RESTRICTED
WORLD TRADE WT/L/49
22February 1995
ORGANIZATION(95-0369)
Original: English
ACCESSION OFLATVIA
Questions andReplies
totheMemorandum onForeign Trade Régime (L/7526 andAdd.1-2)
Inacommunication, dated 30January 1995, circulated asWT/L/39, theGovernment ofLatvia
applied foraccession totheWorld Trade Organization (WTO) pursuant toArticle XII.Having regard
totheDecision adopted bytheGeneral Council on31January 1995, theWorking Party ontheAccession
ofLatvia totheGATT 1947 wastransformed intoaWTO Accession Working Party. Theterms of
reference oftheWorking Party arereproduced indocument WT/L/39. Indocument L/7526, members
hadbeeninvited tosubmit questions inwriting concerning theforeign trade régime ofLatvia. The
questions submitted bymembers andthereplies thereto provided bytheauthorities ofLatvia are
reproduced hereunder.
Delegations wishing toraiseadditional questions concerning theforeign traderégime ofLatvia
might inform thedelegation ofLatvia (with acopytotheSecretariat) ofsuchquestions inadvance
ofthemeeting oftheWorking Party, sothatconsidered replies canbemade available byLatvia to
members atthetimeoftheWorking Party meeting.WT/L/49
Page2
CHAPTER IINTRODUCTION AND SUMMARY OBSERVATIONS
1. Overview: Independence, Stabilization andReform
Question 1
What percentage ofagricultural inputs andoutputs arestillcontrolled bytheState?
Reply
Realdataabout thepercentage ofStatecontrolled productional inputs andoutputs ofagricultural
production arenotaccessible atpresent. Anapproximate conception about thepresent situation can
bemade using information included inLatvia 'sanswers toquestions about theprocess ofprivatization.
Asummary ofprivatization intheagricultural sector isprovided below.
Allkinds offarms
(%)State-owned farms
andstatute
companies
(%)Private farms,
personal plots
(%)
Meat (liveweight) 100 34 66
Milk 100 23 77
Eggs 100 69 31LATVIAWT/L/49
Page3Exports andImports byHSChapters andState-Owned Companies
(f.o.b. prices)
January-June 1994 January-September 1994
No.of
companies atthe
endofJuneExports Imports* No.of
companies at
theendof
SeptemberExports Imports*
Thousand
latsAspercent
oftotalThousand
latsAspercent
oftotalThousand
latsAspercent
oftotalThousand
latsAsper
centof
total
Total (excluding re-exports and
re-imports) 6,547 256,367 100.0 286,551 100.0 8,029 398,494 100.0 441,021 100.0
Ofwhich State-owned
companies 613 89,046 34.7 94,818 33.1 546 140,350 35.2 137,137 31.1
Agricultural andfishery
products (Chapters 1-24of
Harmonized System) X 33,205 13.0 38,088 13.3 X 49,330 12.4 56,411 12.8
Ofwhich State-owned
companies X 5,095 2.3 6,664 2.3 X 6,383 2.1 11,311 2.6
Industrial products
(Chapters 25-97 ofHarmonized
System) X 223,162 67.0 248,483 66.7 X 349,364 67.6 384,610 87.2
Ofwhich State-owned
companies X 63,161 32.4 68,164 30.8 X 131,987 33.1 126,826 28.5
*Excluding adjustment formineral fuelimports (notbroken down bycompanies) of44,863 thousand latsforJanuary-June of62,147 thousand latsforJanuary-SeptemberWT/L/49
Page4
Question 2
Please provide anEnglish version ofthe"Programme ofReforms fortheNational Economy of
Latvia", or"LATVIA 2000".
Reply pending
2. Institutional Framework
(b) Price System
Question 3
What aretheprice discovery andprice setting mechanisms inLatvia foragricultural products?
Reply
PricesforagriculturalcommoditiesandproductsinLatviaareregulatedbytheConditionNo.185
"OnDetermination ofPrices andTariffs forGoods andServices" ofthe23August 1994. Clause 2
ofCondition No.185provides that"Free prices andtariffs determined byenterprises independently,
aswellasprices regulated bytheState andlocal government institutions areinforce inLatvia ...
according totheAddendum."
IntheAddendum itisindicated thattheCouncil ofMinisters determines thepurchase prices
offoodgrain purchased bytheState.
Question 4
Areinternal andexternal prices comparable?
Reply
Seeanswer toquestion 3.
(c) Exchange Controls
Question 5
Please clarify what arethe"applicable taxes" onrepatriated profits cited inthissection.
Reply
Thetaxes applicable onrepatriated profits areasfollows:
(i) Permanent missions ofnon-residents whoperform entrepreneurial activity intheRepublic of
Latvia paycorporate income taxat25percentrate;
(ii) TheLatvian incorporated enterprises payincome taxat25percentrateand,when paying
dividends fornon-residents theapplicable rateis10percentwhich must bewithheld atthe
dateofpayment;WT/L/49
Page5
(iii) Enterprises withforeign investment share mayenjoy corporate income taxholidays, butthey
arenotexempt fromthewithholding of10percentratefromdividends paidtonon-residents;
(iv) Physical persons (including foreigners) whogainincome intheRepublic ofLatvia aresubject
toindividual income taxatrates25percentor35percent. After paying thetaxes theymay
freely repatriate theirincome toaforeign country.
(d) Industrial restructuring
Question 6
Please elaborate infurther detail onLatvia 'splans tocreate aspecial government funding agency
fordomestic industries andmake reference tothepriority industries Latvia seeks todevelop.
Reply
Seeanswer toquestion 10.
(e) Financial Sector
Question 7
What loans, ifany,areavailable totheagricultural andagricultural equipment sectors, andat
what rates? Arethese available from private banks oralsofrom theState-owned banks?
Reply
TheLatvian manufacturers ofagricultural products haveaccess tothecredits oftheWorld
Bank. These credits areadministered inLatvia bytheAgricultural Finance Company "Lauku kredits"
andtheInvestment Bank ofLatvia. Thecredit interest is16percentinyear. Credit rates ofthe
commercial banks arefluctuating about 50percentinyear.
Question 8
Please describe thelimits ontheability offoreign companies tooffer financial services inLatvia.
Does theGovernment orBank ofLatvia planaceiling onthenumber offoreign banks thatmay
open branches inLatvia?
Reply
Foreign banks andother credit institutions should receive thelicence oftheBank ofLatvia
toperform theiroperations inLatvia. There arenorestrictions forforeign banks, licensed bytheBank
ofLatvia, inproviding banking services inLatvia.
TheBank ofLatvia hasnotestablished anylimits anddoesnotplantoputaceiling onthe
number offoreign banks thatmayopenbranches orsubsidiaries inLatvia.
TheBank ofLatvia would favour privatization ofremaining State-owned commercial banks.
Other foreign financial service sectors, including insurance, auditing, operation ofstock
exchanges, activity inprivatization markets, andsecurities, arelicensed bytheMinistry ofFinance.
Allofthelicences aregranted automatically toforeign service providers thatconform tothesameWT/L/49
Page6
requirements made ofdomestic providers. These requirements aresetoutinlegislation governing
theactivities oftheMinistry ofFinance andtheBank ofLatvia.
Professional services. Aforeigner mayobtain licence forsupplying individual professional
services onthenational treatment basis.
However, licences forsworn auditors, sworn landsurveyors, sworn estimate practice, inspector
activities, legal adviser practice, notary practice, coach, sports instructor andspecialist practice,
pharmaceutical practice, insurance mediation services, andkinds ofentrepreneurship mentioned in
part4,Article 32oftheLaw"OnEntrepreneurial Activity" shallbeissued onlytophysical persons.
3. Trade Policy Features andTrends
(a) Facilitating NewRelationships
Question 9
Itisstated that, "Adequate economic andlegal conditions should alsobecreated, including
favourable treatment ofgoods intransit ...". Does Latvia consider thatitscurrent policies on
transit areinconformity withGATT Article V(Freedom ofTransit)?
Reply
Seeanswer toquestion 110.
Question 10
Thissection states thatLatvia doesnotgrant direct orindirect subsidies thatareaimed atincreasing
exports. Please elaborate onwhat other means besides subsidies doestheGovernment ofLatvia
anticipateusingtodevelopitsindustries.PleasealsodescribethesubsidiesLatviagrantsforreasons
other thanpromoting exports.
Reply
According totheLawoftheRepublic ofLatvia "OnStateBudget" ofYear1994, theMinistry
ofAgriculture granted subsidies foragricultural production inamount of6.6million. Thisassignment
ofsubsidies isconnected withtheintroduction ofunted V.A.T. ratesfrom1June1994. Themonthly
amount ofsubsidies granted bytheGovernment wasLs1.1million andintheState budget of1995
theamount granted forthisaimisLs13.2million.
Domestic subsidies intheyear1995 areprovided asfollows:
- Subsidies tofarmers etc.forregistered areas ofgraded sowing. Cereals, spring andwinter
crops -Ls7perhectare; potatoes -Ls15perhectare; clover -Ls10perhectare; seedclover -
Ls20perhectare;
- Saleofsuperelite andelitegraded seeds tospecialized seed-nursery units andfarmers
seed-nurseries;
- Saleofgraded seeds offirsttothirdgrowth tofarmers, personal plots etc.forutilization in
productional sowing,
- Preservation, re-sawing, grade analyses ofgraded seedcollections;
- Flaxcultivators forcultivation andsaleofhighquality fibre;WT/L/49
Page7
- Cattle breeding. Forcows satisfying requirements topedigree bullbreeders andbeing bred
according totheselection program -Ls6inmonth. Forcows inaherdfreefrom leycosis,
being supervised accordingly totheRegulations andwhere highquality breeders arebeing
usedforobtaining ofprogeny -Ls2inmonth;
- Pig-breeding. ForClass ERandELpedigree boars andsowsinthefirstcategory pig-breeding
farms bredaccording tothepedigree plan-Ls5inmonth. InControl TestStations forevery
animal tested -Ls1,5inmonth;
- Horse-breeding. Forevery approbated pedigree stallion ofStateimportance -Ls10inmonth.
Forevery mare being usedforobtaining ofpedigree stallions according toselection plan-
Ls5inmonth;
- Sheep-breeding. Tograded sheep breeding farms forevery pedigree ewe-Ls1,2inmonth.
Forevery tested pedigree rambeing usedinbreeding -Ls2inmonth;
- Toobtain pedigree material intheresult ofcompetition according totheRegulations ofthe
competition.
Latvia provides export subsidies forcheese, butter andgrain. Thetotalsumsetasideforsuch
subsidies intheState Budget of1994 wasminimal -Ls1million which waslessthan0.16percent
oftotalapproved State budget expenditures. Theplanned distribution ofthissumwasfollowing:
Ls100,000 forcheese exports (250Ls/ton)
Ls320,000 forbutter exports (320Ls/ton)
Ls580,000 forgrain exports
However, in1994, Latvia disbursed only86percentofitsbudget forexport subsidies ofLs1million.
Atpresent theusefulness oftheexisting domestic andexport subsidies isbeing evaluated. The
Ministry ofAgriculture willdetermine thedirections andconditions oftheirapplication. According
tothevolumes ofsubsidies provided bytheLawonStateBudget itisprovided thatinprinciple, the
subsidies granted forplantcultivation andstock breeding in1994should bemaintained butthefuture
requirements should beincreased. Itispossible thatdepending onagricultural production, newexport
subsidies forparticular goods willbeprovided. Itisforeseen thattheexisting subsidies would not
becancelled inthenearfuture because theirshare oftheincomes offarmers isminimal, andthese
subsidies donotinfluence directly thefoodstuff prices anddonotviolate themarket balance.
Other Stateaids. Theonlytaxcredit connected withexports isexemption ofexported goods
fromVAT (value added tax)andexcise taxes, butwecannot consider these taxcredits asaStateaid,
because theonlypurpose forsuchapolicy istoprevent double taxation.
Thisyear(possibly inFebruary) thetaxcredit forexemption ofagricultural production from
corporate income taxpayments willbeabolished. Thelegislation willcome intoeffect retroactively -
from1January 1995. However, producers ofagricultural products willcontinue tobenefit fromsome
reliefs: thesumofannual corporate income taxwillbereduced by10Latsforeachhectare usedin
agricultural production.
Themost widespread form ofState aidinLatvia isdisbursement ofState guaranteed loans
toenterprises aswellasStateguarantees toforeign credits toenterprises. Suchkinds ofStateaidallow
firms toobtain credits atamuch lower interest ratethanprevailing atthemarket. Inthelastyearthere
wasdisbursement ofadditional Stateguaranteed loansandStateguarantees inamount ofLs63.2million
andLs7.4correspondingly. Ofcourse, State guaranteed loans andcredit guarantees disbursed in
previous years havetobetaken intoaccount aswell.IntheStatebudget for1995therearesetlimitations
forsuchkindofStateaid:forStateguaranteed loans theupper limitisLs264.6 million, butforState
guarantees -Ls21.9million.WT/L/49
Page8
StateInvestment Program elaborated bytheMinistry ofEconomy anticipates investment only
insuch sectors ofeconomy astheenergy sector andtransportation (construction ofroads and
reconstruction ofportsandairports). Suchinvestment willnothaveanegative impact oninternational
competition.
Themain activity oftheLatvian Government aimed atdevelopment ofnational industries is
thepromotion oflarge enterprises 'privatization.
Latvia doesnotgrant special taxholidays forinvestment byfirms thatexport from Latvia.
Under present taxlegislation allnewenterprises during first3years afterregistration benefit from
corporate income taxholidays forinvestment ifthisinvestment isfunded fromremaining profits. Other
enterprises benefit from50percentcorporate income taxholidays forsums invested intheenterprise
from remaining profits. However, newdraftlawoncorporate income taxdoesnotanticipate such
taxreliefs. Atthesame timeitisplanned tointroduce newtypeofcorporate income taxreliefs -
20percenttaxrelief forsmall enterprises.
TheLaw"Oncustoms duties (tariffs)" (Chapter VII,Articles 27to29)provides specific
procedure fortheimportation forgoods andother items forprocessing. Itisstated intheLawthat
theabove mentioned importation isdutyfree. Forprocessing ofgoods andother articles adefinite
time-limit depending onprocessing technology shallbeset.Theregulations under theabove mentioned
Articles providing more detailed procedure arebeing elaborated.
According totheLatvian legislation, foreign investment (capital goods) isexempt fromcustoms
dutyandturnover tax.
Seealsoanswer toquestion 105.
(b) Legal support offoreign trade
Question 11
Please provide English copies ofthelawsordraft lawsmentioned inthissection, including the
LawonForeign Currencies andPrecious Stones, theAnti-Dumping/Countervailing Duty Law,
theCustoms Valuation LawandtheLawonForeign Ownership ofLatvian Land.
Reply
Thefreemarket exchange ratewasofficially sanctioned withtheadoption ofaresolution by
theParliament ofLatvia establishing aforeign currency market inNovember 1990. Nowallindividuals
andenterprises inLatvia arepermitted tobuy,sellorholdforeign currency. Alicence fromtheBank
ofLatvia isrequired toengage inforeign trade inhardcurrency.
Concerning operations withprecious stones andmetals, there aretwolegislative documents
inthissphere:
(i) Regulation"OnSupervisionoftheStateMark"(RegulationNo.172oftheCabinetofMinisters,
issued on30August 1994);
(ii) Regulation onprocedures forissuing licences forbuying, producing, processing andselling
precious metals andstones andarticles thereof.WT/L/49
Page9
Wehaveneither anti-dumping dutylawnorthecustoms valuations law,however, there are
twoChapters (IIIandIV)devoted tothistopic intheCustoms Tariffs (Please findthese chapters
enclosed).
Question 12
Latvia hassignalled itsintention tointroduce several newlawsincluding alawonforeign currencies
andpreciousstones,ananti-dumping/countervailingdutylawandacustomsprocedural/valuational
law.Would Latvia advise contracting parties ofthetimetable fortheintroduction ofthese laws.
(Chapter I(3),page 5)
Reply pending
Question 13
What isthetimeframe forcompletion oftheproposed newlawsandregulations?
Reply pending
Question 14
Latvia states that,"TheGovernment may, onatemporary basis(andinorder torespond tospecific
market conditions), bothestablish market safeguards and-inorder tolower theeffective level
ofprotection -establish tariff quotas". Under what conditions would Latvia propose tariff rate
quotas asanemergency measure? HowdoesLatvia plantoadjust these policies inlightofWTO
rules?
Reply
According totheLawofLatvia on"Customs Duties (Tariffs), theCabinet ofMinisters has
theauthority tointroduce tariff quotas asatemporary measure tofacilitate theimport ofparticular
commodities forwhich Latvia isfacing short supply. Thequotas maybeineffect foruptooneyear.
TheCabinet ofMinisters alsohastheauthority toconclude international agreements, which
havetoberatified byParliament, which provide fortariff quotas astemporary measures untilfree
trade canbeachieved.
Thescope ofapplication ofthetariff quotas issetoutintworegulations connected withthe
Law: No.208,which defines which countries maybenefit fromsuchtariffquotas andNo.24,which
provides specific procedures fortheallocation oftariffratequotas. Procedures arebeing drafted which
willgovern theactivity oftheCustoms Tariff Consultative Council established bytheCabinet of
Ministers.
TheLawonCustoms Duties (Tariffs) provides thatLatvia mayimpose tariff ratequotas on
alltariff lines. Currently tariff quotas areapplied onlytotheimports from theEuropean Union, as
aresult oftheLatvia-EU FreeTrade Agreement. Currently there arenotariff quotas granted forthe
reason ofshort supply.
Thetariff quotas withtheEU,andanytariff quotas established inthefuture, willbeallocated
between importers onthebasisofpublic tender bytheCustoms Tariffs Consultative Council established
bytheCabinet ofMinisters.WT/L/49
Page10
Tariff quotas alsomaybeimposed pursuant totheimplementing regulations onagricultural
safeguards intheLawonCustoms Tariffs.
Regulation oftheCabinet ofMinisters No.20"Onprotection ofthelocalmarket ofagriculture
products" of17January 1995, issued inaccordance withthetransitional rulesofthe"Law onCustoms
Duty (Tariffs)". These temporary regulations aretobeinforce untilthelegislation ontheprotection
ofthedomestic market ispassed, which likely willbeachieved bytheendof1995. Theregulations
areapplicable onlyforgrain, milk, meat, fish,potatoes andforproducts made from them.
During thetransition period oftheeconomy ofLatvia, Latvia 'sagricultural sector isundergoing
relevant restructuring andchanges intheform ofownership. Thissector isunder privatization and
thereturn ofagricultural landandproperty toformer owners andtheirheirsisnowproceeding. The
above mentioned changes havecaused adecline inproductivity andinproduction volumes. TheLatvian-
made agricultural products haverapidly losttheircompetitiveness, ontheonehand, duetothedecline
inproductivity and,ontheother hand, duetotheprice leveldifferences withtheCIScountries who
weretraditionaltradepartnersofLatvia.In1994theagriculturalsectoremployed20percentofworkers
andaccounted 10percentoftheGDP. Theoutput ofagricultural products in1994 was70percent
oftherespective output in1993. Inthissituation, arapidincrease ofimportation ofagricultural products
maycause serious deterioration insome sectors oftheagricultural production.
Theprotectivemeasures(i.e.,importquotas)describedintheChapterIIIoftheabovementioned
regulations maybeintroduced onlyaftertaking actions andhaving information mentioned inChapter II
(i.e.,macroeconomicanalysis,prognosis,informationontremendousincreaseofimportsandcalculation
ofdamage totherespective industry caused byimportation etc.)andconsidering Latvia 'sobligations
under itstrade agreements andunder theGATT/WTO safeguard provisions. Theregulations clearly
provide thatsafeguard measures cannot beinvolved incases where anti-dumping orcountervailing
measures arerequired.
Latvia intends theprocedures fordeciding onapplication ofsafeguards tobeastransparent
aspossible. Thedecision ofCabinet ofMinisters inregard oftheapplication ofanindividual safeguard
measure hastobepublished inofficial newspapers andmagazines asevery decision oftheCabinet
ofMinisters. Nothing intheregulations prohibits theCabinet ofMinisters fromconsidering theviews
ofimporters andexporters.
TheAdvisory Council forCustoms Tariffs hastheresponsibility forallocation ofquotas. The
rules forallocation must stillbeelaborated butareanticipated tobeconsistent withGATT/WTO
requirements.
Itisstated inregulation No.20thatsafeguard willbeapplied fornolonger thanoneyear.
According tothecurrent legislation Latvia doesnotusetariff quotas.
Question 15
Please detail theconditions under which theLatvian Government mayestablish market safeguards
andtariff-rate quotas (TRQs). HowdoesLatvia intend toadminister these safeguards andTRQs?
Please explain howthese measures would beconsistent withGATT Article XIX.
Reply
Seeanswer toquestion 14.WT/L/49
Page11
Question 16
Onpage 5,Latvia states thatinorder torespond tospecific market conditions itmayestablish
market safeguards. (Chapter I(3)(b), page 5)CanLatvia outline thetypeofmarket circumstances
thatwould require theestablishment ofsafeguards?
- What types ofsafeguards does Latvia envisage introducing? Arequantitative import
restrictions envisaged?
- Would these safeguards beconsistent withGATT Article XIX?
Reply
Seeanswer toquestion 14.
Question 17
Would Latvia provide more information ontheproposed useoftariff quotas? (Chapter I(3)(b),
page 5)
- Aretariff quotas proposed asalong-term industry assistance measure, orasatemporary
measure tofacilitate industry adjustments toalong-term tariff-only regime?
- Which tariff linesarelikely tobeaffected bytariff quotas?
- CanLatvia givedetails ofanytariff linescurrently subject totariff quotas?
- How would Latvia intend toallocate anysuch tariff quotas between importers and/or
supplying countries?
Reply
Seeanswer toquestion 14.
Question 18
Whileinvestmentandalternativepartnersarepartofsuccessfulrestructuring,investmentprotection
willbeimportant toforeign investors. HowdoestheGovernment intend toencourage participation
byforeign capital?
Reply
Currently theLaw"Onforeign investment intheRepublic ofLatvia" istheonlyLawproviding
rulesfortheacquisition andtreatment offoreign investment. Itshould bementioned thattheRepublic
ofLatvia hasconcluded anumerous international agreements withitsmaininvestors onencouragement
andreciprocal protection ofinvestment, providing internationally acceptable environment forthe
permission, operation, liquidation ofinvestment andforrepatriation ofinvestment andreturns related
toit.WT/L/49
Page12
(c) FreeZones
Question 19
InChapter I(3)(c), page 5,Latvia raises thepossibility ofintroducing "Free Zones". WillLatvia
provide more information onwhen suchzones might beestablished andhowtheywould operate?
Reply
Seeanswer toquestion 20.
Question 20
Please provide anupdate onandoutlook fortheestablishment offreezones inLatvia.
Reply
Current Latvian legislation doesnotallow toestablish freetrade zones intheterritory ofthe
Republic ofLatvia. Currently there doesnotexistanydraft lawconcerning possible creation ofa
freetrade zones.
CHAPTER II ECONOMY AND FOREIGN TRADE
1. Economy
(a) General Description
Question 21
Would Latvia provide more information onthestructure ofstatutory companies resulting from
thetransformation ofState andcollective farms? (Chapter II(1)(a), page 7)
Reply pending
Question 22
Onpage 7,Latvia states thatithastaken steps towards theabolition ofvirtually allsubsidies
andthatitdoesnotgrant direct orindirect subsidies which areaimed atincreasing exports of
anyproduct. (Chapter II(1)(a), page 7andChapter III(3), page 21)Notwithstanding these
statements canLatvia:
- Give assurances thatitsexports donotbenefit from subsidies?
- Provide information onthesectors/industries which currently benefit from subsidies?
- Advise ofthetimetable fortheremoval ofanyremaining subsidies?
- Detail anyother types ofsupport other thansubsidies provided totheagricultural sector?
- Provide further details ontheuseofsubsidies forthepreservation ofgenetic stock and
increasing thenumber ofpedigree cattle andcrops?
Reply
Seeanswer toquestion 10.WT/L/49
Page13
Question 23
Towhat extent areexports ofdairy products toRussia stillasignificant export commodity for
Latvia?
Reply
Latvian exports ofmilkanddairy products wasofLs1.795.000 value. Thisis0,45percent
ofLatvian totalexports, 1,61percentofLatvian exports toRussia and52,54 percentoftotalLatvian
exports ofmilkanddairy, eggsandhoney.
Please seeattached list.WT/L/49
Page14
Latvian exports totheCIScountries inlatsandFOBprices (January-September, 1994)
Country Meat (subp.) Fish Milk, milk
produce, eggs,
honeyVege-
tablesFruits Grain-
cropsAnimal and
vege-
table fat,oilMeat andfish
goodsSugar and
confec-
tioneryCacao
goods
and
confec-
tioneryFlour
goods
and
confec-
tioneryFruits
and
greensStrong
drinks and
bever
-agesTobacco
goods
Armenia - - 182903 - 197 - - - 62 1455 - 24 73438 510
Azerbaijan - - - - - - - 66369 29047 - - 8084 -
Byelorussia - 972919 5119 12581 4529 21209 67675 1470825 87771 84422 30031 11990 350837 97683
Georgia - - - 7962 - - - 12236 - - - - - 4489
Kirghizia - - 6773 - - - - 30667 - - - 1257 14014 -
Kazakhstan - 141288 127226 - 22120 - 5199 1236574 11692 64219 - 841 106523 47658
Moldova - 137377 80753 560 479 - 430 270255 - - - 789 151451 10216
Russia 52253 1746701 1797456 55772 117947 156362 257713 9697748 2095205 2529904 122632 273403 2801382 2421937
Tajikistan - - 41997 55772 - - - - - - - - 9881
Turkmen
-istan64999 - 13723 - - - 2845 150612 7593 279 - -
Ukraine 19251 1098344 61661 3774 6201 296372 13587 2194609 42914 54995 145871 19936 263852 68157
Uzbekistan 197502 - - - - - 534 - - - - - -7641 -WT/L/49
Page15
Question 24
What proportion ofagricultural production bycommodity isexported totheFormer Soviet Union
(FSU)? Which republics aretheimporters?
Reply
Seeanswer toquestion 23.
Question 25
Inview ofthefactthatfour-fifths ofagricultural landisfarmed bypublic-sector enterprises,
mainly statutory farm companies, andthePrices andTariffs Council willcontinue to"oversee
price determination forgoods andservices provided bymonopolies, including State enterprises",
doesthePrices andTariffs Council oversee agricultural prices? Howareagricultural prices set?
Reply
Thementioned Council ofPrices andTariffs doesnotexistinLatvia anymore. There isno
State-owned productional orprocessing enterprise inLatvia which hasanyfeature ofmonopoly. Prices
foragricultural commodities andgoods areregulated byCondition No.185issued 23August 1994.
"OnDetermination ofPrices andTariffs ofGoods andServices". Clause 2oftheConditions provides
thefollowing: "Free prices andtariffs determined byenterprises independently, aswellasprices
regulated bythelocalgovernment institutions areinforce intheRepublic ofLatvia according tothe
Addendum". IntheAddendum itisindicated thattheCouncil ofMinisters determines prices for
"...Purchase offoodgrain guaranteed bytheState".
Question 26
How arecredit problems being addressed?
Reply pending
(b) Main Direction ofOngoing Economic Policies
- Pricing Policy
Question 27
Please provide anupdate ofthework ofthePrices andTariff Council including itstimetable for
theelimination oftheremaining fixed prices.
Reply
Prices which arecontrolled bytheState institutions ormunicipalities:
Prices established bytheCabinet ofMinisters:
Grain when purchased bytheState; purchasing price ofdomestically produced electricity;
electricity saleprice; domestic mailservices; housing rentceilings;WT/L/49
Page16
Municipalities establish theprices forthefollowing :
Flatrentinhouses owned byamunicipality; water supply andsewage system services for
municipal enterprises; heating offlatsandenterprises maintained frombudget resources; taxi
services; cemetery services.
TheMinistry ofEconomy setsupprices forthefollowing:
Gasforconsumers (except enterprises); oiloroilproducts transit services fee(by
pipelines) -together withtheTransportation Ministry; oilandoilproducts reloading atports -
together withtheTransportation Ministry.
TheMinistry ofTransportation setsupprices forthefollowing:
Services provided bytheadministrative bodies, having natural monopoly status, whoareunder
supervision oftheMinistry ofTransportation andarenotmaintained fromthebudget; shipping
duties (lighthouse andpilotduties); oilandoilproducts 'transit services fee(byrailroad) -
together withtheMinistry ofEconomy.
TheCouncil ofPorts establishes prices forthefollowing:
Allportduties andportservice charges forships.
TheDepartment ofAviation setsupprices forthefollowing:
Feeforuseofairspace oftheRepublic ofLatvia; feeforcivilairfields 'use; feeforuse
ofairnavigation andother radio equipment.
TheTransport Tariff andTransit Conveyance Council establishes prices forthefollowing:
Passenger andcargo transportation byinternational roadtransport; international passenger
andcargo transportation byrailroad (inaccordance withinternational agreements); passenger
andcargo transportation byrailroad carriers atdomestic routes.
TheTelecommunications Tariff Council establishes prices forthefollowing:
Thebasic telecommunication services; recovering ofdebts andfines.
TheMinistry ofWelfare establishes prices forthefollowing:
Drugs; medical services atState andmunicipal health careinstitutions.
TheMinistry ofJustice setsupprices forthefollowing:
Services ofArchives.WT/L/49
Page17
Question 28
Please describe Latvia 'splans fortheliberalizing prices intheenergy, telecommunications and
housing sectors.
Reply
Seeanswer toquestion 27.
Question 29
Please provide acomprehensive listofthegoods forwhich prices remain controlled. Inwhich
areas doestheGovernment intervene inthemarket -forexample, bypurchasing grain forthe
State grain reserve -thereby influencing theformation ofdomestic prices? Isgrain thatisprocured
fortheState grain reserve purchased atmarket prices? When thegrain isreleased, isitreleased
atmarket prices?
Reply
Seeanswer toquestion 27.
Question 30
Latvia states thatunder theLaw"onEntrepreneurial Activities", onlyState-owned enterprises
areallowed toproduce andselldrugs andtoproduce securities, banknotes, coins andpoststamps,
andthatseveral activities areallowed onlywithspecial permission (alicence), which isgiven by
Ministries andother Government bodies. Please specify which activities areallowed onlywith
Government permission andwhat theprocedures/criteria areforobtaining suchpermission.
Reply pending
- Private Enterprise
Question 31
Please provide acomplete listofthebusiness activities requiring alicence asreferred tointhis
section .
Reply
Inaccordance withtheLawoftheRepublic ofLatvia "OnEntrepreneurial Activity", Chapter 32
"Entrepreneurial Activity Restrictions", onlyaStateenterprise ispermitted toproduce securities, bank-
notes, coins andstamps.
Only aspecial permit (licence), issued byruralandurban localgovernments oftheRepublic
ofLatvia shallprovide:
(i) production andoperation oflocalmineral deposits;
(ii) retail trade oftobacco products;
(iii) cooperation ofpre-school andout-of-school educational establishments;
(iv) shooting-gallery andshooting-ground services;WT/L/49
Page18
(v) passenger commercial transportation services within theterritory ofanappropriate region or
city;
(vi) operation ofhospitals, including veterinary clinics;
(vii) beerproduction fortrade;
(viii) coach, sports instructor andspecialist practice;
(ix) medical practice ofcertified doctors.
Only aspecial permit (licence) issued bytheCabinet ofMinisters oftheRepublic ofLatvia
oritsauthorized institutions, shallprovide:
(i) production andrealization ofpharmaceuticals;
(ii) pharmaceutical practice;
(iii) wholesale oftobacco products andimport forthepurpose oftrade;
(iv) operation ofeducational institutions;
(v) land, air,water andrailcommunication services;
(vi) wireless, communication services, radio andtelevision programmes (except cable-television
service);
(vii) detective andguards 'activities;
(viii) practice ofsworn auditors;
(ix) auditor activities;
(x) practice oflegaladvisors;
(xi) notary practice;
(xii) insurance operations;
(xiii) gun,explosives andspecial appliances -gaspistols (revolvers), theircartridges andgas-bags
filled withirritant gas,import, production andrealization;
(xiv) geological, hydro-geological activities andgeological engineering;
(xv) purchase,processing,productionandrealizationofpreciousmetalsandstonesandtheirproducts;
(xvi) expertise oflabour security andlabour protection requirement fulfilment andworking-place
certification inaccordance withphysical datameasurements ofthelabour environment;
(xvii) meteorological inspection ofmeasuring appliances usedintrade, mailandtaxation operations;
(xviii) meteorological inspection ofmeasuring appliances usedinlabour andhealth protection;
(xix) meteorological inspection ofmeasuring appliances usedincourt, inquiries andother State
administration institution expertise;
(xx) design, manufacturing, assembling, servicing, repair operation andmodernization ofdangerous
equipment;
(xxi) blasting operations;
(xxii) repair ofsports, hunting andother gunsandspecial appliances -gaspistols (revolvers) and
gas-bags filled withirritant substances;
(xxiii) production, import andrealization ofpyrotechnic materials andappliances andpyrotechnic
services;
(xxiv) specialist training inlabour protection andretraining oflabour protection specialists andtraining
ofdangerous equipment service staff;
(xxv) operation ofstock exchanges;
(xxvi) training ofallvehicle drivers;
(xxvii) printing ofpieces ofliterature andartortheircopies fordissemination purposes;
(xxviii) dissemination offilms andvideo films andtheirpublic demonstration;
(xxix) purchase offerrous andnon-ferrous iron-scraps;
(xxx) export ofthepurchased ferrous andnon-ferrous metals;
(xxxi) shipping agencies inLatvian ports;
(xxxii) repair andtesting ofshipwreck andrescue equipment;
(xxxiii) repair andtesting ofnavigation equipment;
(xxxiv) publishing ofnavigation materials andmarine maps, andtheiramendments;WT/L/49
Page19
(xxxv) underwater works inports andshiprepair;
(xxxvi) training ofshipping specialists;
(xxxvii) rescue works incases ofshipwreck, including liquidation ofseapollution consequences;
(xxxviii) operation oftugboats inports:
(xxxix) jobplacing;
(xl) insurance mediation services;
(xli) holding andmaintenance ofallkinds oflotteries, gambling houses andsimilar hazards of
winning;
(xlii) activities insecurities andprivatization certificate market;
(xliii) sugar wholesale andimport;
(xliv) trade ofplant lifeprotection aids;
(xlv) retail trade ofmechanical vehicles andtheirtrailers.
Only aspecial permit (licence), issued bytheState Land Agency (Service) shallprovide:
(i) practice ofsworn landsurveyors;
(ii) practice ofsworn values;
(iii) system oflanduse;
(iv) geodetic works, photo grammatical works andtopographical works.
Onlyacertificate oraspecial permit (licence) issued byprofessional associations (corporations),
shallprovide thefollowing private practices:
(i) veterinary -medical;
(ii) pedagogical;
(iii) architectural;
(iv) building engineering;
(v) lawyers.
Licences forsworn auditors, sworn landsurveyors, sworn estimate practice, inspector activities,
legaladvisor practice, notary practice, coach, sports instructor andspecialist practice, pharmaceutical
practice, insurance mediation services, andkinds ofentrepreneurship mentioned inpart4,Chapter 32,
shallbeissued onlytophysical persons.
Only alicence issued bytheBank ofLatvia shallpermit:
(i) purchase andsaleofforeign currency;
(ii) activities ofbanks andcredit institutions;
(iii) bankoperations andcredit operations withprecious metals andtheirproducts.
Onlycredit institutions shallbepermitted toperform public announcement andacceptance of
allkinds ofmoney deposits (deposits, loans, cashmanagement otherwise agreed on,capital investments)
inaccordance withthelicence issued bytheBank ofLatvia, anditsauthorized credit institution for
investment acceptance andoperation, aswellasincases envisaged byspecial laws.
Only theSAEIMA oftheRepublic ofLatvia shall have theright toState other types of
entrepreneurship, onlyStateenterprises arepermitted toperform ortheperformance ofwhich require
aspecial permit (licence).
Special permits (licences) forentrepreneurial activities shall beissued byState andlocal
government institutions mentioned inthischapter, aswellasprofessional associations (corporations)
notlaterthanwithin 30daysfrom theapplication receipt notlessthanforfiveyears. ThelicenceWT/L/49
Page20
feeshould notexceed oneLs,except theentrepreneurship mentioned inparagraph 42,part3ofthis
Chapter.
Licences forinsurance operations andinsurance mediator servicing shallbeissued inaccordance
withtheprocedure envisaged bytheLawoftheRepublic ofLatvia "OnInsurance" of12January 1993
(Information Bulletin oftheSupreme Council andGovernment oftheRepublic ofLatvia",
No.3/4,1993).
Theentrepreneurial activity restrictions inproduction, import, export, wholesale andretail
trade ofrawalcohol, spirit andalcoholic drinks, andsanctions duetoignorance ofthese restrictions
andtheprocedure oftheirapplication shallbestated bytheregulations oftheCabinet ofMinisters.
Theentrepreneurialactivityrestrictionsininstalment,servicingandrepairofelectronicappliances
(electronic cashtills)andelectronic systems fortaxandother payment record, andsanctions dueto
ignorance ofthese restrictions andtheprocedure oftheirapplication shallbestated bytheregulations
oftheCabinet ofMinisters.
Question 32
Please clarify whether Latvia isprepared toallow firms other thanState-owned enterprises the
ability toproduce andsellpharmaceutical products asreferred tointhissection.
Reply
Special permits (licences) forpharmaceutical activities shallbeissued inaccordance withthe
Law"OnPharmaceutical Activities" oftheRepublic ofLatvia (Information Bulletin oftheSupreme
Council andGovernment oftheRepublic ofLatvia, No20/21, 1993).
Cultivation ofnarcotic andplants containing psychotropic substances, production and
disseminationofnarcoticandpsychotropicsubstancesandprecursorsnottobeusedformedicalpurposes
andsupervised bytheDrugs Control Department oftheMinistry ofWelfare shallbeprohibited.
Licences forlaboratories providing foodquality testsshallbeissued inaccordance withthe
procedure stated bytheCabinet ofMinisters Regulation No.129"OnFood" of12July1994.
Licences forpharmaceutical activities
TheLawoftheRepublic ofLatvia "OnPharmaceutical Activities" states theprocedure of
production, manufacturing anddissemination onlyofdrugs included intheDrugs Register orVeterinary
Drugs Register oftheRepublic ofLatvia.
Thefollowing licences forpharmaceutical activities shallbeissued inaccordance withtheabove
saidLaw:
- pharmaceutical practice;
- drugstore opening (operation);
- drugs market opening (operation);
- drugs production;
- veterinary drugs dissemination;
- veterinary drugstore opening (operation);
- veterinary drugs market opening (operation);
- veterinary drugs production.WT/L/49
Page21
Nationals oftheRepublic ofLatvia, having theknowledge oftheStatelanguage anduniversity
education, andatleastthree yearworking experience inthefield, shallhavetheright toapply for
alicence toperform pharmaceutical activities.
Aprivate person, being granted alicence forpharmaceutical practice, shallhavetherightto
apply foralicence toopenadrugstore; thefollowing legalentities shallhavethesame right:
(i) aState enterprise under thesupervision ofMinistry ofWelfare;
(ii) localgovernment;
(iii) RedCross ofLatvia orothersocial organizations -withaspecial permit ofMinistry ofWelfare;
(iv) drugs supermarkets ordrugs production enterprise, coordinating thenumber ofdrugstores
withthePharmacy Department;
(v) entrepreneurial activity, ifnotlessthan51%ofitscapital assets isowned bypersons with
pharmaceutical education, andiftheenterprise performs pharmaceutical activities.
Legal entities shallhavetherighttoapply foralicence toopen(operate) adrugs supermarket, iftheir
basic activities aredissemination ofdrugs andthepharmacist incharge hasbeengranted alicence for
pharmaceutical practice.
Legal entities abletoprovide thenecessary conditions fordrugs production andcontrol, as
wellastheassistance ofappropriate specialists, shallhavetherighttoapply foralicence tomanufacture
drugs. Thelicence shallindicate thedrugs permitted toproduce intheappropriate enterprise.
Question 33
Would Latvia advise which trade-related activities require special permission (licensing)?
(Chapter II(1)(b), page 9)
Reply pending
- Privatization ofEnterprises
Question 34
Thissection states thatprivatization intheagricultural sector willbecompleted by1995 andby
1996, 75percentofState-owned enterprises willbeprivatized.
- Pleaseelaborateonthestatusofprivatizationinthefarmeconomywithparticularemphasis
oncollective andState farms. DoLatvia 'splans include privatizing itsentire food
procurement andprocessing system?
- Please elaborate ontheprivatization offormer agricultural trading organizations. Which
ofthese stilldominate trade inthemajor agricultural commodity groups?
- What difficulties doesLatvia anticipate after1996inprivatizing theremaining 25percent
ofState-owned enterprises?
- What isLatvia 'soutlook andtimetable forprivatizing theremaining 80percentof
municipal property enterprises?WT/L/49
Page22
Reply
Privatization inagriculture
TheLaw"OnPrivatization ofAgriculture Enterprises andFishery Farms" of21June1991,
envisaged thetransformation ofallagriculture andfishery farms intostatutory companies by
15March 1992. Bythebeginning of1993, mostpartsofthesestatutory companies hadself-liquidated
toformstatutorycompaniescomprisedofseveralfarmers.Thesecompanieswereorganizedtoguarantee
limited liability orwere organized topromote thecommon useoffarmtechnology.
TheLaw"OnProperty Privatization inAgroservice Enterprises" of31March 1993; theLaw
"OnMeat Processing Enterprise Privatization" of27January 1993; theLaw"OnBread Production
Enterprise Privatization" of1June1993; andtheLaw"OnAmendments totheLaw'OnBread
Production Enterprise Privatization '"envisage privatization ofallagriculture agroservice enterprises,
andfoodproduction andprocessing enterprises, withthenexttwoyears.
Theprivatization ofagriculture trade organizations isregulated bytheLaw"OnPrivatization
ofState andLocal Government Property". Iftheenterprise tobeprivatized isowned bythelocal
government, privatization willbecarried outbytheappropriate local government inLatvia. Ifthe
enterprise isowned bytheState, theprivatization isperformed bytheStatejointstock company known
asthe"Privatization Agency".
Neither thelegislation oftheRepublic ofLatvia northeGovernment Program envisages a
deadline forlocalgovernment enterprise privatization.
Privatization ofState andlocal government enterprises allows foreign companies tobidon
tenders. Attheendof1994, theLatvian Privatization Agency heldaninternational tender ofState
enterprises. 45State property objects wereoffered forthetender. Thetenders willbecontinued in
thefuture.
Privatization oflarge enterprises
TheLaw"OnStateandLocal Government Property Object Privatization" entered intoforce
on3March 1994, currently stipulating theprocedure ofStateenterprise privatization. Atthemoment,
there isatheoretical possibility toprivatize anyStateenterprise intheRepublic ofLatvia, however,
committing Stateenterprises toprivatization, theeconomic interests oftheRepublic ofLatvia andits
declared priorities shallbetaken intoaccount.
Thecurrent Lawdoesnotprohibit foreigners frombuying shares oftheprivatized enterprises
inthesector ofhealth, culture, science andcommunications. However, inthetelecommunications
sector, theLatvia/British/Finnish jointstock company TILTS COMMUNICATIONS hasbeengranted
anexclusive rightfor20years toprovide suchservices.
Land privatization
Thespecific rules forforeign legalpersons registered intheRepublic ofLatvia withrespect
toacquiring titletolandaresetoutinthe20December 1994amendments totheNovember 1994Law
"OnLand Reform inTowns andCities oftheRepublic ofLatvia". According tothisLaw, anyforeign
legalperson registered intheRepublic ofLatvia hastherighttolease andforaperiod of99years
ifthatinvestor isfrom acountry withwhich Latvia hasentered intoaninternational investment
agreement.WT/L/49
Page23
Question 35
Thissection alsostates thatLatvia currently isnotplanning onprivatizing State enterprises in
some sectors. Please elaborate onwhether andhowLatvia plans toallow foreign companies to
provide goods andservices inthese sectors -including health, culture, science andcommunications.
Reply
Seeanswer toquestion 34.
Question 36
What doesprivatization intheagricultural sector mean? How isitbeing accomplished? What
willbethedifferent approaches andunique lawsforprivatizing agriculture? Forfirms processing
agricultural foods? Foragricultural land?
Reply
ThePrivatization ofagricultural enterprises hasbeen carried outaccording totheLawof
21June1991"OnPrivatization ofAgricultural Enterprises andFishing Collective Farms". TheLaw
provides forprivatization ofcapital ofagricultural enterprises freeofcharge forindividuals andlegal
persons. Thepurpose oftheLawistoseparate company 'sproperty using capital shares, andutilize
thesecapital shares togenerate individual business activity orinvestment intoentrepreneurial companies.
After theseparation ofcompany property, theremaining members ofthecompany decide whether
toliquidate thecompany ortocontinue itsactivity.
At1January 1995, ofthetotalof613founded agricultural statute companies, 116statute
companies wereexcluded fromtheRegister ofEnterprises, 306companies decided onself-liquidation,
and193companies arecontinuing theiractivity. Itisenvisaged that70-100 agricultural entrepreneurial
companies shallcontinue theirbusiness activity, i.e.existing asjointventures, inthecoming years.
Theorder inwhich agricultural service enterprises isdetermined bytheLawoftheRepublic
ofLatvia of30May1993 "OnPrivatization ofProperty intheEnterprises ofAgricultural Service".
Enterprises subjected toprivatization areregional State-owned enterprises ofagricultural machinery,
agricultural supplies, agricultural chemistry, land-reclamation construction andspecialized movable
mechanized units. These -total122enterprises which havebeendivided into890structural unitswhich
areterritorially andorganizationally independent. Itisprovided bytheLawthattherighttoacquire
property ofagricultural services allows theco-operative branch associations offarmers tocombine
withtheemployers entrepreneurial companies established intheenterprises being privatized. Real
privatization takes place concluding agreements ofrentwiththeright tobuyouttheproperty or
agreements ofpurchase andsale. TheLawdetermines which members ofemployer theenterprise
being privatized havetheright toestablish employee entrepreneurial companies. Priority rights to
privatize anobject aregiven totheemployee entrepreneurial company which wasestablished before
Lawcame intoeffect. Only incases when theabove mentioned entrepreneurial companies andco-
operative branch associations offarmers donotacquire theobjects being privatized, cantheybeacquired
bylocalgovernments orother individuals andlegalpersons. Asof122agricultural service enterprises
werecompletely privatized andintheremaining 107enterprises theprivatization process wasunder
way.
Theprivatization ofmilkprocessing enterprises isdetermined bytheLawofJanuary 1993
"OnPrivatization ofMilkProcessing Enterprises". Thelawprovides thatmilkcollecting andprimer
processing unitsshould betransferred tothepossession ofmilkproducers co-operative companies andWT/L/49
Page24
thatthe15bigmilkprocessing enterprises should betransformed intostock companies andthatthe
fixedcapital should bedivided among milkproducers andsuppliers ofmilkanditsproducts envisaging
different discounts. Atpresent allthemilkprocessing enterprises areprivatized withcertain capital
share owned bytheState.
Theprivatization ofmeatprocessing enterprises isbeing carried outaccording totheLawof
theRepublicofLatviaof18May1993"OnPrivatizationofMeatProcessingEnterprises".Itisprovided
bytheLawthattheStateowned meatprocessing enterprises should betransformed intoStateowned
stock companies andthentransformed intostock companies withcertain capital share owned bythe
State. Thefixed capital oftheenterprise being privatized isdivided among employees ofthemeat
processingenterprise,manufacturersofagriculturalproductionandotherpersons.Asof1January1995
9of14Stateowned meatprocessing enterprises wereprivatized butin5enterprises theprivatization
process isstillgoing on.
Theprivatization ofbread production enterprises isbeing carried outaccording totheLaw
oftheRepublic ofLatvia of1June1993 "OnPrivatization ofState Owned Bread Production
Enterprises". TheLawdetermines theprivatization order which issimilar totheprivatization ofmeat
processing enterprises asindivisible holding selling 65-85 percentofshares. Asof1January 1995
of15bread production enterprises 7enterprises wereprivatized, and5enterprises wereintheprocess
ofprivatization butasto3remaining enterprises theformer owners ofthem arebeing privatized.
Theprivatization ofgrain products enterprises isbeing carried outaccording totheLawof
therepublic ofLatvia of1June1993"OnPrivatization ofStateOwned Bread Production Enterprises".
Thefixedcapital oftheenterprise being privatized, hasbeendivided among thepension fund, personnel,
other employers andgrain producers andtheirco-operative associations. Thelastgroup isgranted
notlessthan60percentoftheshares (indivisible holding) which canbeacquired alsousing privatization
certificates. Asof1January 1995, of13grain processing enterprises, 3enterprises wereprivatized
andtheprivatization process isstarted intheremaining enterprises.
- Privatization ofLarge Enterprises
Question 37
Please provide thelistreferred tointhissection of558enterprises thatare"non-privatizable"
andclarify whytheyarenotconsidered privatizable. Inwhich fields arethese enterprises?
Reply
Seeanswer toquestion 34.
Question 38
Could Latvia elaborate onthelistofsectors inwhich privatization willnotoccur? Arethere
anyother sectors oftheeconomy thatwillnotbeprivatized?
Reply
Thecomplex approach totheprivatization ofwhole branches ofnational economy isoneof
thebasic principles ofmodel oftheprivatization inLatvia. Privatization ofseparate branches isnot
approved without theprivatization ofthebranches connected withthem. Latvia 'sPrivatization Agency
oversees theprivatization ofthese branches.WT/L/49
Page25
Privatization willbeperformed gradually -selling small andmedium enterprises ofallbranches
firstly. Privatization ofmonopolies willbeperformed attentively -thelegalandinstitutional basis
hastobecreated before privatization canoccur. Branches without monopolies andoligopolies will
beprivatized first.
Theprivatization Agency hasbegun tousethesectional approach forall-embracing privatization
ofseparate branches:
- timber industry;
- wholesale andretail saleofoilproducts;
- supply ofammunition;
- retail saleofmedicine.
Thesectional approach hasbeenusedforprivatization ofenterprises ofagricultural production
onevery sub-branch (milk processing, meatprocessing, agroservice, bread production, storing and
processing ofgrain products).
Latvia alsohaspromoted privatization oftheservice sector. According totheMinistry of
Economy, just18percentoftheprimary number ofestablishments oftradeandcommerce, restaurants
andservice remain asproperty ofmunicipalities. Butsuchbranches aspublic health care,social care,
wholesale ofmedicine andcertain enterprises attending onseparate sub-branches ofagriculture will
notbeprivatized inthemeanwhile.
Looking intothefuture -there arenoenterprises, which could beimpossible toprivatize.
- Privatization ofLand
Question 39
What arethespecific rules forforeigners withrespect toleasing oracquiring titletoland; are
there anyrestriction? What istheexpected process, legislative orotherwise, andwhatisthecurrent
status ofsuchrules?
Reply
Anyforeign legalperson registered intheRepublic ofLatvia hastherighttolease landfor
aperiod of99years. Thespecific rulesforforeign legalpartners registered intheRepublic ofLatvia
withrespect toacquiring titletolandarelaidoutin24November 1994amendments totheLaw"On
theLand Reform intheTown andCities oftheRepublic ofLatvia." These amendments provide that
foreign investors inLatvia canacquire landiftheyarefromacountry withwhich Latvia hasentered
intoaninternational investment agreement.
Question 40
Please elaborate onLatvia 'splans andtimetable forallowing foreigners theability toacquire
titletoland.
Reply
Seeanswer toquestion 34.WT/L/49
Page26
CHAPTER III FOREIGN TRADE REGIME
1. Import Regulations
Question 41
What isthestatus oflawsthatapply toimport regulations? Please elaborate onanyprovisions
intheCustoms Code thatpertain totheappraisement ofimported merchandise forcustoms
valuation orother purposes.
Reply
Latvia'sLawonCustomsTariffs(Duties)hasbeenineffectsince1December1994.Regulations
oncustoms valuation, agricultural safeguards, andtariff quotas toimplement thisLawhavebeen
approved. Regulations onanti-dumping/countervailing duties andinother areas areexpected tobe
drafted inthefuture. Latvia willprovide anEnglish language translation ofallthreeexisting regulations,
including theonepertaining tocustoms valuation.
Question 42
Arethere anyimport regulations governing non-ferrous metals?
Reply pending
(a) TheEvolution oftheCustoms Tariff Regulation
Question 43
Could Latvia provide acopy ofthecurrently applied Customs Tariff?
Reply
Please seeattached copy ofLatvia 'simport tariffs. These tariffs havebeenineffect since
1December 1994.
Question 44
Tariff-exempt items suchasbaby foodsuggest thatthisisacritical import requirement. Isthis
policy statement provisional until some element ofself-sufficiency isestablished? Could Latvia
provide alistof"critical imports"?
Reply
Theitems ofthecritical import where import customs tariff rateisequal to0(seeattached
copyofLatvia 'sCustoms Tariff).WT/L/49
Page27
Question 45
Latvia hasstated onpage 17thatitisundertaking anoverhaul ofitstariff policy andthatthe
average basic rate oftariff forconsumption goods willbe15percent to20percent.
(Chapter III(1)(a), page 17)Inrelation tothiswould Latvia:
- Provide alistofthose tariff groups (showing theaverage tariff rate) which attract rates
greater than20percent?
- Confirm thatmineral ores, mineral concentrates andcooking andthermal coals areto
belevied attherawmaterials minimal tariff rateof0.5percentto1percent? Alsoexplain
thereason forsuch tariffs, given theGovernment 'spolicy thattariffs notbeused for
revenue purposes?
- CanLatvia provide more detail onitsAgricultural Tariff Policy? Isagriculture tobe
partofthisreview? Ifso,what plans arethere forreductions intariffs onagricultural
products?
- What proportion ofLatvian imports aresubject totariff exemptions orreductions asa
consequence oftrade agreements between Latvia andother countries?
Reply
Attached isalistofcommodities andproducts forwhich Latvia 'sMFN tariffs aregreater than
20percentadvalorem. Latvia would apply theMFN tariff ratetothetrade ofother GATT/WTO
members.
HS Description Basic (%) MFN (%) FTA(%)
0102 Livebovine animals 40 30 30
0103 Liveswine 55 45 45
0201 Meat ofbovine animals
fresh orchilled40 30 30
0202 Meat ofbovine animals 40 30 30
0203 Meat ofswine fresh,chilled
forms ofafatcontent by
weight exceeding 1,5%40 30 30
0402 21 Notcontaining added sugar
orother sweetening40 30 30
0405 00 Butter andother fatsandoils
derived from milk55 45 45
0406 Cheese andcurd 55 45 45
0407 00 Birds'eggs, inshell, fresh
preserved orcocked40 30 30
060310110 Roses 40 30 30
060310130 Carnations 40 30 30
060310150 Orchids 40 30 30
060310210 Gladioli 40 30 30
060310250 Chrysanthemums 40 30 30
060310290 Other 40 30 30
0701 Potatoes, fresh orchilled 40 30 30WT/L/49
Page28
HS Description Basic (%) MFN (%) FTA(%)
070200901 Tomatoes, fresh orchilled
(from 1Juneto30June)40 30 30
070610000 Carrots andturnips,
cucumbers40 30 30
160100 Sausages andsimilar products, or
meet, meetoffalorblood55 45 45
1602 Other prepared orpreserved meat 55 45 45
291814000 Citric acid 40 30 0
360500000 Matches, other thanpyrotechnic
articles ofheading40 30 0
Theestablishingof0,5percentor1percentcustomstariffformineralores,mineralconcentrates
andcooking andterminal cools wasadvised bytheIMFduring theperiod ofcreation oftheindependent
Latvia 'scustoms tariffsystem. Thereason wasaveraging ofthecustoms tariffs andavoidance ofpeaks
andzerotariffs ofthesystem.
Theattached LawonCustoms Tariffs includes acomplete listoftheimport tariffs thatLatvia
currently applies toagricultural commodities andproducts.
Thefollowing aretheLatvian tradeflows withthecountries withwhich Latvia hasnegotiated
FTAS.
Country Imports
%oftotalExports
%oftotal
EU 37.85 37.58
Switzerland 0.31 1.77
Norway 0.49 0.53
Lithuania andEstonia 9.05 8.22
Total 47.70 48.10
Databased onfirst9months of1994.
Question 46
Latvia notes that"Asregards goods forfinalconsumption, whenever possible, therates ofimport
tariffs willaverage thebasic rates 15percentor20percent(thelatter inthecaseofcountries
without trade agreements); these rates donotapply toagricultural items andtoalimited number
ofother goods". Arefisheries products included in"agricultural items" inthiscase? Doany
non-tariff measures apply tofisheries items? Ifso,please specify.
Reply
Thetariff ratesforfishproducts arespecified inChapter 3andforMFN trade range from
9to15percent. Nonon-tariff barriers areapplied tofishimports.WT/L/49
Page29
Question 47
WenoteinAnnex II,page 36,thatthenewCustoms Law hasnotbeen passed andthata
presidential vetofocused onagricultural tariffs. Given thissituation, canLatvia provide the
following information:
- What changes areproposed tothisLaw, particularly inrelation toagriculture?
- What effect willanychanges have onthestatements relating totheCustoms Tariff
contained inLatvia 'sMemorandum ofForeign Trade Regime?
- When isthelegislation toberesubmitted toParliament?
Reply
TheLaw"OnCustoms Duty(Tariffs)" comes intoeffect on1December 1994. Inaccordance
withproposals oftheFarmers Union, customs tariffratesforsomeagricultural products wereincreased.
Seethelistofgoods forwhich customs tariffs exceed 20percent.
Question 48
Please indicate Latvia 'stimetable forconverting itsremaining specific tariffs toadvalorem rates.
Willallspecific tariffs beconverted? Ifnot,please detail thetariffs thatwillremain assessed
atspecific rates.
Reply
Latvia hasnospecific timetable forconverting specific tariffs toadvalorem ratesalthough
itanticipates thatthisprocess could beaccelerated onceitimplements itsnewcustoms valuation system.
Intheanswer toanother question, Latvia provides alistofthose products which arecurrently assessed
specific tariffs.
Question 49
Would Latvia provide thefollowing further information onconversion ofspecific tariffs to
advalorem rates (Chapter III(1)(a), page 17):
- Which tariff groups arecurrently subject tospecific tariffs?
- Which tariff groups does Latvia intend toconvert toadvalorem rates andinwhat
time-frame?
Reply
Attached isalistofcommodities andproducts towhich areapplied specific tariffs. Tocalculate
theimport dutyforgoods marked with(**),thecorresponding customs dutyratehastobemultiplied
bythevolume ofalcohol inpercentage anddivided by100.Tocalculate import dutyforgoods marked
with(***), thecorresponding customs dutyratehastobemultiplied bytheworking capacity incm3
ofcylinders ofthespecific vehicle.
Question 50
HowdoesLatviaenvisagetheimplementationoftheproposednewCustomsLawallowingincreased
tariff barriers asatemporary safeguard action given thatthemajority ofitstariff lineswillbe
expected tobebound aspartoftheGATT/WTO accession process? (Chapter III(1)(a), page 17)WT/L/49
Page30
- Under what conditions willtheproposed newCustoms Lawallow theincrease/decrease
oftariffs?
Reply
Theprocedure forprotection ofdomestic market setupbyRegulations No.20areapplied
onlyincaseofmaterial loss, significant disturbances ordifficulties, thatcould result inmaterial
worsening ofeconomic orsocial position oftheproducers oftherespective foodstuffs which is
threatened orhasoccurred duetoasurge ofimports. Thesafeguard envisaged byregulation No.20
isonimport quota forsome agricultural products.
Seealsoanswer toquestion 14.
Question 51
Latvia states, "Itisanticipated thatthenewCustoms Lawwillprovide thattheGovernment may
actwithout Parliamentary approval, onatemporary basis, tobothincrease anddecrease tariff
barriers". This could suggest apotentially arbitrary approach totheTrade Regime. What
conditions willbemetbefore emergency safeguards willbeapplied?
Reply
TheCustoms tariffs inLatvia canbechanged onlybytheapproval oftheParliament. According
totheLaw"OntheCustoms Tariffs (Duties)" theCabinet ofMinisters mayonlyintroduce tariffquotas
andsafeguard measures.
Seealsoanswer toquestion 14.
Question 52
Please clarify whether Latvia intends tofurther raise itsapplied tariff rates onfarm products
orinvoke anysafeguard measure -suchastariff quotas cited inthissection -tocurtail imports.
What isthejustification fortherecent sharp tariff increases onfarm imports?
Reply
Given therestructuring oftheLatvian agricultural sector, Latvia mayhavetoincrease tariffs
forspecific agricultural products. However, ingeneral, Latvia hasnointention toraisecustoms tariffs.
After Latvia 'saccession totheWTO, Latvia plans toadhere toWTO obligations intheevent thatit
needs toraiseitstariffs. Please seeseparate section onsafeguards policy.
Question 53
Willalltariff rates bebound?
Reply
Latvia isconsidering thescope oftariff binding thatislevelofeconomic development.WT/L/49
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Question 54
Why areagricultural products excluded from Latvia 'sfree-trade agreements? Does Latvia plan
toexpand itsfree-trade agreements toinclude agricultural products? Does theFree-Trade
Agreement withtheEUofJune 1994 include agricultural products? Arethere other special
arrangements foragriculture? Doallcountries receive MFN treatment foragriculture?
Reply
From theentryintoforceoftheLatvia-EU FTAon1January 1995, noquantitative restrictions
apply toimports intotheEUofagricultural products originating inLatvia nortoimports intoLatvia
ofagricultural products originating intheEU. Latvia andtheEUalsogrant toeachother tariff
concessions aspartoftheAgreement.
Question 55
Please assure thatLatvia willnotraisetariffs except inaccordance withtheGATT/WTO including
GATT Article XIX, Article IIandArticle I.
Reply
Latvia hasnospecific timetable forconverting specific tariffs toadvalorem ratesalthough
itanticipates thatthisprocess could beaccelerated onceitimplements itsnewcustoms valuation system.
Intheanswer toanother question, Latvia provides alistofthose products which arecurrently assessed
specific tariffs.
Question 56
Please detail theextent ofenterprise-specific exemptions from import duties andlatvia 'stimetable
forphasing them out.
Reply
Customs tariffs exemptions areavailable forenterprises which import rawmaterials foruse
inproducing goods which arethenexported. Anyenterprise isentitled toapply forsuchanexemption.
(b) Customs Tariff Nomenclature, Types ofDuties, etc.
Question 57
Which sectors currently benefit from enterprise-specific exemptions from import duties? When
willthese exemptions cease? (Chapter III(1)(a), page 17)
Reply
There arenosector specific exemptions from tariffs; however, Latvia 'sLawonForeign
investment exempts inputs forforeign investment (capital goods) from application oftariffs.
TheLaw"OnCustoms Duties (Tariffs)" (Chapter VII,Articles 27to29)provides specific
procedures fortheimportation forgoods andother items forprocessing. Itisstated intheLawthat
theabove mentioned importation isdutyfree. Forprocessing ofgoods andother articles adefiniteWT/L/49
Page32
time-limit depending onprocessing technology shallbeset.Theregulations under theabove mentioned
Articles providing more detailed procedure arebeing elaborated.
According totheLatvian legislation, foreign investment (capital goods) isexempt fromcustoms
dutyandturnover tax.
Question 58
Please provide anEnglish version ofLatvia 'stariff rates ineight-digit HSformat. Inaddition,
please estimate theaverage trade-weighted level oftariff protection onboth agricultural and
industrial products.
Reply
Seeanswer toquestion 52.
Question 59
Thissection states thatimport duties arefixed according tothecustoms value ofgoods andthat,
"inspecial cases" therates canbefixed inLatsperunitofgoods". Thisappears tobeinconsistent
withArticles 1to7oftheCode which provide forthemethods ofvaluation ofgoods. Please clarify
theinstances inwhich Latvia would fiximport dutyrates inLatsperunitofgoods.
Reply
Inaccordance withtheLawonCustoms Duties (Tariffs), fivemethods ofcustoms valuation
consistent withWTO obligations exist. SeeChapter "Customs Valuation" oftheCustoms Lawand
customs valuation regulations.
Question 60
Ifimports from Chapter 1-24from countries with free-trade agreements with Latvia receive
different tariff treatment, could Latvia provide alistofthedifferent setsofrates? Isthere any
preferential access (e.g.tariff quotas) provided under these bilateral agreements?
Reply
TheLatviaEUAgreementcoversbothagriculturalproductsandprocessedagriculturalproducts.
Latvia grants toEUreductions oftariffs inequal annual steps forcertain agricultural andprocessed
agricultural products starting in1995 until2000 iftheannual reductions arehigher than1percent;
otherwise thereductions shallbeimplemented inonestepintheyear2000. Some oftheimports may
benefit fromthetariffreductions onlywithin thelimits oftheindicated quantities (tariff quotas). Main
products which havesignificant tariff reductions, butonlywithin tariff quotas, aremeat andmeat
products,yoghurt,flowers,cabbagesandcauliflowerandmargarine.Significanttariffreductionswithout
anyquantitative limitations areprovided regarding different kinds offruits andtheirjuices, dogand
catfood, different kinds ofhairaswellassome other processed agricultural products.
TheEUtreatment ofagricultural products ofLatvian origin issimilar. Differences areonly
intheproduct coverage andthesizesoftariff quotas. TheEUalsoapplies variable levies onagricultural
products which isnotcurrently thecaseinLatvia. Main products forwhich theEUhasgranted
concessions aredifferent kinds ofmeatanditsproducts, dairy products, chocolate andsweets.WT/L/49
Page33
Agricultural products areexcluded from some freetrade agreements duetothefactthat
negotiations onthem aremuch more complicated thanthose onindustrial products. AllofLatvia 's
freetradeagreements contain aclause which provides thatanagreement ontradeinagricultural products
willbeconcluded. There iswide coverage oftheagricultural partintheLatvia -EUagreement.
There isanAgreement ontradeinagricultural products between Latvia andNorway. TheArrangement
ontrade inAgricultural Products wassigned inDecember, 1994 withSwitzerland andisexpected to
beratified thisyear. Negotiations ontheAgreement onTrade inAgricultural Products between the
Baltic countries areunder way.
Currently MFN treatment isgranted onlytothecountries which haveconcluded withLatvia
MFN agreements.
Question 61
Please provide therationale forLatvia 'slimitation ontheamount that"physical" persons are
allowed toimport.
Reply
Physical persons areentitled tobring upto300Latsworth ofgoods orcommodities intoLatvia
without paying customs taxaslongastheimport ofthegoods isnotprohibited orrestricted, andthe
goods areintended fornon-commercial purposes.
- Tariff Preferences
Question 62
Please explain howLatvia willconform itsfree-trade arrangements (FTAs) -which exclude 24
chapters oftheTariff Schedule -tobeconsistent withArticle XXIV oftheGATT.
Reply
Agricultural products areexcluded from some freetrade agreements duetothefactthat
negotiations onthem aremuch more complicated thanthose onindustrial products. AllofLatvia 's
freetradeagreements contain aclause which provides thatanagreement ontradeinagricultural products
willbeconcluded. There iswide coverage oftheagricultural partintheLatvia -EUagreement.
There isanAgreement ontradeinagricultural products between Latvia andNorway. TheArrangement
ontradeinAgricultural products hasbeensigned inDecember 1994withSwitzerland andisexpected
toberatified thisyear. Negotiations ontheAgreement ontradeinagricultural products between Baltic
countries areunder way.
Latvia doesnothaveanycountertrade arrangements withformer CEMA members.
Question 63
Please provide anassessment ofthetrade-creating andtrade-diverting effect ofLatvia 'sFTAs
withFinland, Norway, Sweden andSwitzerland. Willalltrade befreeupon thefinal staging
oftariffreductions,asstipulatedinGATTArticleXXVI:8(b)?Whatwillhappentotheagreements
withFinland, Norway andSweden when these countries jointheEU?WT/L/49
Page34
Reply
Seeanswer toquestion 62.
Question 64
Please provide information ontheagricultural provisions oftherecently-implemented trilateral
FTA withEstonia andLithuania.
Reply
Seeanswer toquestion 62.
Question 65
Please specify -bycountry andtype-anycountertrade arrangements thatLatvia haswithformer
CEMA members.
Reply
Seeanswer toquestion 62.
(c) Taxation Regime
Question 66
CanLatvia clarify thenature oftheturnover tax? (Chapter III(1)(c), pages 17-18)
- Istheindustrial rateof18percenttoapply tomineral oresandconcentrates andcoking
andthermal coals?
- Willthetaxrateof18percentapply toallnon-food products?
- What rateofturnover taxforbasic foodproducts willapply after 31May1994?
Reply
TheLaw"OntheTurnover Tax" waselaborated onthebasisonthesame principles asValue
Added TaxLawwhich isinforce inEuropean Union countries.
Toimprove theadministration ofthisLawandinorder toconform itwiththeregulations of
functioning inEUcountries, thedraftlaw"OntheValue Added Tax"hasbeenelaborated intheRepublic
ofLatvia. Thislawisexpected tobeineffect from 1April 1995 anditwillsubstitute theexisting
law"OntheTurnover Tax".
Thetaxrateof18percentapply toallnon-food products withtheexception ofthose, which
areexempt from taxpaidunder theLaw"OntheTurnover Tax". Export andintentional transport
areexempt fromTurnover tax.Since 1June1994, allfoodproducts havebeentaxed at18percent.
Thelawonexcise taxdetermines, thatthetaxable objects onwhich theexcise taxislevied,
arethegoods (domestic andimported), mentioned below (paragraphs 1-10).WT/L/49
Page35
Theexcise taxiscalculated from theprice ofsaleofdomestic goods atthefollowing rates
inLs(Lats) orpercentage (%),andfrom thetotalsumofcustoms value oftheimported goods and
customs taxonimported goods:
(i) onmethyl alcohol for1litreoftotalalcohol -Ls3;
(ii) onchampagne andallother types ofwine(uptot9%alc.), thataremade from natural wine
materials intheprocess ofwine yeast with orwithout methyl alcohol additions, for
1litre-Ls0.25;
(iii) onother alcoholic beverages, except beer, theexcise taxiscalculated from thetotalamount
ofalcohol (100% ofalcohol) concentration andcapacity.
Therateoftotalalcohol for1litre-Ls3
(iv) oncigarettes (with filter orwithout filter) -onecigarette -Ls0.0035;
(v) oncigars andcigarillos -onecigar orcigarillo -Ls0.01;
(vi) onother products made from tobacco, thatareexpected tosellbyretail;
(vii) ongoods made fromgoldandother precious metals. andjewellery withdiamonds, precious
stones andsemi- precious stones -30%
(viii) onmotor cars-10%
(ix) ongasoline for1litre -Ls0.04
(x) ondiesel fuelfor1litre -Ls0.02
Theexcise taxforthementioned goods aswellasonwood alcohol, thatisusedinproduction
process (technology) ofgoods mentioned inthelawisestablished attherateofLs0.14forlitre.
Theexcisetaxisleviedonthementionedgoods,exceptthosethatareexemptedfromthepayment
ofexcise taxintheorder defined inArticle 4,ofthelaw"OnExcise Tax".
- export goods, transit goods traffic, re-export.
Latvia hasthesame taxratesforboththedomestic andimported products.
Question 67
Could Latvia provide alistofitems eligible forreduced turnover tax(asbasic foodstuffs)?
Reply
Seeanswer toquestion 66.
Question 68
Please describe ingreater detail theapplication ofimport, turnover andexcise taxsystems as
theyareapplied toimports andtodomestic goods. Please indicate thelevels andpoints ofsale
atwhich thetaxes areapplied toimports, byHStariff line,anddescribe thecomponents ofthe
taxable base.
Reply
Seeanswer toquestion 66.WT/L/49
Page36
Question 69
Arethesame taxrates always levied ondomestic andimported goods? How doesLatvia justify
inGATT/WTO terms thetaxes applied exclusively toimports?
Reply
Seeanswer toquestion 66.
Question 70
Please provide therates ofthecurrent turnover taxondomestic andimported foodproducts and
theexcise taxes onimported anddomestic alcoholic beverages andtobacco products. How does
Latvia intend tobring these taxes intoconformity withtheGATT/WTO upon accession?
- Asidefromlicensing,pleaseexplainhowtheGovernmentcontrolsimportsoftheseproducts.
Reply
Seeanswer toquestion 66.
Question 71
Ifdomestic competition lawsandpolicy willonlybeharmonized infouryears withEuropean
standards, what monitoring andauditing willbecarried outbyGovernment andindependent
bodies onbuy-outs andmergers?
Reply
TheLawgoverning mergers is"OnCompetition andRestriction ofMonopoly". Itprovides
inpart:"abusiness merger ispermissible onlybyobserving theregulations andconditions contained
inthelawoftheRepublic ofLatvia onEnterprises, legislation onspecific forms ofbusiness, thislaw
andstatutes ofthecompanies."
Anenterprise mustnotify theInstitution fortheControl ofMonopoly Action andDevelopment
ofCompetition ifasaresult ofamerger orforming ofapartnership aconcentration ofcapital occurs
thatcontrols more than25percentofagroup ofgoods orservices intheLatvian market. This
regulation doesnotapply tosmall business orenterprises whose capital fundisnotmore than$9000.
Theinstitution forthecontrol ofmonopoly action anddevelopment ofcompetition mustgive
written approval ofthemerger orpartnership giving grounds forsamewithin 30daysofbeing notified
ofsuchmerger orpartnership. Ifnoreaction isreceived within 30days, itcanbeassumed thatapproval
hasbeengranted.
Enterprises orforming partnerships maysubmit evidence thatsuchcooperation doesnotcreate
adanger ofmonopoly action.
Anewdraftofthelaw"OnCompetition andRestriction ofMonopoly" isbeing reviewed by
relevant authorities, which takes intoaccount therelevant lawsoftheEUinstitutions.WT/L/49
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Inpractice, noactual system exists yetforthemonitoring andauditing onbuy-outs andmergers,
buttheAnti-Monopoly Committee works closely withtheCompany Register oftheRepublic ofLatvia,
intercepting registrations resulting from buy-outs andmergers.
(d) Non-Tariff Measures, Quotas andLicensing System
Question 72
Latviastates,"QuotasontheimportationofproductshavenotbeenusedinLatvia.Theapplication
ofimport taxes istheonlymeans ofimport trade regulation". Inaddition, inChapter III(2)(b),
itstates that"Quotas have notbeen used tocontrol exports". Dothese statements apply to
agricultural products aswell? Arethere anynon-tariff barriers? Will import tariffs bein
accordance withWTO obligations (e.g.comprehensive binding)?
Reply
Quantitative restrictions apply onlyinthesugar sector. Latvia expects thattheapplication
ofitstariffs régime willbeconsistent withWTO requirements.
Question 73
Latvia states, "Licences arerequired inorder toprotect welfare, health andsafety". Onwhat
basis arelicences granted orrefused)
Reply
Thebasis forregulating licences forwelfare, health andsafety reasons istheLaw"Onthe
Protection ofConsumer Rights": Point 30.Certifications ofgoods: Goods, forwhich documents
oftechnical standards determine mandatory requirements concerning theconsumer, his/her health,
andtheenvironment,mustbesubjecttocertificationinaccordancewiththeproceduresetbytheRepublic
ofLatvia Cabinet ofMinisters.
Inaccordance withthispointCouncil ofMinisters Republic ofLatvia passed the12April 1994
Regulation No.87"Onthemandatory certification offoodstuff, cosmetics andtoys". Thisregulation
determines general order, themandatory certification ofsubjected products andgoods manufactured
andrealized intheRepublic ofLatvia andinthetechnical specifications ofthose characteristics securing
thesafety andhealth ofhuman beings aswellasenvironmental safety. Thenational quality system
isinaccordance withtheUruguay Round Agreements.
Inaddition, the27December 1994 Regulation No.224"Onthemandatory certification of
machinery touseofagriculture" provides fornon-discriminatory licensing ofdomestic andimported
machinery.
According tothese regulations therehavebeenappointed twobodies -theNational Foodstuff
Certification Centre andtheStateBaltic Machine Experimental Station, which elaborate instructions
about certification offoodstuff andproducts.
Thelistofgoods subject tocertification iscompiled bytheCabinet ofMinisters oftheRepublic
ofLatvia. Thesaleofgoods included inthislistisforbidden without acertificate. Certification is
doneinaccordance withgenerally accepted international certification regulations andmutual agreements
between trade partners. Certificates areissued bytheCertification Centre ofFoodstuffs. Imported
goods which aresubject tocertification arecontrolled bycustoms.WT/L/49
Page38
Question 74
Please provide acomprehensive listofproducts currently subject tonon-tariff measures, such
asprior import approval requirements, mandatory import licences, import quotas orprohibitions.
Please listbyHStariff line,citing themeasure applied, itslegalbasis anditsjustification under
GATT provisions.
Reply
According totheLaw"Onentrepreneurial activity" currently subject tonon-tariff measures
(import licensing) areethylalcohol andspirits, tobacco, pyrotechnic materials, non-ferrous andferrous
metals andsugar.
Licensing ofimportation ofagricultural products
TheGrain Bureau inaccordance withArticle 4oftheLaw"OntheLatvian grain market and
State grain reserves" of18May1993 issues thelicences forthefollowing goods:
- thecomplete HSChapter 10.Cereals;
- Chapter 11.Products ofthemilling industry; malt; starches; inulin; wheat gluten, withthe
exception of1105; 1106; 1108;
- Chapter 23.Residues andwaste from thefoodindustries; prepared animal fodder, withthe
exception of2301; 2303; 2307; 2308; 2309.
TheMinistryofFinanceinaccordancewithArticle32oftheLaw"OnEntrepreneurialActivity"
andinaccordance withregulation No.86"OnSaleProcedure oftheTobacco Articles" of14April 1994
issues thelicences forthefollowing goods:
- 2402. Cigars, cheroots, cigarillos, andcigarettes, oftobacco oroftobacco substitutes)
- 2403. Tobacco andmanufactured tobacco substitutes.
TheMinistry ofAgriculture pursuant todecision ofthelicensing commission andinaccordance
withArticle 32oftheLaw"OnEntrepreneurial Activity", andtheLaw"OnSugar" of11May1993,
andregulation No.61"OnProcedure forIssuing ofSpecial Licences forSugar Wholesale and
Importation" issues thelicences forthefollowing goods:
- 1701. Cane orbeetsugar andchemically puresucrose.
TheSpirits Monopoly Board, inaccordance withtheLaw"OnEntrepreneurial Activity" and
Regulation No.37"OntheState monopoly ofspirits andalcoholic beverages" of25January 1994,
issues licences forthefollowing goods:
- Chapter 22.Alcoholic beverages, spirits andvinegar, withtheexception of2201; 2202; 2203;
2209.
Thelicensing oftheimportation oftheabove mentioned agricultural products isnotaobstacle
fordomestic orforeign business activity. Theprocedure helps tomake transparent thelistoffirms
andenterprises engaged inimportation activities oftheabove mentioned products andestablishes
possibility forthecontrol oftheiractivity andconformity ofsuchactivity withtheapplicable laws
andregulations.WT/L/49
Page39
Thesugar licensing issetuptoavoid smuggling ofsugar andinorder toprotect thelocalmarket
ofsugar inaccordance withtheLaw"OnSugar".
Thefollowingexplainstheprocedureforobtainingoflicencesfortheabovementionedproducts:
Every yeartheMinistry ofEconomy establishes animport quota forsugar andorganizes tenders
forthequota. Forthispurpose theMinistry takesintoaccount thesugar balances oftheprevious years.
Theenterprises andfirms which havesubmitted allthenecessary documentation within thecertain
period oftimereceive import licences. Thevolumes aredivided considering thenumber ofapplicants,
thequota volume andtheproposals oftheapplicants.
Thetobaccoimportationlicenceisavailableforeveryfirmwhichhassubmittedallthedocuments
provided forintheregulations setupbytheMinistry ofFinance andperforms business activity in
accordance withthelawsapplicable intheterritory ofLatvia.
Licences forcereals. Tender forsuchlicences isrequired onlyforimported wheat. Inthis
casefirms havetosubmit thecertain documentation within thespecified timeperiod. Forother cereals
thetender isorganized onlywhen there isproposal toimport acertain product inthevolume which
exceed 1000 tons. Inother cases every firmisentitled toobtain alicence ifsubmit thedocumentation
andperform entrepreneurial activity inaccordance withtheapplicable laws.
Every enterprise which hassubmitted theapplication forobtaining spirit oralcohol import
orexport licence, andappropriate documentation, andwhich performs theentrepreneurial activity in
accordance withtheLatvian Law, canobtain alicence pursuant tothestatute oftheSpirits Monopoly
Board.
Thesame approach isusedforissuing thenon-ferrous andferrous metal import orexport
licences. Issuing authority isMinistry ofEconomy.
Anylegal person (private orState-owned business company, whether ornotwithforeign
investment share) registered inLatvia mayperform import andexport operations.
Thereasons forpossible refusal toissue alicence:
(i) Thefirmhasnoexperience necessary forimport operation performance;
(ii) Thedescription oftheactivities ofthefirmanddocuments submitted create doubt about the
security andstability ofthefirm;
(iii) Thefirmhasnotbeenregistered asataxpayer attheState Revenue Service;
(iv) Theregistration document doesnotcontain theimport operation performance asakindof
business activity ofthisfirm.
(v) taxoranyother payment debts toState budget.
Specialpermit(licence)forentrepreneurialactivitiesshallbeissuedbyStateandlocalgovernment
institutions mentioned inthischapter, aswellasprofessional associations (corporations) notlaterthan
within 30daysfrom theapplication receipt notlessthanforfiveyears. Thelicence feeshould not
exceed oneLs,except theentrepreneurship mentioned inparagraph 42,part3ofthisChapter.
Refusal toissue aspecial permit (licence) shallbedoneinwriting inthesame term, itshould
bewellmotivated. Therefusal maybeappealed against atcourt.
Aspecial permit (licence) should bereceived before theappropriate entrepreneurial activity
hasbeenstarted anditshould besubmitted totheEnterprise Register oftheRepublic ofLatvia.WT/L/49
Page40
Stateinstitutions issuing special permits (licences) shallhavetherighttoannul them when it
hasbecome obvious thattheinformation supplied isfalseortheentrepreneur hasviolated theterms
ofthelicence, aswellasincases, envisaged bytheLawoftheRepublic ofLatvia "OnStoppage of
Enterprise, Organization andOffice Activities" (Information Bulletin oftheSupreme Council and
Government oftheRepublic ofLatvia, No.1,1992).
Iftheissue ofspecial permit (licence) isdetained without motivation after30dayssince the
application hasbeensubmitted, theentrepreneurial activity shallbeconsidered permitted.
Resolution onrefusal toissueaspecial permit (licence) orresolution onannulment ofthespecial
permit (licence) maybeappealed against atthecourt.
Question 75
Please describe Latvia 'simport regime forethyl alcohol andforspirits, tobacco andsugar, noting:
(1) thelimitations ontheimportation ofthese products;
(2) theroleofState-owned enterprises inimportation, exportation anddomestic production
anddistribution; and
(3) current taxes andtariffs applied.
- Maytheimport beconducted byanyperson orfirmregardless ofownership?
- Please describe thereasons/requests forimport licences have everbeen rejected.
Reply
Seeanswer toquestion 74.
Question 76
Why doesLatvia require aspecial licence fortheimportation ofsugar?
Reply
Seeanswer toquestion 74.
Question 77
Wewould appreciate more detailed information onwhyimport licences arerequired forsugar.
(Chapter III(1)(d), page 18)
Reply
Sugar licences areusedtoavoid smuggling ofsugar andtoprotect domestic production of
sugar.WT/L/49
Page41
Question 78
Thissection mentions thatimport licences areadministered ona"first-come, first-serve" basis.
Does thisimply thatLatvia onlyissues acertain amount oflicences foreachproduct category?
Reply
Seeanswer toquestion 74.
(e) Customs Valuation
Question 79
Please update Latvia 'splans andtimetable tointroduce theseven methods ofcustoms valuation
listed inthissection.
Reply
ThecustomsvaluationprocedurehasbeenelaboratedintheChapterIVoftheLaw"OnCustoms
Duty (Tariff)" andinRegulation 27of31January 1995 "OnCustoms Valuation". These legalacts
havebeendrafted taking intoaccount theGATT/WTO requirements. TheEnglish version ofRegulation
No.27willbeprovided.
Question 80
Please provide thefollowing additional information onLatvia 'svaluation regime:
- What types ofappraisement areinvolved inthemethod referred tointhissection as
"according tothegoods ofthesame type"?
- Please elaborate further onthemethod called "according tothegoods ofthesame type"
which hasnocounterpart intheCustoms Valuation Code.
- Inaddition, thelastmethod "approximate evaluation" byitsname hasnoequivalent in
theprovisions ofArticle VIIoftheGATT andtheCode. Please explain howLatvia intends
tomeet GATT provisions using thismethod.
Reply
Seeanswer toquestion 79.
Question 81
Latvia should provide aresponse tothequestionnaire contained inVAL/2/Rev.2, "Information
onImplementation andAdministration oftheAgreement".
Reply
Seeanswer toquestion 79.WT/L/49
Page42
(g) Customs Formalities
Question 82
Which imports arehighly restricted oroutright banned foranimal orplant health reasons? What
areLatvia 'sjustifications forthese restrictions?
Reply
Inaccordance with thispoint, theCouncil ofMinisters Republic ofLatvia passed the
12April 1994 Regulation No.87"Onthemandatory certification offoodstuff, cosmetics andtoys."
Thisregulation determines general order, themandatory certification ofsubjected products andgoods
manufactured andrealized intheRepublic ofLatvia andinthetechnical specifications ofthose
characteristics securing thesafety andhealth ofhuman beings aswellasenvironmental safety. The
national quality system isinaccordance withtheUruguay Round Agreements.
Inaddition, the27December 1994 Regulation No.224"Onthemandatory certification of
machinery touseofagriculture" provides fornon-discriminatory licensing ofdomestic andimported
machinery.
According tothese regulations there havebeenappointed twobodies -theNational Foodstuff
Certification Centre andtheStateBaltic Machine Experimental Station, which elaborate instructions
about certification offoodstuff andproducts.
Thelistofgoods subject tocertification iscompiled bytheCabinet ofMinisters ofRepublic
ofLatvia. Thesaleofgoods included inthislistisforbidden without acertificate. Certification is
doneinaccordance withgenerally accepted international certification regulations andmutual agreements
between trade partners. Certificates areissued bytheCertification Centre ofFoodstuffs. Imported
goods which aresubject tocertification arecontrolled bycustoms.
Sanitary andphytosanitary measures
Inorder topromote trade andproduction coordination inLatvia, asystem ofquality testing
andproduction certification isbeing established based oninternational andEuropean standards (ISO/IEC
andEN45000standards).
Regulations No.87oftheCabinet ofMinisters "OnFood andGoods, Perfumery andToys
Obligatory Certification" havebeendrafted inaccordance withtheISO/IEC andEN45000standards.
Revision anddrafting ofstandard documents (standard andtechnical regulations) hasbeenperformed
withintheMinistryofAgriculture,followingtheISO/IEC,EN45000andCodexAlimentariusstandards.
Thefollowing documents havebeenworked out:
- LVVDLM10-93"RecommendationsOnStandardDocumentDraftingandArrangementwithin
theMinistry ofAgriculture System".
- LVVDLM11-93 "Regulations onTestLaboratories Certification within theMinistry of
Agriculture System oftheRepublic ofLatvia".
- LVSTLM6-92"Milk andMilk Products. Methods ofMicrobiological Testing".
- LVSTLM1-92"Cow Milk. Procurement Standards." etc.WT/L/49
Page43
Since 10November 1993inaccordance withtheMinistry ofAgriculture application toaccede
totheCodex Alimentarius Commission, under paragraph 2oftheCommission Statutes, Latvia isa
member ofthiscommission.
Since1993,LatviaisamemberoftheEuropeanandMediterraneanPlantProtectionOrganization
withheadquarters inParis. StatePlantLifeProtection Station administration andspecialist participation
intheOrganization 1992, 1993 and1994 sessions andin1994 working seminars hasfacilitated
establishment ofpersonal contacts withheads ofEuropean andother States plantprotection services,
andgaining Nordic States, European andother States experience inthefieldofplant protection and
plant quarantine, aswellasreceipt ofregulations onplant protection aidsrecord, useandmeasures
ofplant quarantine.
Thenecessary fortheRepublic ofLatvia legislative andstandard regulations inthefieldof
plant protection andquarantine havebeendone inaccordance withEuropean State standards. The
law"OnPlant Protection" hasbeenpassed bytheSaeima on5October 1994 andannounced on
20October. Amendments andsupplements tothelaw"OnEntrepreneurial Activities", "Criminal
Code oftheRepublic ofLatvia" and"Administrative Violations Code oftheRepublic ofLatvia have
beenpassed which arerelated tothelaw"OnPlant Protection".
Tofacilitate theexisting Plant Protection law:
(i) On19December 1994 adraftresolution "OnAmendments toLawNo.266oftheCouncil
ofMinisters oftheRepublic ofLatvia of27May1993 "OnSpecial Permit (Licence) Issue
Procedure forIndividual Entrepreneurial Activities".
(ii) On27December 1994"Regulations onPlant Quarantine" havebeenadopted. Incooperation
withEPPOdocumentsofplantquarantineinLatvia(Quarantinelicenceforimport,Phytosanitary
certificate andPhytosanitary certificate forre-export) havebeendisseminated andarerecognized
asofficial documents in40member States.
(iii) "Instructions onPlant Protection Means Record Procedure intheRepublic ofLatvia" have
beenpreparedincoordinationwiththeEnvironmentHealthDepartment,MinistryofEnvironment
Protection andRegional Development. Theyhavebeenadopted bytheMinister ofAgriculture.
(iv) Regulations "OnPlant Protection Means Trade andApplication" havebeenworked out.They
havebeenforwarded toEnvironment Health Department, Ministry ofWelfare forcoordination
andwillbepassed soon.
Laws oftheRepublic ofLatvia, resolutions andregulations oftheCabinet ofMinisters are
published inthe"Information Bulletin oftheSaeima andCabinet ofMinisters oftheRepublic ofLatvia",
inthedaily paper "Diena," etc.Thelaw"OnPlant Protection" andphytosanitary regulations are
published inthemonthly periodicals "Raziba" and"Latvijas Lauksaimnieks".WT/L/49
Page44
(h) Standards andCertification
Question 83
Please provide anupdate ofLatvia 'sefforts toestablish aunified system ofstandards andindicate
howLatvia willcomply withtheobligations oftheWTO Agreement onTechnical Barriers to
Trade.
Reply
Seeanswer toquestion 82.
Question 84
DoesLatviapublishproposedstandards,technicalregulationsandconformityassessmentprocedures
forcomment? Ifso,please identify these publications.
Reply
Seeanswer toquestion 82.
Question 85
Please describe Latvia 'slaws andregulations pertaining tothedevelopment, adoption and
application ofvoluntary standards, mandatory technical regulations andconformity assessment
procedures inLatvia.
Reply
Seeanswer toquestion 82.
Question 86
(Statement) Regarding theAgreement onTechnical Barriers toTrade, Estonia should complete
the"Statement onimplementation and administration oftheAgreement" contained in
TBT/16/Rev.7, toallow theWorking Party tobetter assess Latvia 'sability toimplement the
Agreement.
Reply
Seeanswer toquestion 82.
Question 87
Does Latvia intend toacknowledge theOffice Internationale desEpizootics (O.I.E.) andthe
International Plant Protection Convention (I.P.P.C.) which have been designated under the
WTO SPSAgreement astherecognized objective scientific bodies, forestablishing international
standards?
Reply pendingWT/L/49
Page45
(i) Sanitary andPhytosanitary Measures
Question 88
Please detail howLatvia 'ssystem ofsanitary andphytosanitary protection conforms withthe
WTO Agreement onsanitary andphytosanitary measures andhowLatvia willmake anychanges
toreach conformity, e.g.describe howLatvia 'slaws, practices andregulations meettheprovisions
oftheAgreement.
Reply
Seeanswer toquestion 82.
Question 89
DoesLatvia publish proposed standards, technical regulations, conformity assessment procedures
andsanitary andphytosanitary measures forcomment? Ifso,please identify these publications.
Reply
Seeanswer toquestion 82.
Question 90
Does Latvia publish thefulltextsofsanitary andphytosanitary measures when finalized? Ifso,
please identify these publications.
Reply
Seeanswer toquestion 82.
Question 91
Isitthepolicy orpractice forLatvia toparticipate inthework oftheinternational standardizing
bodies, such astheInternational Organization forStandardization (ISO) andtheCodex
Alimentarius? Please elaborate onhowitisLatvia 'spolicy orpractice tousethestandards
developed bysuchinternational bodies.
Reply
Seeanswer toquestion 82.
Question 92
IsLatvia ready tojointheInternational Plant Protection Convention (IPPC)?
Reply
Seeanswer toquestion 82.WT/L/49
Page46
Question 93
AreLatvia 'ssanitary andphytosanitary measures based onscientific information? Please provide
thecriteria Latvia usesineacharea.
Reply
Seeanswer toquestion 82.
(j) Anti-dumping andCountervailing Duties
Question 94
Please provide anupdate onLatvia 'sestablishment ofananti-dumping law. Please provide a
draft ofthelegislation intranslation formembers 'review.
Reply
Chapter IIIoftheLawonCustoms Tariffs wasdrafted taking account oftheGATT/WTO
obligations relating toanti-dumping andcountervailing duties measures. Theregulations enacting
Chapter IIIoftheLaw"OnCustoms Duties (Tariffs)" andestablishing rules foranti-dumping and
CVD investigations aswellforcausal andinjury testsarebeing stillelaborated. Thedefinition of
subsidy (Article 10oftheLaw"OnCustoms Duties (Tariffs)") isconsistent withtheWTO Agreement
onSubsidies andCVD Measures.
Question 95
Haswork begun onArticle 6(onanti-dumping andcountervailing duties) ofthedraft law"On
Customs Duties (Tariffs)"? Ifyes,could abrief description ofwhat willbeincluded inArticle 6
beprovided?
Reply
Seeanswer toquestion 94.
Question 96
What criteria willhavetobemettoinitiate ananti-dumping/countervailing investigation? Will
there becausal andinjury tests? Willthere beadefinition ofsubsidy? Willthedefinition be
consistent withthenewWTO Agreement onSubsidies andCountervailing Measures?
Reply
Seeanswer toquestion 94.
Question 97
When willtheLaw"onCustoms Duties (Tariffs)" come intoeffect, including Article 6?
Reply pendingWT/L/49
Page47
Question 98
Please describe specifically howthevarious provisions ofthelawcomply withtheprovisions of
theWTO Agreement onAnti-Dumping.
Reply
Seeanswer toquestion 94.
Question 99
Please describe Latvia 'slegislation forapplication ofcountervailing duties onsubsidized imports
andhowitconforms totheprovisions oftheWTO Agreement onSubsidies andCountervailing
Measures.
Reply
Seeanswer toquestion 94.
2. Export Regulations
(a) Customs Tariff Nomenclature, Types ofDuties, etc.
Question 100
What istheexport tariffs schedule fornon-ferrous metals?
Reply
Export dutytariffs
General rules
1. Export dutytaxratesincolumns 3,5and7areshowed inpercentage fromthecustoms value
ofexported goods orother articles, butincolumns 4,6and8-inLatsperoneunitofmeasures of
theexported goods orother articles.
2. Export dutytaxratearefixedforthebasicunitofmeasure -kilogram, ifforthespecific good's
position there isnotforeseen another unitofmeasure.
3. Forgood'spositions, which arementioned inthese tariffs, butforwhich export dutytaxrates
arenotshown, should beapplied common tariff ratesforthecorresponding good'sChapter (healing)
ofratesfixed for"Goods, which donotrefertoabove mentioned good'scodes".
4. Ifexport dutytaxratesareshown onlyforthegood'sChapter (heading), theyapply toany
position orsub-position making partofthisChapter (heading), according totheCombined Commodity
Nomenclature andshould beusedtogether withthecorresponding unitofmeasure.
5. Ifitisnecessary,beforepositionsonwhichexportdutyisimposedonthereareshownexplaining
positions.
6. Codes ofthegoods marked with*)arespecified byconferring tothemthechanged 9thsign.WT/L/49
Page48
Question 101
Could theLatvian authorities provide acopy oftheregular scheme forreducing export tariffs
andthespecial schedule thatwillapply tocountries withwhich Latvia hasanFTA.
Reply
Seeanswer toquestion 100.
Question 102
Please elaborate onLatvia 'splans toreduce itsexport tariffs.
Reply
Exporttariffswillbeabolishedcompletelybytheyear2000excepttariffsforspecificantiquities.
(b) Export Licensing System
Question 103
Howarelicences obtained forexporters ofnon-ferrous metals? Canforeign-owned firms obtain
licences? Isalicence required foreachtransaction?
Reply
According totheLaw"OnEntrepreneurial Activity", export licences aregiven toenterprises
registered intheRegister ofEnterprises ofLatvia forfollowing activities:
- forbuying ferrous metal andnon-ferrous metal scraps inLatvia;
- fortheexport ofstocks oftheferrous metal andnon-ferrous metal scraps inLatvia.
Foreign companies willbepermitted toconduct suchbusiness onlyiftheyareincorporated
inLatvia, i.e.registered intheRepublic ofLatvia. There isnodifferences forobtaining licences between
enterprises owned byLatvians andenterprises owned byforeigners.
Toobtain alicence, theenterprise should present attheMinistry ofEconomy:
- copyoftheregister certificate;
- copyoftheextract ofstatutes;
- reference ofState Income service about account withbudget;
- copyofmetal scraps delivery agreement;
- documents about rentofthestorehouse;
- thebankaccounts through which theenterprise settles thepayment;
- theeconomic foundation oftheenterprise activity.
Each licence isvalid formore thanonetransaction, butvalid onlyforthespecific period of
time.WT/L/49
Page49
LCCN codeDescriptionBasic rateof
dutyRateofdutyfor
"themost
favourable
regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
SECTION V. MINERAL PRODUCTS
Chapter 25 Salt; sulphur; earths andstone; plastering
materials, limeandcement 0 0 0 0 0 0
2520 Gypsum; anhydrite; plasters (consisting of
calcined gypsum orcalcium sulphate)
whether ornotcoloured, withorwithout
small quantities ofaccelerators orretarders 10 5 5
2521 00000 Limestone flux; limestone andother
calcareous stone, ofakindusedforthe
manufacture oflimeorcement 10 5 5
SECTION IX. WOOD AND ARTICLES OFWOOD; WOOD CHARCOAL; CORK AND ARTICLES OF
CORK; MANUFACTURES OFSTRAW, OFESPARTO OROFOTHER PLAITING
MATERIALS; BASKETWARE AND WICKERWORK
Chapter 44 Wood andarticles ofwood; wood charcoal 0 0 0 0 0 0
4403 Wood intherough, whether ornotstripped
ofbarkorsapwood, orroughly squared 0 0 0 0 0 0
4403 20000 -Other, coniferous 0 0 0 0 0 0
4403 20001 --Round timber withlength above 2mand
diameter from 14cm to24cm, dense M3* 6.0 6.0 6.0
4403 20002 --Round timber withlength above 2mand
diameter 26cm andmore, dense M3*8.0 8.0 6.0
-Other:
4403 91000 -Ofoak(Quercus spp.) 0 0 0 0 0 0
4403 91001 --Oak-tree round timber withlength above
1manddiameter above 14cm, dense M3* 50.0 50.0 50.0
4403 92000 -Ofbeech (Fagus spp.) 0 0 0 0 0 0
4403 92001 --Beech round timber withlength above 1m
anddiameter above 14cm,dense M3* 60.0 60.0 60.0
4403 99900 ---Other, leaf-bearing trees(soft), dense M30 0 0 0 0 0
4403 99901 ----Round timber withlength above 1.6m
anddiameter from 16to24cm (veneer
blocks, match blocks andsaw-timber of
sortA),dense M3* 16.0 16.0 16.0
4403 99902 ----Round timber withlength above 1.6m
anddiameter 26cm andmore (veneer blocks,
match blocks andsaw-timber ofsortA),
dense M3* 20.0 20.0 20.0WT/L/49
Page50
LCCN codeDescriptionBasic rateof
dutyRateofdutyfor
"themost
favourable
regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
4403 99903 ----Round timber withlength above 1.6m
anddiameter from 16to24cm (except veneer
blocks, match blocks andsaw-timber of
sortA),dense M3* 4.0 4.0 2.0
4403 99904 ----Round timber withlength above 1.6m
anddiameter 26mandmore (except veneer
blocks, match blocks andsaw-timber of
sortA),dense M36.0 6.0 2.0
4403 99909 ----Ash-tree, elm,elm-tree, hornbeam,
maple andother Latvian hardleaf-bearing
round timber withlength above 1mand
diameter above 14cm, dense M3* 50.0 50.0 50.0
SECTION X. PULP OFWOOD OROFOTHER FIBROUS CELLULOSIC MATERIAL; WASTE AND
SCRAP OFPAPER ORPAPERBOARD; PAPER AND PAPERBOARD AND ARTICLES
THEREOF
Chapter 49. Printed books, newspapers, pictures and
other products oftheprinting industry;
manuscripts, typescripts andplans 0 0 0 0 0 0
4901 Printed books, brochures, leaflets andsimilar
printed matter, whether ornotinsingle
sheets 0 0 0 0 0 0
4901 10000 -Insingle sheets, whether ornotfolded 0 0 0 0 0 0
4901 10001 --Notolder than50years* 0 0 0 0 0 0
4901 10002 --Published before 50-100 years* 50 50 0
4901 10003 --Older than100years* 100 100 0
-Other:
4901 91000 --Dictionaries andencyclopedias, andserial
instalments thereof0 0 0 0 0 0
4901 91001 --Notolder than50years* 0 0 0 0 0 0
4901 91002 --Published before 50-100 years* 50 50 0
4901 91003 --Older than100years* 100 100 0
4901 99000 -Other: 0 0 0 0 0 0
4901 99001 --Notolder than50years* 0 0 0 0 0 0
4901 99002 --Published before 50-100 years* 50 50 0
4901 99003 --Older than100years* 100 100 0WT/L/49
Page51
LCCN codeDescriptionBasic rateof
dutyRateofdutyfor
"themost
favourable
regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
SECTION XV. BASE METALS AND ARTICLES OFBASE METAL
Chapter 72. Ironandsteel 0 0 0 0 0 0
7204 Ferrous waste andscrap; remelting scrap
ingots ofironorsteel 100 100 100
Chapter 74 Copper andarticles thereof 0 0 0 0 0 0
7404 00 Copper waster andscrap 20 20 20
Chapter 75 Nickel andarticles thereof 0 0 0 0 0 0
7503 00 Nickel waste andscrap: 20 20 20
Chapter 76 Aluminium andarticles thereof 0 0 0 0 0 0
7602 00 Aluminium waste andscrap: 20 20 20
SECTION XXI. WORKS OFART, COLLECTORS 'PIECES AND ANTIQUES
Chapter 97 Works ofart,collectors 'pieces andantiques 0 0 0 0 0 0
9701 Paintings, drawings andpastels, executed
entirely byhand, other thandrawings of
heading No.4906 andother thanhand-
painted orhand-decorated manufactured
articles; collages andsimilar decorative
plaques 0 0 0 0 0 0
9701 10 -Paintings, drawings andpastels 0 0 0 0 0 0
9701 10001 --Notolder than50years* 0 0 0 0 0 0
9701 10002 --From 50to100years* 50 50 0
9701 10003 --Older than100years* 100 100 0
9701 90 -Other 0 0 0 0 0 0
9701 90001 --Notolder than50years* 0 0 0 0 0 0
9701 90002 --From 50to100years* 50 50 0
9701 90003 --Older than100years* 100 100 0
9702 00000 Original engravings, prints andlithographs 0 0 0 0 0 0
9702 00001 --Notolder than50years* 0 0 0 0 0 0
9702 00002 --From 50to100years* 50 50 0
9702 00003 --Older than100years* 100 100 0
9703 00000 Original sculptures andstatuary, inany
material 0 0 0 0 0 0WT/L/49
Page52
LCCN codeDescriptionBasic rateof
dutyRateofdutyfor
"themost
favourable
regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
9703 00001 --Notolder than50years* 0 0 0 0 0 0
9703 00002 --From 50to100years* 50 50 0
9703 00003 --Older than100years* 100 100 0
9706 00000 Antiques ofanageexceeding 100years 100 100 0
Chapters 01-98 Goods andother articles, which donotrefer
toabove-mentioned goods 'codes 0 0 0 0 0 0
Secretary ofSaeima I.DaudiasWT/L/49
Page53
Pirmdiena, 16.janvaris
LATVIJAS BANKAS KONVERTELJAMO VALUTU
KURSS 12.01. -16.01. (LS)
Valuta 12.01. 14.-16.01.
1ATS
1AUD
1BEF
1CAD
1CHF
1DEM
1DKK
1ECU
1EEK
100ESP
1FIM
1FRF
1GBP
100ITL
100JPY
1LTL
1NLG
1NOK
1SDR
1SEK
1USDAustrijas silins
Australijas dolars
Belgijas franks
Kanadas dolars
Sveices franks
Vacijas marka
Danijas krona
Eiropas norekinu vieniba
Igaunijas krona
Spanijas pesetas
Somijas marka
Francijas franks
Anglijas marcina
Italijas liras
Japanas jenas
Lietuvas lits
Niderlandes guldenis
Norvegijas krona
SVF norekinu vieniba
Zviedrijas krona
ASV dolars0.0506
0.420
0.0173
0.387
0.425
0.356
0.0903
0.674
0.0445
0.409
0.114
0.1032
0.853
0.0336
0.548
0.137
0.317
0.0813
0.7997
0.0727
0.5460.0506
0.413
0.0173
0.384
0.425
0.356
0.0902
0.673
0.0445
0.408
0.115
0.1028
0.857
0.0335
0.551
0.136
0.317
0.0813
0.7997
0.0728
0.544
ASV DOLARA UNBALTIJAS VALUTU KURSI
MASKAVAS KOMERCBANKA STOLICNIJ 13.JANVARI
Valuta Perk Pardod
ASV dolars
Igaunijas krona
Lietuvas lits
Latvijas lats3700
284
875
64224100
314
965
7015
Latvijas,Lietuvas,Igaunijasvalutupirksanasgadijumavelamsieprieksparliecinatiesparsovalutuesamibu
mainas nunktu kase13.janvari Maskavas starpbanku valutas birza tikapardots 70.370 milj.$ peckursa 3776
RUR/$. Sakotnejais pieprasijums bija70.450 milj.$, betsakotnejais piedavajums 59.090 milj.$.
Ieprieksejos tirgos birza dolara kurss bija3757 RUR/$.
Firma V.l.G. Kaminu salons PiePodniekiem
Krasnis.
Kamini.Projektesana, muresana, liela krasns pldinu izvele.
Sarkandauoava Priezu 9WT/L/49
Page54
Question 104
Latvia states, "The application ofexport tariffs istheonlymeans offoreign trade regulation".
Could Latvia provide alistofproducts covered, along withapplicable rates ofexport duties?
Reply
Seeanswer toquestion 103.
3. Export Incentives, Including Subsidies
Question 105
Latvia states, "Latvia doesnotgrant direct orindirect subsidies, including taxincentives, which
areaimed atincreasing exports ofanyproduct". Doesthisapply tobothindustrial andagricultural
products?
Reply
Seeanswer toquestion 10.
Question 106
Please specify bytype, products affected andannual budgetary outlay ofLatvia 'ssubsidies. Please
alsodocument Latvia 'sexport subsidy practices overthepast10years.
Reply
Seeanswer toquestion 10
Question 107
Does Latvia maintain anysupports forindustry thatshould benotified inaccordance withthe
Agreement onSubsidies andCountervailing Measures?
Reply
Seeanswer toquestion 10.
Question 108
Does Latvia grant income-tax holidays forinvestment byfirms thatexport from Latvia? Ifso,
please describe theprogrammes andindicate howthese relate totherequirements oftheSubsidies
Agreement.
Reply
Seeanswer toquestion 10.WT/L/49
Page55
Question 109
Weunderstand thatLatvia introduced diesel fuelsubsidies inmid-1992. CanLatvia supply details
oftheexpenditure inthisarea andoutline thesectors benefitting from thissupport?
(Chapter III(3), page 21)
Reply
Seeanswer toquestion 23.
4. Regulations ofTrade inTransit
Question 110
HowdoesLatvia distinguish between metals thataregoods intransit andthose which areofLatvian
origin?
Reply
Goods carried intransit arechecked atthecustoms border stations. Thecustoms office of
stations keeps thecopyofadispatch noteofthecargo, which indicates thekindofgoods, thetransporter,
andthereceiver. Inthecaseoftransit, thecustoms office putsitsseal"TRANSIT". Thisinformation
isthenrecorded forthepurpose ofcompiling customs statistics. There procedures arefollowed for
allgoods, including metal. Thestatistical accounting ismade depending onthekindofthegoods,
separating transit from export (import).
Question 111
Does Latvia charge atransit fee,andifso,atwhat level?
Reply
Atpresent Latvia doesnotcharge atransit fee.
CHAPTER IV OTHER POLICIES AFFECTING FOREIGN TRADE
1. Industrial Policy
Question 112
Please elaborate ontheGovernment 'splans forextensive investments ininfrastructure and
production -asreferred tointhissection -withparticular emphasis ontheinitiative 'slikely effect
onLatvia 'sexport sectors.
Reply
Theinvestment ininfrastructure planned bytheLatvian Government hasthemain purpose
ofageneral improvement oftheinfrastructure. Itisnotplanned tomake aninvestment inthe
infrastructure withtheaimtomake certain aidtoaparticular industry orenterprise toraisetheirexport
ability.WT/L/49
Page56
2. Agricultural Policy
Question 113
Given thatLatvia states inChapter II(1)(a) that"virtually allsubsidies" have been abolished,
could Latvia produce more information onthesubsidies mentioned inChapter IV(2) including
whytheyhave been maintained? What subsidies have been eliminated? How would these be
classified under theWTO Agreement onAgriculture? How dothese subsidies operate?
Reply
Seeanswer toquestion 105.
Question 114
How arethese subsidies allocated (especially given changes inthestructure oftheagriculture
sector)?
Reply
Seeanswer toquestion 105.
Question 115
Thissection states thatLs6.6million were allocated foragricultural subsidies in1993. Please
further describe Latvia 'sfarm support programmes andindicate when Latvia plans tophase out
these programmes under itsoverall market reform.
- Please provide more detail onLatvia 'ssubsidies topreserve genetic stock andincrease
thenumber ofpedigree cattle andcrops.
Please confirm thatLatvia hasnoexport subsidies asdefined inArticle 9oftheUruguay
Round Agreement onAgriculture.
Reply
Seeanswer toquestion 10.
Question 116
Please describe anyprogrammes Latvia hasthatsupport farm prices.
Reply
Seeanswer toquestion 10.
Question 117
Inorder tofacilitate bilateral market access negotiations, Latvia should develop adraft agricultural
country schedule forthereview ofinterested contracting parties andcirculate itimmediately.
Reply pendingWT/L/49
Page57
Question 118
Latvia should prepare adraft agricultural country schedule tofacilitate itsaccession negotiations.
Reply
Seeanswer toquestion 117.
Question 119
What portion ofLatvia 'sagricultural output is:
(a) produced;
(b) domestically distribute; and
(c) imported orexported byState-owned enterprises, collectives orfarms atthistime?
Reply
Seeanswer toquestion 117.
Question 120
How doesLatvia intend toimplement theWTO disciplines ondomestic support?
Reply pending
Question 121
Thissection isverybrief. More detail would beappreciated inorder togainabetter understanding
ofpolicy directions andtheir relevance toGATT/WTO obligations. Ofparticular interest isthe
indication that14.9percentofLatvian exports areofagri-food products, compared to6.4percent
ofimports (Annex III,Tables 3and6).What aretheabsolute values ofthese percentages? Could
Latvia provide alistofmajor agricultural import andexport commodities?
Reply
Most Exported Agricultural Goods ofGroups 1-24(HS), 1994 inlats
GOODS 1stquarter 2ndquarter 3rdquarter 9months
Horses 111945 134384 51332 297661
Frozen beef 96541 240193 52850 389584
Condensed milk 132188 355050 324165 811403
Cheese, allkinds 768953 48180 225650 1042783
Butter 263917 90296 372018 726231
Mushrooms 0 0 486170 486170
Cranberries 0 0 585906 585906
Rye 156305 143865 160060 460230
Rape seeds 126763 0 0 126763WT/L/49
Page58
GOODS 1stquarter 2ndquarter 3rdquarter 9months
Sausages andsimilar
meatprod.340405 365260 143533 849198
Confectionary 1022552 268127 1026032 2316711
Chocolate 341213 31219 2339 374771
Other cacao prod. 1506907 550315 401376 2458598
Blown androasted
cereals75335 217914 197028 490304
Apple juice 194049 64936 79580 338565
Coffee essences andits
products28493 85904 468365 582762
Mineral water 312030 742458 488375 1542863
Sparkling wines 542131 491601 580852 1614584
Not-denatural alcohol 253083 131989 80474 465546
Semi-finished alcohol
products163797 18367 28290 210454
Strong alcoholic drinks 632441 281991 216804 1131236
Cigarettes of3rdclass
andlower911688 1170919 1022792 31053399
TheMost Imported Agricultural Goods 1-24(HS)1994, inlats
FORM 1stQuarter 2ndQuarter 3rdQuarter 9months
Cattle 1180159 430169 346781 1957109
Pigs(<50kg) 204954 591494 771092 1567540
Poultry 85094 111574 142292 338960
Pork(fresh or
frozen)1247004 186858 88713 1522575
Meat ofpoultry 379210 172434 116696 668340
Yoghurt 142549 57913 41456 241918
Fresh tomatoes 27867 144591 37921 210379
Onions 154512 148965 204272 507749
Bananas 252831 874339 559725 1686895
Oranges 184758 148568 37591 370917
Apples 140081 193341 95799 429221
Coffee (roasted) 109775 176074 25852 544001
Tea(black) 34975 127534 61872 224381
Wheat (except
hard)30610 1140524 53626 1224760
Cornseed 141110 80928 45166 267204
Wheat flour 368 1467394 3818 1471580
Malt 19395 173692 238961 432048WT/L/49
Page59
FORM 1stQuarter 2ndQuarter 3rdQuarter 9months
Corn starch 146726 74777 104272 325775
Soya flour 662549 331918 221200 1215667
Sunflower oil
(crude)173938 199834 60077 433849
Margarine 294371 116669 112727 523767
Cane-sugar 13449 3900118 3944371 7857938
Cacao beans 357415 298647 291275 947337
Cacao butter 187914 55631 7274 250819
Children 'sfood
(packing)68933 77291 150581 296805
Sweet biscuits 276300 124648 91347 492295
Juices 371001 351448 230499 952948
Ice-cream 246679 539751 540885 1327315
Waters 273652 770453 939905 1984010
Malty beer 177962 418600 216728 813290
Wines
(sparkling)91228 152904 211774 455906
Grapes mash 84362 140897 265420 490679
Beverages 163724 224675 255064 643460
Tobacco 204515 168283 667071 1039869
Tobacco
(revival)555372 0 1417 556789
Question 122
CanLatvia supply further information onitsAgricultural Policy? (Chapter IV(2), page 22)
- Would Latvia outline itsplanning andpricing policy foragricultural policy?
- What isthenature oftheState-owned processing monopolies?
- CanLatvia supply anoutline oftheoperation oftheState Grain Office?
Reply
TheLatvian Government isnotengaged intheplanning ofagricultural production. Subsidies
aregranted toafewsectors; details areprovided elsewhere inthese documents. Theonlyfixedprice
foragricultural products isprice forgrain when purchased bytheState. TheLatvian Grain Bureau
guaranteesaminimumpriceforitspurchasesofdomesticgrain(gainmustmeetcertainquality&sanitary
requirements). Thisprice every yearisestablished bytheCabinet ofMinisters.
TheGrain Bureau inaccordance withtheArticle 4oftheLaw"OntheLatvian grain market
andState grain reserves" of18May1993 issues thelicences forthefollowing goods:
- thecomplete HSChapter 10.Cereals;WT/L/49
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- Chapter 11.Products ofthemilling industry; malt; starches; inulin; wheat gluten, withthe
exception of1105; 1106; 1108;
- Chapter 23.Residues andwaste from thefoodindustries; prepared animal fodder, withthe
exception of2301; 2303; 2307; 2308; 2309.
Licences forcereals. Tender forsuchlicences isrequired onlyforimported wheat. Inthis
casefirms havetosubmit thecertain documentation within thespecified timeperiod. Forother cereals
thetender isorganized onlywhen there isproposal toimport acertain product inthevolume which
exceed 1000 tons. Inother cases every firmisentitled toobtain alicence ifsubmit thedocumentation
andperform entrepreneurial activity inaccordance withtheapplicable laws.
3. Financial, Budgetary andFiscal Policy
- Financial Policy
Question 123
Does Latvia plantoprivatize thefourremaining State-owned commercial banks? Towhat extent
doesLatvia plantoallow foreign banks toestablish branches inLatvia?
Reply
Seeanswer toquestion 8.
- Budgetary andFiscal Policy
Question 124
ThissectionmentionsthatLatvia'scollectionofcustomsdutieshasbeeninefficient.Sinceinefficient
collection could bestow advantages upon exports from some countries, please explain Latvia 's
plans forimproving itscustom system aspartofitsaccession.
Reply
Toimprove customs activities andprevent illegal inflow ofgoods, itisplanned tocarry out
following organizational undertakings discussed withWorld Customs Organizations atthejointSeminar
heldinRigalastautumn.
(i) toarrange legislation;
(ii) toimprove technical baseincooperation withinternational organizations;
(iii) toimprove system ofcustoms stafftraining incooperation withinternational organizations;
(iv) torevise organizational structure ofcustoms anditsplace among other State supervision
institutions.WT/L/49
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5. Foreign andDomestic Investment Policy
Question 125
What arethebasic provisions oftheLawonForeign Investments? Arethere other lawswith
important provisions oninvestment (i.e.intheservices sector)?
Reply
TheLaw"Onforeign investment intheRepublic ofLatvia" istheonlylawregulating specific
foreign investment issues. Thelawprovides forthebasic definitions related totheinvestment, the
rules related totheregistration oftheenterprise withtheforeign investment, protection offoreign
investment,taxation,repatriationoftheinvestment,disputeresolution,restrictionsforforeigninvestment,
safeguarding oftheinterests oftheRepublic ofLatvia, andapplicability ofinternational treaties. The
Republic ofLatvia hasconcluded anumerous international agreements withitsmain investors on
encouragement andreciprocal protection ofinvestment.
TheLaw"OnEntrepreneurial Activity" provides forbusiness licences forseveral types of
thebusiness activities. Theissuance oflicences isensured onthenon-discriminatory basis forevery
applicant (including foreigners) whomeets thespecific obligations under licence. Thelicence giving
authorities have established theregulations fortherespective professional skills, conformity with
environmental requirements, security requirements, consumer protection obligations etc..
Paragraph 3oftheLaw"OnForeign Investment intheRepublic ofLatvia" provides that:
"Foreign investors must notgaincontrol ofenterprises which areinvolved inthefollowing sectors:
- thedefence industry;
- themanufacturing andsalesofnarcotics;
- themanufacturing andsalesofweapons andexplosives;
- theemission ofstocks, banknotes, coins andstamps (theState monopoly);
- thesectors ofmass media;
- thesector ofnational education;
- recovery ofallrenewable andnon-renewable natural resources including resources found in
thecontinental shelf;
- fishing intheinternal waters subject tothejurisdiction oftheRepublic ofLatvia;
- hunting;
- portmanagement
provided thatforeign control overanenterprise means gaining oftherights bytheforeigner tothe
control overthetypeofbusiness activities anddirection ofbusiness development viavoting shares
orother means.
Currently theLatvian legislation allows foreign investors from thecountries withwhich the
RepublicofLatviahasinternationalagreementsonencouragementandreciprocalprotectionofinvestment
approved bytheSaeima (Parliament) topurchase thelandinurban areas.
Atpresent theMinistry ofForeign Affairs andtheDepartment ofCitizenship andImmigration
isworking onamore liberal visaregime tourists, business people andother categories offoreigners
coming toLatvia withplausible intentions. Thevalidity period ofvisaswillbeuptooneyearinstead
ofthepresentthreemonths.Aforeignermayobtainlicenceforsupplyingindividualprofessionalservices
onthenational treatment basis.WT/L/49
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However, licences forsworn auditors, sworn landsurveyors, sworn estimate practice, inspector
activities, legal adviser practice, notary practice, coach, sports instructor andspecialist practice,
pharmaceutical practice, insurance mediation services, andkinds ofentrepreneurship mentioned in
part4Article 32oftheLaw"OnEntrepreneurial Activity" shallbeissued onlytophysical persons.
According totheLatvian legislation foreign investment (capital goods) isexempt fromcustoms
dutyandturnover tax.According totheparagraphs 9and10oftheLaw"Onforeign investment in
theRepublic ofLatvia" foreign investors mayenjoy profit taxholidays.
Theacquisition ofprivatized national companies byforeign investors ispermitted asfaras
itdoesnotcontradict acertain requirements made byaprivatization commission (i.e., prohibition to
sellshares within specific timeperiod onthedateofprivatization) andtheLaw"Onforeign investment
intheRepublic ofLatvia".
Latvia intends tonotify theWTO members ofanymeasure which would beinconsistent with
theUruguay Round TRIMS Agreement uponaccession totheWTO. Latvia would phase outtheuse
ofanyTRIM within thetwoyearperiod thatisprovided asthetransitional period fordeveloped
countries.
Until nowLatvia hasnotapplied TRIMS, however suchpossibility exists under paragraph 6
oftheLaw"Onforeign investment intheRepublic ofLatvia".
Asinacurrent period oftransition Latvia needs arelevant investment resources, Latvia ensures
veryliberal foreign investment regime. However, inaccordance withtheLaw"Onforeign investment
intheRepublic ofLatvia" some screening measures forforeign investment exceeding US$1,000,000
areestablished. Procedures forforeign investment screening aretransparent andnon-discriminatory.
Theparagraphs 4to6andtheAppendices oftheLawdescribe procedure forthescreening. The
organizationresponsiblefortheimplementationistheLatvianDevelopmentAgency(semi-governmental
organization under thesupervision oftheMinistry ofEconomy).
Latvia provides fullmost-favoured nation andnational treatment forthepre-andpost-
establishment foreign investment. Theexceptions andexcluded sectors aresetuponlyforestablishment
insome sectors mentioned intheLaw"Onforeign investment intheRepublic ofLatvia".
According tothecurrent Latvian legislation asingle person ispermitted tofound more than
onecompany (including SIA's).
Inaccordance withboththedomestic legislation andinternational agreements Latvia provides
freetransfer offunds offoreign investors. Noregulations existtoprevent certain transfers related to
investment.
Question 126
Areanysectors, including services, notopentoforeign investment? Also, arethere anyrestrictions
ontheentry andtemporary stayofnatural persons supplying services?
Reply
Seeanswer toquestion 125.WT/L/49
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Question 127
What aretheincentives forforeign partners andinvestors referred tointhissection?
Reply
Seeanswer toquestion 125.
Question 128
Please provide anyplans Latvia hastorelax import andexport tariffs forcompanies thatinvest
inLatvia.
Reply
Seeanswer toquestion 10.
Question 129
Istheacquisition ofprivatized national companies byforeign investors permitted?
Reply
Seeanswer toquestion 125.
Question 130
Please provide anupdate onLatvia 'sefforts toprovide foreign partners andinvestors withasystem
ofincentives andelaborate onLatvia 'sability toapply theTRIMS provisions oftheUruguay
Round.
Reply
Until nowLatvia hasnotapplied TRIMs, however, suchapossibility exists under paragraph 6
oftheLaw"Onforeign investment intheRepublic ofLatvia".
Question 131
What areLatvia 'sintentions with respect tonotification andelimination under theTRIMS
Agreement?
Reply
Seeanswer toquestion 125.WT/L/49
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Question 132
DoesLatvia screen foreign investment? Ifso,what Government departments oragencies dothis?
How aredecisions onacquisitions andnewinvestments taken andwhat aretheapplicable laws,
regulations andpolicies?
Reply
Seeanswer toquestion 125.
Question 133
Does Latvia provide forfullnational treatment andmost-favoured-nation treatment ofpre-and
post-established investment? Arethere anyexceptions orexcluded sectors?
Reply
Seeanswer toquestion 125.
Question 134
What istherationale fornotallowing asingle physical person tofound acompany withlimited
liability (SIA), ifheorsheisanowner inanyother company?
Reply
Seeanswer toquestion 125.
Question 135
What obligations doesLatvia have, arising from either domestic lawsorinternational agreements,
toprovide foreign investors withtheunrestricted transfer offunds? Doanyregulations exist
topermit Latvia toprevent certain transfers?
Reply
Seeanswer toquestion 125.
6. Government Procurement
Question 136
Under whatcircumstances would aGovernment supply contract beawarded without bidorwithout
competition? (Chapter IV(6)(b), page 28)
Reply
Currently,regulationsareinplacethatprovideageneralframeworkforgovernmentprocurement
without specific procedures. Theregulations conform ingeneral totheGATT Code onGovernment
Procurement. However, Latvia iscurrently working onadraft lawonPublic Procurement andWT/L/49
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implementing procedures asareplacement forthese general procedures. ThedraftLawonPublic
Procurement provides thatthefollowing cases maybeawarded acontract without bidorcompetition:
(i) those which areassociated withState security, Statedefense orthecreation ofStatematerial
reserves, if,according totherespective Ministry 'srequest, ineachseparate case,theCabinet
ofMinisters hasmade adecision;
(ii) ifthevalue ofthepublic procurement, ortheamount ofState (local government) resources
inthecaseofpartial financing, islessthat5.000 Ls,iftheprocuring entity isaStateinstitution;
orlessthan3.000 Ls,iftheprocuring entity isalocalgovernment institution. Even ifthe
amount islessthanthesesums, awritten contract between theprocuring entity andthesupplier
(contractor) isnecessary.
There arealsocases when theprocuring entity maysignapublic procurement contract by
examining onlyoneoffer:
(i) ifitisonlypossible topurchase thegoods orutilize theservice fromonesupplier (contractor),
which hasexclusive rights inrelations tothesegoods orthisservice, andthereisnoreasonable
alternative orreplacement;
(ii) ifthere isanurgent necessity forthegoods ortheservices andtherefore participation inthe
tendering isnotpossible ortherearenogrounds foritbecause conditions fromwhich theurgent
necessity hasarisen could nothaveearlier beendetermined bypurchaser ;
(iii) ifinsurmountable conditions havearisen andthereisanurgent necessity forthegoods orservice
andtherefore itisimpossible toutilize anyother method forpublic procurement because other
methods would require aconsiderable amount oftime;
(iv) iftheprocuring entity whohasalready acquired thepurchased goods, equipment ortechnology
from asupplier, determines thatforadditional supply, itisnecessary toutilize goods from
thesame supplier. Thiswould beforstandardization ortoensure technical compatibility with
thealready purchased goods, equipment ortechnology. Thiswould takeintoaccount theinitial
purchaser 'ssatisfaction witharestricted amount oftheadditional purchase incomparison with
theinitial purchase, andifthepriceissuitable andnoalternative isacceptable forthesupply;
(v) iftheprocuring entity islooking forapossibility tosignacontract withthesupplier inorder
toconductresearchwork,anexperimenttrainingoranimprovementwhichcallsforthepurchase
ofaprototype.
Question 137
Please elaborate onhowLatvia 'sState procurements aretransparent andcompetitive andindicate
towhich procurements Latvia would apply theprovisions oftheGATT Government Procurement
Code.
Reply
Seeanswer toquestion 136.WT/L/49
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7. State-Trading Enterprises
Question 138
What proportions ofagricultural andindustrial imports andexports aretrade through State-owned
companies? Could Latvia provide alistofthecompany names andgoods andcommodities trade
byeach? Doanyother organizations haveexclusive orspecial privileges withrespect totheexport
and/or import oftheproducts theyhandle? Ifso,please provide details.
Reply
InJanuary-September 1994, themost recent timeperiod forwhich figures areavailable,
17percentoftotalagricultural andfishery products (Chapters 1-24ofHS)exports and20percent
ofagricultural andfishery products imports were traded through theState-owned companies. The
share ofindustrial goods (Chapters 25-97 ofHS)which wastraded through theState-owned companies
inJanuary-September 1994 was38percentinexports and33percentinimports.
InJanuary-September 1994, 8029 Latvian companies dealtwithforeign trade transactions of
which 546were State-owned companies. ThelistofState-owned companies broken down by
commodities isenclosed.
Question 139
What Stateimporting agencies exist? Howdodomestic wholesale prices forfarmproducts compare
withimport prices? Which wholesale orretail foodprices stillareregulated orsubject tosubsidies?
Please specify byproduct andsubsidy amount.
Reply
According totheLaw"OnCustoms Duty (Tariffs)" andregulations under thisLawpassed
bytheCabinet ofMinisters on31January 1995, Latvia usesthecustoms valuation procedures forall
products (including farmproducts) inconsistency withtheGATT/WTO obligations. Latvia doesnot
useprices ofthelocally produced products forcustoms valuation purposes neither forindustrial or
agriculture products.
Theonlyfixed price foragricultural products isprice forgrain when purchased bytheState.
Thisprice every yearisestablished bytheCabinet ofMinisters.
Subsidies: Seesubsidies section. (Replies toquestions 10and115)
9. Trade-Related Aspects ofIntellectual Property Rights
Question 140
Amember notes thatLatvia iscommitted under aFree-Trade Agreement tobring itssystem of
intellectual property rights intocompliance withthesubstantive standards ofinternational law
bytheendof1995. Canthisbeinterpreted tomean thatLatvia willbeinaposition tocomply
withtheprovisions oftheTRIPS Agreement bythatdate? Specifically, willthechanges referred
toabove include theimplementation ofrights intopographies ofintegrated circuits, geographicalWT/L/49
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indications andundisclosed information, which areareas cited bytheGovernment ofLatvia as
examples ofrights notextended bypresent laws?
Question 141
How andwithin what time-frame would Latvia propose toimplement theprovisions ofthe
WTO Agreement ontrade-related aspects ofintellectual property rights (TRIPS)?
(Chapter IV(9)(b), page 28)
Reply
AsfollowsfromtheMemorandum(SectionIV(9),page28),theGovernmentofLatviaisinclined
toconsider thatLatvia hasalready implemented initslaws most ofthebasic provisions ofthe
WTO Agreement ontrade-related aspects ofintellectual property rights (TRIPS). Inparticular, the
national legislation including intellectual property laws, lawsoncompetition, civillaw,etc.corresponds
inprinciple tothemostsubstantial TRIPS provisions covered byPartI,PartII,Sections 1-2,4-5,7
(partially: some provisions aretoberefined), 8;PartIII,Section 1-2,5;PartIV;PartV.
Insofarastheprovisions oftheTRIPS Agreement referred toabove areconcerned, itis
supposed thatcertain minor amendments oftheabove mentioned national lawsmaysuffice togive
effect tothesaidprovisions oftheTRIPS Agreement intheirentirety. These minor amendments of
thelawsmaybeaccomplished within aperiod ofoneyear.
With respect toSections 3and6ofPartIIaswellasSections 3-4PartIIIoftheTrips
Agreement, itshould benoted that:
(i) subject toitsobligations under existing bilateral Trade Agreements, Latvia isobliged bythe
endof1995, toimplement initslawprovisions providing forprotection ofgeographical
indications andlayout-designs (topographies) ofintegrated circuits adequate totheprovisions
ofSections 3and6ofPartIIoftheTRIPS Agreement; and
(ii) theprovisions ofSections 3-4ofPartIIIoftheTRIPS Agreement maybeimplemented in
Latvia 'slawwithin aperiod oftimeasdefined incitedPartVl,Article 65,paragraph 1of
theTRIPS Agreement (asconstrued in1.1(ii)above), butinanycasenolaterthanwithin
aperiod offouryears asdefined inPartVI,Article 65,paragraph 3oftheTRIPS Agreement.
Thus, themain method ofimplementing theprovisions oftheTRIPS Agreement shallcover
bothadoption ofnewlegalacts(laws, regulations etc.)andamendment oftheexisting law.
ItshouldbeemphasizedthattheproposeddelaysinimplementingLatvia'slawcertainprovisions
oftheTRIPS Agreement arebased onitsgeneral policy withrespect toreviewing andrevising the
domestic legalandcourt systems intheirentirety. Asonecanunderstand thisprocess requires amuch
longer period oftimethanadoption ofoneortwospecial laws.
With respect toSections 3(Geographical Indications), 6(Layout designs (Topographies) of
Integrated Circuits) andSection 7(Protection ofUndisclosed Information) ofPartIIoftheTRIPs
Agreement itshould benoted that:
(i) subject toitsobligations under existing bilateral Trade Agreements which Latvia hasconcluded
earlier, Latvia isobliged andintends, bytheend1995, toimplement initslawsprovisionsWT/L/49
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forprotectionofgeographicalindicationsandlayout-designs(topographies)ofintegratedcircuits
adequate totheprovisions ofSections 3and6PartIIoftheTRIPs Agreement; and
(ii) thecurrent legislation ofLatvia, inprinciple, provides fortheimplementation ofrights in
undisclosed information. Basic provision ofthesaidlegislation correspond totherelevant and
mostsubstantial TRIPs provisions. Therefinement ofthecurrent lawsmaybeaccomplished
within thetime-limits indicated above.
Question 142
Dothepresent intellectual property lawsofLatvia provide rental rights forcomputer programmes
asrequired byArticle 11oftheTRIPS Agreement? Ifnot,willsuchaprovision beenacted in
thenearfuture?
Reply
TheCopyright LawofLatvia of11May1993 (Chapter 4,Article 14(2)(2)) includes basic
principles forproviding rental rights forcomputer programs. However, itisunderstood thatthese
principles should berefined forbetter implementation ofthese rights. Therefinement ofthelawsmay
beaccomplished within thetime-limits indicated.
Question 143
Does Latvia consider thecurrent domestic legal framework tobesufficient fortheadequate and
effective protection ofintellectual property rights? (Chapter IV(9)(b), page 28)
- How doesLatvia propose tocover anydeficiencies?
Reply
Latvia cannot consider itscurrent domestic legalframework asawhole tobefullysufficient
fortheadequateandeffectiveprotectionintellectualpropertyrightsforasfollowsfromtheMemorandum
oftheGovernment ofLatvia ontheForeign Trade Regime, Section IV(9), andexplanatory notes, above
thecurrent legislation ofLatvia isnotyetcovering allcategories ofintellectual property rights referred
toinArticle 1,paragraph 2oftheTRIPS Agreement.
However thequestion maybeanswered intheaffirmative ifandwhere itrefers tothecurrent
lawsassuch. Latvia mayconsider existing lawssufficient tocomply withtheprovisions ofthe
Agreement asthesubstantial provisions ofthelawscitedintheMemorandum donotdiffer much from
those oftheAgreement. Inanycase,theydonotcontravene theprovisions oftheTRIPS Agreement.
Thisestimation ofthecurrent national lawsdoesnotresult onlyfromadomestic comparative analysis.
Itisbased aswellonthefactthatprior totheiradoption almost allLatvian draftlawspertaining to
intellectual property rights were examined inwipe andbysome international non-governmental
organizations andexperts.WT/L/49
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Question 144
What steps willLatvia takeinregard totheprovisions oftheTRIPS Agreement relating to
enforcement ofintellectual property rights inLatvia? (Chapter IV(9)(b), page 28)
Reply
Theproblem ofenforcement ofintellectual property rights inLatvia has,atleast, three basic
aspects, namely: (i)carrying intoeffect provisions, measures andprocedures specified already in
domestically intellectual property lawsandrefinement thereof; (ii)implementing some provisions and
procedures oftheTRIPS Agreement inLatvia 'slawingeneral aswellasinsome special lawsand/or
regulations, incustoms law; and(iii)practice. Thecurrent intellectual property lawsofLatvia are
considered tobesufficient fortheadequate implementation ofmost substantial TRIPS provisions.
Thisstatement fullycovers theprovisions relating toenforcement ofintellectual property rights.
Inparticular: theCopyright Lawincludes Part4,Articles 54-57 which specify thenotion of
infringement ofcopyright andrelated rights aswellascivilprocedures provided forunder thislaw
andrelating toenforcement ofthesaidrights. Article 57refers toadministrative andcivilliability
andcriminal responsibility incaseofinfringement ofcopyright orrelated rights. ThePatent Law
includes Chapter 9"Patent Infringement andResponsibility thereof" Articles 40to41,Chapter 10
"Protection ofRights Derived from aPatent", Articles 42-45. Chapter 11"Review ofDisputes in
Court", Articles 46to49;theLawonCompetition andRestriction ofMonopolies comprises Chapter 3
"ProtectionofCompetition"Articles9and10andChapter4"ResponsibilityforViolationofRestrictions
ofMonopolies andillegal Competition" Articles 11to13.Similar provisions areprovided forbythe
Trademark LawandLawonDesign Protection. Inaddition toprovisions citedabove thesaidLaws
refertoprocedures andmeasures provided forbythecivilorcriminal law. Each Lawpertaining to
intellectual property includes apart from thecitedprovisions, ageneral clause which, states that"if
aninternational agreement towhich theRepublic ofLatvia isaparty provides forprovisions which
differ fromthose inthisLaw, theprovisions oftheinternational agreement shallapply" (Patent Law,
Trademark Lawetc.). Thisclause means, fromthelegalpoint ofview, thatassoonasLatvia accedes
totheGATT/WTO theprovisions oftheTRIPS Agreement shallapply ifandwhere thedomestic law
differ from provisions oftheTRIPS Agreement.
Certain provisions ofPartIIIoftheTRIPS Agreement which might bespecified bythecivil
orother lawsincluding, asthecasemaybe,intellectual property laws, arenotyetprovided forin
thedomestic legislation (inparticular, some provisions ofArticles 44,48,50to52,55to59).The
method andtimeframe ofcovering these deficiencies ofthedomestic legislation shallnotdiffer from
those proposed intheanswer tothefirstquestion.
Latvia hasstarted toimplement acourt reform. However, duetothepast,thecourt system
isnotready tofullyfulfil itstasks withrespect tointellectual property rights. Acomparatively low
levelofknowledge ofproperty lawandlackofexperience inreviewing intellectual property disputes
arenatural results oftheformer judiciary law,education andpractice. These deficiencies willrequire
much efforts andtimetobefullycovered. Therefore training ofpractitioners (judges, advocates, patent
attorneys, trademark agents) andeducation ofanewgeneration ofexperts inthefieldofprotection
andenforcement ofintellectual property rights areregarded asoneofthemostimportant tasksinLatvia.WT/L/49
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Question 145
Does Latvia intend toaccede totheBerne Convention fortheprotection ofliteracy andartistic
works andtheConvention fortheProtection ofPerformers, Producers ofPhonograms and
Broadcasting Organizations? (Chapter IV(9)(b), page 28)
- Ifyes,when doesLatvia envisage acceding tothese Conventions?
Reply
Duetoitsobligations under certain bilateral Trade Agreements, Latvia intends toaccede to
theconventions inquestion bytheendof1995.
CHAPTER VINSTITUTIONALBASEFORTRADERELATIONSWITHTHIRDCOUNTRIES
1. Brief Description oftheBilateral Trade andEconomic Agreements andIntegration
Agreements
Question 146
Please comment ontheagricultural provisions oftherecently negotiated free-trade areawiththe
EU,particularly product coverage, staged implementation andpreferences toEUproducts.
Question 147
Latvianotesthatithasfree-tradeagreementswithanumberofcountrieswhich"specificallyexclude
agricultural products". Dothese free-trade agreements cover fisheries products? Ifnot,what
aretheterms ofaccess forfisheries products imported from theEFTA countries andtheEuropean
Union?
Reply
From theentry intoforce ofAgreement, 1January 1995, noquantitative restrictions apply
toimports intotheEUofagricultural products originating inLatvia nortoimports intoLatvia of
agricultural products originating intheEU.Latvia andtheEUalsogranttoeachothertariffconcessions
aspartoftheAgreement.
TheAgreement covers bothagricultural products andprocessed agricultural products. Latvia
grants toEUreductions oftariffs inequal annual stepsforcertain agricultural andprocessed agricultural
products starting in1995 until2000 iftheannual reductions arehigher than1percent; otherwise
thereductions shallbeimplemented inonestepintheyear2000. Some oftheimports maybenefit
fromthetariffreductions onlywithin thelimits oftheindicated quantities (tariff quotas). Main products
which havesignificant tariff reductions, butonlywithin tariff quotas, aremeat andmeat products,
yoghurt, flowers, cabbages andcauliflower andmargarine. Significant tariff reductions without any
quantitative limitations areprovided regarding different kinds offruits andtheirjuices, dogandcat
food, different kinds ofhairaswellassome other processed agricultural products.
TheEUtreatment ofagricultural products ofLatvian origin issimilar. Differences areonly
intheproduct coverage andthesizesoftariff quotas. TheEUalsoapplies variable levies onagriculturalWT/L/49
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products which isnotcurrently thecaseinLatvia. Main products forwhich theEUhasgranted
concessions aredifferent kinds ofmeatanditsproducts, dairy products, chocolate andsweets.
Question 148
What portion ofLatvia 'simports andexports, based oncurrent trade patterns, willbesubject
topreferential trade agreements, e.g.FTAs, after 1January 1995?
Reply
Seeanswer toquestion 45.
ANNEX II LIST OFTRADE-RELATED LEGISLATIVE ACTS
29. Regulations onState Monopoly ofSpirits andAlcoholic Beverages -25January 1994
Question 149
Please provide information ontheState monopoly ofspirits andalcoholic beverages. Over which
activities related tospirits andalcoholic beverages isthere amonopoly? Howdoesthissituation
impact trade? When doesLatvia plantonotify thismonopoly under GATT Article XVII? Please
provide anEnglish copy ofthisLaw.
Reply
Theregulations onStatemonopoly ofspirits andalcoholic beverages of25January 1994 are
issued inaccordance withArticle 32oftheLaw"Onentrepreneurial activity" of26September 1990.
Theregulations envisage thatonlyentrepreneurs granted aspecial permit (licence) issued bytheSpirit
Monopoly Administration incoordination withtheStateRevenue Service andwithconsent ofthelocal
government inwhose administrative territory theappropriate entrepreneurial activity willbeperformed,
havetherighttodealwiththefollowing kinds oftheentrepreneurial activity:
(i) saleandproduction oftherawspirit;
(ii) reprocessing (rectification) andsaleofspirit;
(iii) production ofthealcoholic beverages forsale;
(iv) importation ofthealcoholic beverages forfreesale;
(v) importation ofthealcoholic beverages (spirit) without therighttoresale them toother legal
persons;
(vi) exportation ofthealcoholic beverages, rawspirit orspirit;
(vii) wholesale ofthealcoholic beverages;
(viii) retail trade inalcoholic beverages.
Thereasons fortheintroducing ofthelicensing system forbusiness activities intheabove mentioned
areas wereconsiderations onthepublic health andmorality, elimination ofthetrade infalsified and
harmful products, improvement ofthecollection oftheexcise tax.
Asaresult oftheintroduction ofthemonopoly onspirits andalcoholic beverages trade in
falsified andharmful products sharply decreased andrelevant improvement ofthecollection ofthe
excise taxtookplace.WT/L/49
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Toprovide theimplementation oftheabove mentioned Regulations, Spirit Monopoly
Administration withlegalentity status hasbeenestablished under thesupervision oftheMinistry of
Finance.