and state administration.

These pivotal areas of the fledgling Estonian economy were bolstered by a significant inflow of Finnish capital and expertise that helped to rapidly modernise Estonia ’s agri-based economy. More fundamentally, Estonia was able to avail of Finland ’s support in lifting its public finances and economy to the level and standards required for the Baltic state to join the EU in 2004.

Real-time economy partnership

The digitisation of logistics joint venture follows closely on the heels of a Finnish-Estonian “real-time economy” partnership linked to the launch by Estonia of a digital ecosystem initiative, where transactions, including invoices, take place in real time.

The resulting new digital ecosystem, modelled on real-time data exchange (RTDE) solutions developed in Finland , enables enterprises in Estonia to replace traditional paper invoices with digitally structured, machine-readable data in standard formats. The RTDE solutions cover e-invoices and e-receipts, as well as aiding data-driven reporting by companies to the state.

They also include other financial and non-financial data exchange mechanisms, such as e-waybills, which are generated for cross-border goods transportation. The same RTDE technology can be used to create digital product passports (DPPs) in the future.

The EU is working to roll out DPPs under the new Ecodesign for Sustainable Products Regulation (ESPR). The ESPR is on course to be adopted by EU states during the first quarter of 2024. It will initially comprise sector-specific legislation for up to 30 different product categories. In the case of DPPs, the EU has identified apparel, batteries and consumer electronics as the three industries where product passport implementation will proceed in 2026.

Estonia is using the digital invoice exchange project alongside ongoing efforts to standardise business transactions. The primary goal of the project is to make it easier for enterprises in the private sector to communicate with and secure more seamless access to government departments and public services.

For Estonia , the overarching objective is to enhance productivity in the national economy by standardising and automating the way data is exchanged, both between companies and with the state.

Digital data exchange

The deepening of cross-border digital cooperation between Finland and Estonia has also produced a signed treaty on the electronic exchange of population data (EEPD). The EEPD mechanism will be used to update data for individuals moving between the two countries.

In Finland , the task of implementing the practical segments of the treaty falls to the Digital and Population Data Services Agency (DPDS/Digi ja Väestötietovirasto).

EEPD will significantly simplify the lives of the large number of Finnish and Estonian citizens who move between the two countries for work and travel, said Timo Salovaara, DPDS’s director general.

“Under the new digital population data system, a person who moves from Finland to Estonia will only need to report the change in Estonia as the information is automatically updated in the DPDS system. This way, we can ensure that a person moving from Finland to Estonia is domiciled in only one country and not in both at the same time. The real advantage is clearer and less distorted population statistics for both countries,” said Salovaara.

Finland and Estonia began to dramatically scale up digital collaboration in 2020, a year when the commercial registers of each country began exchanging data on a cross-border basis. Following the initiative, which helped to develop the integration of digital services between Estonia and Finland, the two national commercial registers are able to request information through the data exchange platform X-Road, operated by Estonia.

In the long term, Finland and Estonia plan to develop joint information exchange platforms that deal with commercial activity licenses, population registers and health data. The digital-specific cooperation aims to improve cross-border e-services, while making it easier for the residents of both countries to pursue business and economic opportunities on both sides of the Gulf of Finland .

The stream of cross-border digital partnerships in 2020 also produced a digitally signed ICT memorandum of understanding between the two Baltic Sea- bordering states.

Considered the world’s first digitally inscribed international agreement, the ICT MoU was signed using Finland and Estonia’s state-issued national ID cards, which use a common software version and platform. The shared resource allows authorities in both countries to exchange information, while enabling companies and persons to conclude contracts and exchange other documents using mutually accepted digital signatures.

Source: Computer Weekly

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