RESTRICTED
WORLD TRADE WT/ACC/SPEC/LVA/1/Rev.1
6January 1997
ORGANIZATION(97-0005)
Original: English
ACCESSION OFLATVIA
Elements ofaDraft Report
oftheWorking Party ontheAccession ofLatvia
Revision
Introduction
1. TheGovernment ofLatvia 'srequest foraccession totheGeneral Agreement onTariffs and
Trade (GATT 1947) wascirculated tocontracting parties inNovember 1993. Atitsmeeting on
17December 1993, theGATT 1947Council ofRepresentatives established aWorking Party toexamine
theapplication oftheGovernment ofLatvia toaccede totheGeneral Agreement under Article XXXIII,
andtosubmit totheCouncil recommendations which mayinclude adraft Protocol ofAccession.
Membership oftheWorking Party wasopentoallcontracting parties indicating thewishtoserve on
it.Inpursuance oftheMinisterial Decision of14April 1994 onAcceptance ofandAccession tothe
Agreement Establishing theWorld Trade Organization (WTO) andtothedecision of31May1994
ofthePreparatory Committee fortheWTO, theWorking Party examined theapplication ofLatvia
formembership intheWTO andagreed topursue themarket access negotiations forgoods, including
anagricultural country schedule, andforservices. Inpursuance ofthedecision adopted bytheWTO
GeneralCouncilon31January1995,theexistingGATT1947AccessionWorkingPartywastransformed
intoaWTO Accession Working Party. Theterms ofreference andthemembership oftheWorking
Party arereproduced indocument WT/ACC/LVA/6/Rev.1.
2. The Working Party meton28-29 March and13November 1995; 22March and
16September 1996; and........... under theChairmanship ofMr.F.Theilgaard (Denmark).
Documentation
3. TheWorking Party hadbefore it,toserve asabasis foritsdiscussions, aMemorandum on
theForeign Trade Régime ofLatvia (L/7526 withAddenda 1,2and3)andthequestions submitted
byMembers ontheforeign trade régime ofLatvia, together withthereplies thereto (WT/L/49 and
Corrigendum 1andAddendum 1;WT/ACC/LVA/3, WT/ACC/LVA/4, WT/ACC/LVA/8 and
Corrigendum1;WT/ACC/LVA/12,WT/ACC/LVA/16)andotherinformationprovidedbytheLatvianWT/ACC/SPEC/LVA/1/Rev.1
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authorities (WT/ACC/LVA/5, WT/Spec(95)6; WT/SPEC/26). TheGovernment ofLatvia made
available totheWorking Party thefollowing documentation:
- TheLawonCustoms Duty withAnnexes I(Import dutytariffs) andII(Export dutytariffs);
- Latvia 'sNational Tariff Schedule;
- LawontheBank ofLatvia;
- LawonCredit Institutions;
- LawonCompetition andRestriction ofMonopoly;
- LawonTrademarks;
- LawonIndustrial Design Protection;
- Patent Law;
- Resolution andLawonBookkeeping;
- Decree andLawonJoint Stock Companies;
- Resolution andLawonIncome Tax;
- Resolution andLawonLimited Liability Companies;
- Resolution andLawonForeign Investment intheRepublic ofLatvia;
- Resolution andLawonExcise Tax;
- Resolution andLawonTurnover Tax;
- Resolution andLawoftheRepublic ofLatvia onEntrepreneurial Activity;
- Regulation onFood;
- Regulations oftheCabinet ofMinisters No.208of1November 1994 ontheOrder of
Establishment andAdministration ofImport andExport Tariff Quotas;
- Regulations oftheCabinet ofMinisters No.24of17January 1995 OnOrder bywhich the
Special Authorizations (Licences) shallbeIssued inAccordance withtheQuotas ofCustoms
Tariffs;
- Regulations oftheCabinet ofMinisters No.20of17January 1995Regulations toProtect the
Domestic Market forFood Stuff Produced inLatvia;
- RegulationsoftheCabinetofMinistersNo.27of31January1995OnDeterminingtheCustoms
Value ofImport andExport Goods orOther Items;
- RegulationsoftheCabinetofMinistersNo.87of12April1994OntheMandatoryCertification
ofFoodstuff, Perfumery andToys;
- Programme ofReforms fortheNational Economy ofLatvia "Latvia 2000";
- Regulations oftheCabinet ofMinisters No.37of25January 1994 OnState Monopoly of
Alcohol andAlcoholic Beverages;
- Regulation bytheBank ofLatvia OnGranting Licences (Permissions) toPerform Activities
ofCredit Institutions;
- Regulation bytheBank ofLatvia OnRegulation onAmending theCharter, Changing
Shareholders, theInitial Capital, theManagement, theChief Accountant, theLegal Address,
theName ofaCredit Institution, andUndertaking Merger orSplit-up ofCredit Institutions;
- Regulations oftheCabinet ofMinisters No.185 of23August 1994 OnFormation ofPrices
andTariffs ofGoods andServices;
- LawonForeign Investment intheRepublic ofLatvia;
- TheOfficial ListofQuarantinable Pests;
- Founding LawoftheLatvian Food Centre;
- Statutes ofInformation, Consultation andTraining Centre ofGoods andServices;
- Draft Customs Code;
- Draft LawonSafety onProducts, Services andLiability ofProducer, Supplier;
- Draft LawonUniformity ofMeasurements;
- Draft LawonConformity Assessment;
- Latvia 'sImport Totals under eachHarmonized System 8-digit category (f.o.b. values); and
- Latvia 'sImport Datafor1994.WT/ACC/SPEC/LVA/1/Rev.1
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Introductory Statements
4. Therepresentative ofLatvia stated thatLatvia hadachieved considerable results intransforming
acentrally-planned economy toamarket-based economy since restoration ofindependence in1991.
Latvia haddrafted several newtrade lawsandregulations modelled onWTO principles toestablish
auniform andpredictable trading environment forimporters, exporters andinvestors. Although the
Russian Federation remained Latvia 'sprincipal trading partner, tradewithothercountries wasgrowing
rapidly andhehoped thatthistrend would continue. External trade relations were emphasized by
Latvia 'sgeographical position between EastandWest; several bilateral trade agreements based on
themost-favoured-nation principle hadbeenconcluded andmore were inprogress. Latvia hadalso
concluded freetrade agreements withmany countries inEurope. However, bilateral andregional
arrangements alone could notprovide thenecessary stability forexternal trade relations. Latvia had
therefore made astrong commitment tobecome member oftheWTO. TheWTO principles ofnational
andm.f.n.treatmenthadbeenincorporatedinnationallegislationwithparticularattentiontotransparency
inthepublication ofalllawsandregulations andatariff-based trade régime. Minimal tariffs were
imposed onimported rawmaterials, spare parts andcapital goods, thebasic average m.f.n. import
tariffwas15percent,andexport tariffs wereimposed onlyonsome rawmaterials. Non-discrimination
between imported anddomestically produced items applied intheimposition ofexcise taxes andthe
turnover tax,thelatter hadbeenreplaced byavalue-added tax.Anyperson orenterprise registered
inLatvia could perform anylegalimport operation. Imports ofalcohol, spirits, tobacco, pyrotechnic
materials, sugar andgrain required alicence, butnoquantitative limitations wereassociated withthe
licences. Exports ofspirits, ferrous andnon-ferrous metals were alsosubject tolicensing butwith
nounderlying quotas. Finally, hepointed outthatLatvia 'seffort tobecome member oftheWTO was
supported byallthemajor political institutions andthatabroad national consensus existed regarding
theimportance ofWTO membership andthepursuit ofliberal trade policies.
5. Many members oftheWorking Party welcomed Latvia 'srequest foraccession totheWTO
andexpressed theirreadiness towork withLatvia inelaborating terms ofaccession thatwould support
theprogramme oftransition toamarket-based economy andLatvia 'sintegration intothemultilateral
trading system. Some members welcomed thedocumentation provided andthestatement made by
therepresentativeofLatvia.TheyalsosaidthattheylookedforwardtoadetailedexaminationofLatvia's
policies andofthereasons fortheadoption ofcertain measures, e.g.licensing requirements. Some
members oftheWorking Party noted thatLatvia hadraised tariffs andintroduced newtraderestrictions
aftertherequest foraccession hadbeensubmitted andthatfurther restrictions appeared tobeunderWT/ACC/SPEC/LVA/1/Rev.1
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consideration. Thiswasadisturbing trend. Latvia wasaccordingly requested tonotify theWorking
Party ofproposed newrestrictions andtosupply allnewrelevant lawsandregulations toitsmembers.
6. TheWorking Party thenproceeded toreview theeconomic policies andforeign trade régime
ofLatvia andthepossible terms ofadraftProtocol ofAccession totheWTO. Theviews expressed
bymembers oftheWorking Party aresummarized below inparagraphs ...to.....
ECONOMIC POLICIES
Foreign Exchange andPayments
7. Therepresentative ofLatvia saidthathiscountry hadestablished oneofthemostliberal foreign
exchange régimes intheworld. Latvia hadbeenamember oftheIMFsince 1992. Thenational
currency -thelats-wasfreely convertible, backed bythecurrency reserves oftheBank ofLatvia.
Foreign exchange andlocalcurrency could bebrought intoortaken outofLatvia inunlimited amounts.
Foreign entrepreneurs werefreetorepatriate profits inanycurrency having paidtheapplicable taxes.
Corporate income taxamounted to25percent, incomes ofphysical persons were taxed at
25or35percent,anda10percentwithholding taxwaslevied ondividend payments tonon-residents.
Some members welcomed thefactthatthelatwasfreely convertible andstressed theimportance of
continuing current policies.
8. Therepresentative ofLatvia stated thatLatvia hadnotified theInternational Monetary Fund
thatithadaccepted theobligations ofArticle VIII,Sections 2,3and4oftheIMFArticles ofAgreement
witheffect from10June1994. Byaccepting theobligations ofArticle VIII, Latvia gaveconfidence
totheinternational community thatitwould pursue sound economic policies thatwould obviate the
needtorestrict payments andtransfers forcurrent international transactions, andthereby contribute
toamultilateral payments system freeofrestrictions.
Investment Régime
9. Some members oftheWorking Party asked Latvia todescribe thebasicprovisions oflegislation
regulating investment andinparticular identify anyrestrictions orregistration measures affecting foreign
investment.
10. Therepresentative ofLatvia referred tothelaw"OnEntrepreneurial Activity" which provided
forlicensing ofseveral types ofbusiness activities (see"Quantitative Import Restrictions, includingWT/ACC/SPEC/LVA/1/Rev.1
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Prohibitions, Quotas andLicensing Systems", paragraph 47).Suchlicences wereissued forenterprises
registered inLatvia onanon-discriminatory basis, irrespective ofnationality, toanyapplicant meeting
thespecificrequirements.Allissuespertinenttoforeigninvestment-registration,investmentprotection,
taxation, repatriation, dispute settlement, restrictions oninvestment, safeguards andtheapplicability
ofinternational treaties -wereregulated through theLaw"OnForeign Investment intheRepublic of
Latvia".
11. Therepresentative ofLatvia added thattheLawonForeign Investment intheRepublic ofLatvia
stated thatforeign investors weregranted therights andduties provided forbythenational laws. The
LawonForeign Investment contained norestrictions onforeign investment inanysector ofthenational
economy. TheGovernment hadamended theLawonForeign Investment inApril 1996, deleting its
Articles 3,5and6andthusterminating allrestrictions onforeign investment. Theamendment had
beenapproved byParliament on4September 1996. TheLawonForestry limited foreign ownership
inwood cutting (logging) companies to49percent.TheLawonRadio andTelevision limited foreign
ownership inradioandtelevision companies to20percent. TheLawonLotteries andGambling limited
foreign ownership ingambling business to49percent. On4September 1996, theSaeima (Parliament)
decidedthattheGovernmentshouldsubmitproposalstoadjustthementionedlawstotheLawonForeign
Investment within twomonths. Laws onlandownership allowed wholly-owned foreign companies
toownlandiftheowners ofthecompany werefromcountries withwhich Latvia hadsigned investment
promotion andprotection agreements (17countries atpresent). Legal orprivate persons from other
countries could ownlandifatleast51percentoftheshares inthecompany registered inLatvia belonged
toLatvian citizens ortoforeigners from countries withwhich investment protection agreements had
beensigned.
State Ownership andPrivatization
12. Some members oftheWorking Party requested details concerning thepaceofprivatization
inLatvia, noting aninitial statement thatprivatization ofagriculture hadbeencompleted by1995and
that75percentofState-owned enterprises would beprivatized by1996. Latvia wasalsoasked to
enumerate sectors orenterprises where State ownership would beretained foralongperiod or
permanently. Questions were alsoraised concerning theparticipation offoreign investors. Some
members requested areport fromLatvia onprogress achieved todateinitsprivatization programme.
Inaddition, Latvia should beprepared toprovide information onaperiodic basis onitsprivatization
efforts,economicreforms,andimplementationofanytransitionalarrangementsnegotiatedintheprotocol
ofaccession.WT/ACC/SPEC/LVA/1/Rev.1
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13. Therepresentative ofLatvia saidthatnoparticular sector would beexcluded fromprivatization.
Themain considerations weretoimprove company performance andtoavoid thecreation ofprivate
monopolies. A"List ofCurrently Non-Privatizable State Specialized Agricultural Enterprises" was
linked torestitution ofproperty toformer owners. Enterprises operating inindustry, agriculture, trade
andconstruction services would beprivatized first,while sectors suchasmedical care,social welfare
services, medicine wholesale andcertain agricultural sub-sectors would beprivatized overalonger
timeperiod. TheGovernment hadalsodecided thatasell-off ofinfrastructure (roads, railway, public
transport, postal services, etc.)would notbereasonable during thefirstyears ofprivatization. Latvia
provided adocument (WT/L/49/Add.1) onprivatization ofagriculture. InJuly1996, from atotal
of613agricultural statutory associations created atthefirststage ofprivatization offormer collective
andState farms byallocating shares according toinitial contributions ofcapital andlabour, 207had
beenfullyprivatized andexcluded from theEnterprise Register, 275hadchosen voluntary decision
forselfliquidation and131werestilloperating. Privatization offarms usedfortraining andresearch
would beconsidered onanindividual basis. Foreign firms could participate inprivatization; Latvia
hadheldtwointernational tenders. Foreign natural andlegalpersons could buyprivatization certificates
onlyafterhaving wonthetender foracompany undergoing privatization. Thisrestriction didnotapply
tojointventures orbranches offoreign companies registered inLatvia.
14. Regarding privatization ofindustry, therepresentative ofLatvia saidthatasat1September
1996, 805Stateenterprises (asset units) hadbeenassigned forprivatisation, 68Stateenterprises assigned
forliquidation, State-owned equity holdings of136enterprises assigned forprivatisation, and25real
estates assigned forsalebytheCabinet ofMinisters. ThePrivatisation Agency wasinvolved invaluation
of187cases ofrestitution ofproperty. Privatization regulations hadbeenapproved for621State
enterprises (asset units) ortheirparts, 42State-owned equity holdings, and20realestates. Sales
agreements hadbeenconcluded for435State enterprises (asset units) ortheirparts, 29State-owned
equity holdings, 17enterprises tobeliquidated, andfor14realestates. Theprivatization process would
generally becompleted bytheendof1997.
15. Therepresentative ofLatvia confirmed thatnational treatment applied fortheparticipation
offoreigners inprivatization programmes. There werenorestrictions ontheacquisition ofprivatized
State andmunicipal property. According toArticle 4oftheLawonthePrivatization ofState and
Municipal Property, anyperson orlegalentity eligible topurchase liquid and/or fixed assets inLatvia
could beaprivatization subject. TheLatvian Stateoramunicipality, aStateormunicipal enterprise,
aStateormunicipal company, oracompany inwhich private funds didnotexceed 25percentofthe
equity capital, could notbeprivatization subjects.WT/ACC/SPEC/LVA/1/Rev.1
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16. Asof11November 1996, 1,124 State enterprises hadbeen assigned forprivatization
(93.7 percentofallStateenterprises), among them302in1992-1994, 238in1994, 215in1995and
369in1996.
21.04.1994.-
31.12.1995.01.01.1996.-
30.04.1996.01.05.1996.-
10.11.1996.
Units under control ofPrivatization Agency 678 989 1,134
Approved privatization principles 409 78 179
Approved privatization regulations 440 133 161
Signed purchase agreements 259 90 136
Intotal, 1,147 units hadbeensoldand53units placed forliquidation. Inorder toattract foreign
investments, thePrivatization Agency hadorganized threeinternational tenders, offering 125medium
andlargeenterprises. Aspecial Public Offering Programme hadbeencreated toencourage participation
ofLatvia 'spopulation. During fourrounds ofthePublic Offering Programme 29large enterprises
hadbeenoffered tothepublic.
17. Therepresentative ofLatvia confirmed thatLatvia would provide information onaperiodic
basis onitsprivatization efforts, economic reforms andimplementation ofanytransition negotiated
intheProtocol.
Pricing Policies
18. Noting thatLatvia hadrelaxed price controls onmany goods andservices some members of
theWorking Party requested Latvia toprovide details onremaining restrictions, including minimum
andmaximum prices, particularly forsectors notconsidered natural monopolies. Latvia wasasked
tolisttheimported products subject topricecontrols byHarmonized System (HS)tariffline.Amember
noted thatLatvia exercised price controls inanumber ofsectors, including some which were not
traditionally considered natural monopolies, butintended toreduce itsprice controls totheextent
possible. Thismember stated thatpricecontrols should belisted inanAnnex. Moreover, Latvia should
exercise itsauthority inthisareainamanner thatdidnotdamage imports orotherwise acttoinhibit
trade. Thismember alsosought acommitment from Latvia thatcurrent andfuture price controls be
applied inaWTO-consistent fashion andwould bepublished intheofficial journal andthatLatvia
would takeaccount oftheinterests ofexporting WTO members asprovided forinArticle III.9ofthe
GATT 1994.WT/ACC/SPEC/LVA/1/Rev.1
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19. Therepresentative ofLatvia replied thatpricecontrol andregulation wascarried outaccording
toseparate lawsandaffected products related toenergy; agriculture (recommended prices forpurchases
fortheState grain reserve); theforestry sector (theprice ofstumpage); publishing ofschool books
financed from theState budget; pharmaceuticals; postal services; portservices; airport services;
archives; andhousing rents, power-supply andresidential services. Minimum andmaximum prices
werestipulated forthefollowing domestic andimported services: transit services foroilandoilproducts
bypipeline; reloading ofoilandoilproducts inports; transit shipment ofoilandoilproducts by
railway transport; long-distance transportation ofpassengers andluggage bymotor transport;
transportation ofpassengers andluggage bymotor transport ininternational lines; international
transportation ofcargo andpassengers byrailway transport according tointernational agreements;
transportation ofcargo andpassengers bydomestic railway; shipservices inports; andrents(maximum
level). TheStatedidnotcontrol theprices ofimported goods. However, theprofit margin wasregulated
withrespect topharmaceutical products; thefinalprice could notexceed theimport orproduction
price bymore than20percent.
20. Therepresentative ofLatvia stated thatprice control andregulation wascarried outaccording
toparticular laws, allofwhich werepublished intheofficial journal oftheRepublic ofLatvia "Latvijas
Vèstnesis". Latvia would apply suchmeasures inaWTO-consistent fashion andwould takeaccount
oftheinterests ofexporting WTO Members asprovided forinArticle III.9oftheGATT 1994. He
confirmed thatLatvia wasready toeliminate pricecontrol forgrain products within atwo-year period
andwasready toinclude thiscommitment intheProtocol.
Competition Policy
21. Some members oftheWorking Party noted thatLatvia intended toharmonize itslegislation
oncompetition withthatoftheEUoverafour-year period. Latvia wasasked toprovide information
onthepresent status ofdraftlegislation, outline existing provisions regarding mergers andtoprovide
alistofsectors considered "natural monopolies".
22. TherepresentativeofLatviarepliedthattheLaw"OnCompetitionandRestrictionofMonopoly"
of1991would berevised. Anenterprise gaining control ofmorethan25percentoftheLatvian market
forgroups ofgoods orservices asaresult ofamerger ortheformation ofapartnership would need
tonotify theInstitution fortheControl ofMonopoly Action andDevelopment ofCompetition. No
system hadbeenestablished tomonitor take-overs andmergers, buttheAnti-Monopoly Committee
cooperated closely withtheCompany Register oftheRepublic ofLatvia andcould intercept registrationsWT/ACC/SPEC/LVA/1/Rev.1
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resulting frommergers ortake-overs. Natural monopolies existed inenergy, communication services,
transport,watersupplyandsewerage.MonopolyenterprisesincludedtheStatestockcompanies"Latvijas
gâze" (Latvian Gas), "Latvenergo" and"Latvijas dzelzceî ø"(Latvian Railways); "Lattelekom" -a
limited liability company; suppliers ofheating; andself-government enterprises inwater-supply and
sewerage. However, competition (including foreign participation )waspresent inthesupply ofnatural
gasandinenergy andtelecommunication sub-sectors.
FRAMEWORK FOR MAKING AND ENFORCING POLICIES
23. Amember asked thatLatvia indicate which bodies wereresponsible fortheadministration of
trade policies andindicate thatsub-central governments didnotmake policies affecting international
trade.
24. Therepresentative ofLatvia replied thatthelegislative body oftheRepublic ofLatvia was
theSaeima (Parliament), theconstitutional basisofwhich wasprovided inSection 2oftheSatversme
(Constitution). Theregulation ofinternal proceedings oftheSaeima wascontained intheRules of
Procedure. TheSatversme stated thattheSaeima wasthehighest legislative bodyanditpossessed the
discretionary power. TheSaeima wasthehighest body ofState power, and,according toSection 5
oftheSatversme, itpossessed therighttoadopt lawsandstatements withthehighest legalforce after
theSatversme. Thisprerogative included adoption oflawsrelated totradeandmonopolies andguidelines
forthetrade policy oftheRepublic ofLatvia. Inthisfield, thepowers oftheSaeima werenotlimited
totheextent thattheywere compatible withtheSatversme.
25. Executive power inLatvia wasgiven totheCabinet ofMinisters. Thegeneral principles of
thefunctioning oftheCabinet werecontained inSection 4oftheSatversme. TheCabinet would discuss
alldraftlawsdrawn upbyMinistries andallquestions concerning thecompetence ofvarious Ministries,
thenumber andthefunctions ofwhich werestated according tospecial rules. Thefunctioning ofthe
Cabinet ofMinisters wasregulated bytheLaw"OntheComposition oftheCabinet ofMinisters" of
15July1993 (asamended on23May1996), Regulation No.5oftheCabinet ofMinisters, andby
special by-laws orgoverning regulations ofeachMinistry, always approved byarelevant Regulation
oftheCabinet ofMinisters. TheCabinet ofMinisters wasformed byaperson entrusted tothattask
bythePresident ofState. Inorder tofulfil theirduties, thePrime Minister andtheMinisters hadto
receive avoteofconfidence bytheSaeima. TheSaeima expressed avoteofconfidence bymeans of
special resolution afterthereport ofthePrime Minister onthecomposition andtheplanned activities
oftheCabinet incaseofapproval. Theimportant point wasthat,according toRegulation No.160WT/ACC/SPEC/LVA/1/Rev.1
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"OntheInternal Order andtheFunctioning oftheCabinet ofMinisters" of1June1996, every draft
regulation orstatement submitted totheState Chancellery forapproval bytheCabinet ofMinisters
would receive legal opinions from interested Ministries andother institutions toensure thatdraft
legislation would becompatible withthelawsinforceandInternational treaties andconventions signed
andratified bytheRepublic ofLatvia. ThetaskoftheStateChancellery wastoverify whether adraft
wascompatible withtheDeclaration oftherelevant Cabinet ofMinisters where theprincipal guidelines
ofitsactivities were mentioned. TheDeclaration wasbinding ontheCabinet.
26. Cabinet decisions were presented intheform ofregulations, instructions, orders or
recommendations. TheCabinet could issueregulations when (i)alawspecifically authorized theCabinet
toissue regulations. Such authorization would needtoprovide details ofthemain rules andoutline
thecontent oftheregulations; (ii)arelevant issuewasnotregulated byalaw;and(iii)inaccordance
withtheArticle 81oftheSatversme, ifthere wasanurgent necessity between sessions oftheSaeima,
theCabinet wasentitled toissue regulations having theforce oflaw.However, Article 81stated that
suchregulations could notmodify lawsconcerning theprocedure andthejudicial issues andthe
Constitution, thebudget, lawsalready passed bytheSaeima inpower, taxes, customs, issuance of
Treasury notes etc.
27. Therights ofthejudiciary power werestated bytheLaw"OntheJudicial Power", bytheCodes
ofCivilandCriminal Procedure, bytheCivilCode andbyspecial lawsonvarious judicial institutions
"OntheBar", "OnthePublic Prosecutor Service", etc.International tradeandmonopoly issues were
qualified bythejudicial institutions asother similar cases. Thejudiciary institutions hadtherightto
settle disputes arising fromquestions ofinternational trade andmonopoly inaccordance withthelaws
andregulations inforce intheRepublic ofLatvia. Thesystem ofCourts ofJustice hadthree levels.
Thefirstinstance wastheDistrict Court orCityCourt, theinstance ofappeal wastheRegional Court,
andtheinstance forcausation wastheSupreme Court. Theveryimportant point wasthat,specially
concerning questions ofinternational commercial relations, settlement ofdisputes could bereached
bymeans ofthearbiter court.
28. TheMinistry ofEconomy wasthecompetent institution fortheadministration oftradepolicies
according toArticle 4.3ofRegulation No.47oftheCabinet ofMinisters "The Governing Regulations
oftheMinistry ofEconomy" (of7March 1995). TheMinistry ofEconomy formulated andimplemented
thegeneral principles ofthedomestic andforeign trade policy oftheState. Sub-central governments
werenotentitled toestablish policies affecting international tradeunder thelegalrulesregulating their
functions.WT/ACC/SPEC/LVA/1/Rev.1
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POLICIES AFFECTING TRADE INGOODS
Trading Rights
29. Amember asked Latvia toconfirm theabolition oftheState trading monopoly andthatno
restrictions existed ontherightofforeign anddomestic individuals andenterprises toimport andexport
goods andservices within Latvia 'scustoms territory, except asprovided forinWTO Agreements.
Latvia should alsoconfirm thatindividuals andfirms werenotrestricted intheirability toimport or
export based ontheirregistered scope ofbusiness, andthatthecriteria fortheregistration ofcompanies
inLatvia were generally applicable andpublished intheofficial journal.
30. Therepresentative ofLatvia replied thatinaccordance withtheLaw"OnEntrepreneurship",
enterprises andentrepreneurships should beregistered inRegister ofEnterprises. Theregistration
procedure andtheinformation tobesubmitted wasregulated bytheLaw"OnEnterprise Register".
Foreigners could alsocarry outentrepreneurship inaccordance withtheLaw"OnForeign Investment
inRepublic ofLatvia". Inaccordance withtheLaw"OnEntrepreneurship" andtheRules oftheCabinet
ofMinisters "Onrestriction ofentrepreneurship", onlyStateenterprises hadtherighttoproduce and
press securities, banknotes, coins, stamps, andcards ofgambling games. Forother kinds of
entrepreneurship restrictions were prescribed bytheissuing oflicence orcertificate. Thekinds of
entrepreneurship requiring certificate orlicence werelisted intheabove-mentioned Rules oftheCabinet
ofMinisters.
Market Access Negotiations
31. Therepresentative ofLatvia announced hisGovernment 'sreadiness toenter intobilateral
negotiations onmarket access forgoods andservices inMarch 1995(document WT/L/57) andpresented
aninitial offerongoods (WT/L/57/Add.1) together withsupporting dataonimports (WT/L/57/Add.2).
1. Import Regulation
Customs Tariff
32. Amember oftheWorking Party noted thatthecollection ofcustoms duties appeared tohave
beeninefficient inLatvia andwondered whatplans Latvia might haveforimproving itscustoms system
aspartoftheaccession totheWTO. Therepresentative ofLatvia replied thatorganizational
improvements hadbeendiscussed withtheWorld Customs Organization andincluded therevision ofWT/ACC/SPEC/LVA/1/Rev.1
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legislation, thereview ofthestructure andfunctions ofthecustoms administration, further training
ofcustoms staffandadditional technical equipment.
Customs Duties
33. Some members oftheWorking Party requested Latvia todescribe thelegal basis forthe
imposition ofcustoms duties, submit acopyofitsCustoms Tariff, identify products attracting duties
ofmore than20percent, listproducts subject tospecific duties (andtheestimated advalorem
equivalent), outline plans toconvert specific duties intoadvalorem rates, andprovide estimates of
trade-weighted average duties onagricultural andindustrial products.
34. Therepresentative ofLatvia saidthattheLaw"OnCustoms Duties (Tariffs)" hadbeeninforce
since 1December 1994. Duties were generally setat15to20percent. Minimal duties (0.5or
1percent)werelevied ongoods withnodomestic production andhigher duties applied forsensitive
agricultural commodities. Latvia listed products withm.f.n. duties exceeding 20percent(WT/L/49,
pp.27-28) andproducts subject tospecific duties andtheadvalorem equivalents (WT/ACC/LVA/12).
Latvia hadnospecific timetable fortheconversion ofspecific duties toadvalorem rates. Thesimple
average duties amounted to5.69percent; 13percentforagricultural products and3.74percentfor
industrial goods.
Other Duties andCharges
35. Amember oftheWorking Party asked Latvia toclarify thesituation concerning anyother
duties andcharges related toimportation.
36. Therepresentative ofLatvia confirmed thatLatvia levied noduties andcharges onimports
other thanordinary customs duties.
Tariff Rate Quotas, Tariff Exemptions
37. Some members oftheWorking Party noted thatLatvian legislation authorized theopening
oftariff quotas tofacilitate importation ofgoods intemporary short supply orintheimplementation
ofpreferential trade agreements andrequested further details. Amember urged Latvia tobring this
system intoconformity withWTO provisions, andtoconsider using tariff protection onlyandallow
market forces todetermine trade.WT/ACC/SPEC/LVA/1/Rev.1
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38. Therepresentative ofLatvia saidthatthelegalbasis fortheopening oftariff quotas onany
item wasthelaw"OnCustoms Duties (Tariffs)" andregulations No.208"Establishment and
Administration ofImport andExport Tariff Quotas" andNo.24"Authorizations forLicences".
Exceptionally, theCabinet ofMinisters hadapproved atariff quota forimports ofhigh-quality seeds
inApril 1995 and1996 duetoashortage ofdomestic supply. TheState Cereals Bureau could open
tariff quotas withanin-quota tariff of0.5percentwhen itsannual forecasts indicated ashortfall in
Latvian production ofcertain types ofgrain. Such tariff quotas would besubject topublic tender.
Tariff quotas inthecontext ofpreferential trade were onlyapplied under theLatvia-EU FreeTrade
Agreement. Annex XIoftheAgreement enumerated theproducts concerned andtherespective quotas,
while thetariff rateswerelisted inAnnex X.Forprocessed agricultural products therelevant parts
oftheAgreement were Annexes 3and4ofProtocol 2.
FeesandCharges forServices Rendered
39. Amember oftheWorking Party asked Latvia toclarify whatfeesandcharges, ifany,were
applied forservices rendered related toimportation.
40. Therepresentative ofLatvia confirmed thatLatvia levied noduties orcharges forservices
rendered related toimportation.
Application ofInternal Taxes
Excise taxes
41. Some members oftheWorking Party asked fordetails ontheexcise taxsystem inLatvia and
itsapplication onimports anddomestic goods. Latvia wasrequested toindicate, byHStariff line,
thelevels andpoints ofsaleatwhich taxes were applied toimports anddescribe thecomponents of
thetaxable base.
42. Inreply, therepresentative ofLatvia saidthatexcise taxes werelevied onalcohol, tobacco,
motorvehicles,petroleumproductsandjewellery.Taxrateswereidenticalforimportedanddomestically
produced items. ThetaxbaseforLatvian products wasthesalesprice indomestic currency, taxes
onimports were levied onatariff-inclusive basis. Theratesofexcise taxwere thefollowing:
Rectified ethyl alcohol of200-proof alcohol Ls3.50perlitre
Champagne andallother types ofwine Ls0.25 "WT/ACC/SPEC/LVA/1/Rev.1
Page14
Other alcoholic beverages, perlitrepurealcohol Ls3.50 "
Cigarettes, withfilter Ls0.0035 perpiece
Cigarettes, without filter Ls0.05 "
Cigars andcigarillos Ls0.01 "
Other tobacco products forretail sale 100percent
Unleaded petrol, from 1June1996 Ls0.10perlitre
" " 1January 1997 Ls0.12 "
" " 1January 1998 Ls0.14 "
" " 1January 1999 Ls0.16 "
" " 1January 2000 Ls0.18 "
" " 1January 2001 Ls0.20 "
Leaded petrol, from 1June1996 Ls0.10 "
" " 1January 1997 Ls0.13 "
" " 1January 1998 Ls0.16 "
" " 1January 1999 Ls0.19 "
" " 1January 2000 Ls0.21 "
" " 1January 2001 Ls0.23 "
Gasoil, from 1January 1997 Ls0.02 "
" " 1January 1998 Ls0.04 "
" " 1January 1999 Ls0.10 "
" " 1January 2000 Ls0.16 "
" " 1January 2001 Ls0.17 "
Beer, perlitreof200-proof alcohol, from 1January 1997 Ls3.50 "
Motor cars 10percent
Goods made from goldandother precious metals, jewellery
including diamonds, precious orsemi-precious stones 30percent
Only tobacco products carrying taxlabels could besoldinLatvia. Enterprises licensed toimport or
manufacture tobacco products forsaleordered labels fromtheStateRevenue Service. Therequested
quantity oflabels would besupplied within 14daysagainst payment ofexcise taxandVAT. Exports,
re-exports andgoods intransit wereexempt fromexcise taxinaccordance withArticle 4oftheLaw
"OnExcise Tax". Exemptions fromexcise taxes hadalsobeenestablished foranumber ofproducts,
enumerated inTable 1.WT/ACC/SPEC/LVA/1/Rev.1
Page15
Table 1:Exemptions from Excise Tax
Excise taxshall notbelevied onthefollowing:
Precious metals, precious stones andproducts from saidmetals andstones imported andpurchased for
theneeds ofthePrecious Metal Fund oftheRepublic ofLatvia;
Goods used forproduction (technological needs) ofgoods listed inArticle 3;
Rectified alcohol:
(i) forthepurposes ofmedicine andveterinary medicine;
(ii) fortheneeds ofresearch anddevelopment;
(iii) forpharmaceutical industry.
Tobacco dustandtobacco products used forproduction ofinsecticides;
Precious metals formaking dentures;
Goods forexport;
Cars withspark-ignition internal combustion reciprocating engine, working volume ofengine cylinders of
which does notexceed 1,600 cm3;
Cars withcompression ignition internal combustion reciprocating engine (diesels orsemi-diesels),
working volume ofengine cylinders ofwhich does notexceed 1900 cm3;
Cars older than7years from thedateofindustrial production;
Cars withelectrical engine (electrocars).
TheCabinet maydetermine themaximum amount ofgoods thatareexcise tax-exempt when imported for
consumption intothecustoms territory oftheRepublic ofLatvia.
Excise taxshall notbelevied ontransit cargo shipping andreexport.
Excise taxshall notbelevied onnatural persons importing alcoholic drinks uptoonelitreoroneunitin
original packaging thatdoes notexceed 3litres intotal amount, aswellascigarettes -upto200
cigarettes perperson.
Excise taxshall notbelevied onnatural andlegal persons selling carsifexcise taxfortherespective car
hasalready been paidonce.
Ifanenterprise (entrepreneurial company) exports self-produced orunused goods forwhich excise tax
hasbeen paid, theexcise taxtransferred intothebudget shall bereimbursed from theState budget.
Theexcise taxpaidforcarsexported from theRepublic ofLatvia within three months after their import
shall bereimbursed from theState budget.
Value Added Tax
43. Noting thataValue Added Tax(VAT) would replace theturnover taxinLatvia, some members
oftheWorking Party requested information ontheapplication oftheVAT, including product- oruser-
specific exemptions. Therepresentative ofLatvia replied thatVAT hadreplaced theturnover taxon
1May1995. VAT waslevied attherateof18percent. VAT waslevied onatariff-inclusive basis
andexcise taxes were added tothetaxbaseofimported anddomestic products. Exemptions from
VAT were determined inaccordance withArticles 6and7oftheLaw"OntheValue Added Tax".
Inall,26types ofgoods andservices wereexempt fromVAT while nineservices related toexporting
andinternational transport were zero-rated (Table 2).Inresponse tospecific questions onVAT
exemption formass-media andcertain publications produced inLatvia, heassured theWorking PartyWT/ACC/SPEC/LVA/1/Rev.1
Page16
thattheexemption wasalsoapplicable toimported films. TheMinistry ofFinance wasdrafting
amendments totheLaw"OntheValue Added Tax"thatwould provide equal regulations fordomestic
andimported mass media.
Table 2:Goods andServices Exempt from VAT orZero-rated
Exemptions (Article 6)
1. Thetaxshall notbelevied onthefollowing:
(i) services ofnursing homes;
(ii) services ofday-care centres andkindergartens;
(iii) catering inpenitentiaries;
(iv) services ofeducational establishments directly connected withtheprocess ofeducation, including
tuition atState andlocal government artandmusic schools;
(v) services oftraining farms incatering forstudents atagricultural educational establishments;
(vi) services ofpublic libraries;
(vii) tuition atprivate educational establishments accredited bytheState;
(viii) visits totheatres, movies (except video), circus shows, concert activities, events incultural
establishments, visits tomuseums, exhibitions, zoological andbotanical gardens, events for
children andcharity events, events ofamateur artandsports;
(ix) medical services, supplies ofmedicine andmedical goods inaccordance withthelistadopted by
theMinistry ofWelfare andapproved bytheMinistry ofFinance.
(x) supplies ofgold, coins andbank notes totheBank ofLatvia;
(xi) betting, lotteries andother types ofgambling;
(xii) burial services, andreligious, ritual andother services provided byreligious organisations
registered intheRepublic ofLatvia provided theyhave nopurpose ofsystematic gaining of
profit;
(xiii) insurance services supplied byinsurance companies inaccordance withtheLawOnInsurance;
(xiv) payments ofindividuals onapartment rentcontracts signed, except payments forrentofhotels,
motels andsimilar establishments;
(xv) specialised baby-food inaccordance withthelistadopted bytheMinistry ofWelfare and
approved bytheMinistry ofFinance;
(xvi) scientific research financed bypublic foundations, orbyfunding from theState andlocal
government budget, orinternational institutions;
(xvii) thefollowing goods andfinancial services:
(a) extension ofloans andtheir monitoring, aswellasservices connected withloanguarantees or
other financial guarantees andtheir monitoring, except debtcollection;
(b) services ofloaninstitutions connected withdeposit andcurrent account operations, payments,
transfers, debts, checks andother negotiable instruments;
(c) negotiable instruments andservices connected withpurchase orsaleofnegotiable instruments in
circulation, except items (money, coins) supplied forcollection, orthatcontain precious metal;
(d) securities andcapital investments, aswellasservices supplied atpurchase andsaleofsecurities
andcapital investments;
(xviii) humanitarian aidandgiftsinaccordance withtheCabinet regulations, butifsaidgoods aresold,
thetaxshall bepaidinaccordance withlaw;
(xix) consular services;
(xx) school books andscientific literature, firstpublications ofworks oforiginal literature inLatvian
andpublications forchildren published andprinted inLatvia inaccordance withlistsadopted by
theMinistry ofEducation andScience;WT/ACC/SPEC/LVA/1/Rev.1
Page17
Table 2:Goods andServices Exempt from VAT orZero-rated
(xxi) mass media registered intheRepublic ofLatvia;
(xxii) services provided bycompanies forjoint processing andsaleofagricultural andfishery
products, aswellascompanies forjoint usage andmaintenance ofagricultural equipment,
machinery andother tools (hereinafter -agricultural cooperatives) tofarmers holdings thatare
nottaxable persons;
(xxiii) saleofrealestate, except saleortransfer ofanunused real estate toitsowner after completion
ofconstruction;
(xxiv) supplies ofimported goods notsubject tocustoms duties inaccordance withChapters 6and7of
theLawOnCustoms Duty (Tariffs) under aprocedure setbytheCabinet, except supplies of
goods towhich the0%rateofcustoms dutyisapplied;
(xxv) fire-fighting services provided bytheFirefighting andRescue Service department oftheMinistry
ofInterior, firefighting services ofinstitutions, enterprises (entrepreneurial companies) and
organizations, voluntary firefighters 'unions andformations offirefighting volunteers;
(xxvi) postal services provided bytheState enterprise "Latvian Post".
2. Aperson supplying saidservices (goods) maysubject them tothetaxbyregistering attheState
Revenue Service.
3. Fixed assets imported intheRepublic ofLatvia byataxable person, shall notbesubject tothe
taxontheborder. Incaseimported fixed assets donotcreate distortions ofcompetition inthecountry,
forexample, duetoproduction ofanalogous fixed assets inLatvia, thetaxshall bewritten off.Otherwise
thecancelled taxshall becollected from aperson whohasimported thefixed assets. Theprocedure for
taxwrite-off andcollection shall bedetermined bytheCabinet regulations. Ifataxable person supplies
goods andservices notsubject tothetaxinaccordance withPart1ofthisArticle, thetaxmaybewritten
offonlyfortheportion ofthetaxthatcorresponds totheratio established byPart5ofArticle 10.
Application ofZero Rate toExports andInternational Transport (Article 7)
1. 0%taxrateshall beapplied to:
(i) supplies ofgoods outside theRepublic ofLatvia;
(ii) services related tosupplies ofgoods referred toinParagraph 1ofthisPart;
(iii) supplies ofservices outside thedomestic territory;
(iv) supplies ofgoods andservices related tosupply andmaintenance ofvessels that:
(a) operate oninternational shipping lines;
(b) perform emergency andrescue missions, orprovide assistance onsea;
(v) delivery, reconstruction, repairs, maintenance, chartering andlease ofvessels referred toin
Paragraph 4ofthisPart, andsupplies andservices inthisregard;
(vi) delivery, reconstruction, repairs, maintenance, chartering andlease ofaircraft operating on
international routes, andsupplies andservices inthisregard;
(vii) agent services andservices forcargo handling oftransportation vehicles listed inParagraphs 1-6
ofthisPart;
(viii) onthebasis ofparity, goods andservices supplied todiplomatic andconsular establishments in
theRepublic ofLatvia, their diplomatic andconsular agents andtheir underage family members
residing withthem, inaccordance withtheprocedure setbytheCabinet.
2. Ifanagent representing anatural orlegal person ofLatvia provides supplies ofgoods outside
theborders oftheRepublic ofLatvia, 0%rateshall apply fortheagent onsupplies ofgoods in
accordance withtheprocedure setbytheCabinet.
3. Toreceive input taxrefund, aVAT taxable person registered attheState Revenue Service shall
submit documentary evidence substantiating thatthesupply ofgoods orservices referred toinPart1of
thisArticle hasoccurred.
4. TheVAT amount paidbynatural persons forgoods (iftheir value exceeds Ls100) exported
from thedomestic territory shall berefunded inaccordance withtheCabinet regulations.WT/ACC/SPEC/LVA/1/Rev.1
Page18
Table 2:Goods andServices Exempt from VAT orZero-rated
5. Ifataxable person thathassupplied goods orservices inaccordance withPart1ofthisArticle
cannot produce documents certifying toexport, itshall besubject tothetaxforgoods andservices
supplied inaccordance attheratesetbyPart1,Article 5.
44. Some members oftheWorking Party requested thatinpursuance ofArticle IIIofthe
GATT 1994, theexemptions from VAT forbooks andmass media items published or(inthecase
ofmass media) registered inLatvia beextended toallitems covered bythese twopoints.
45. TherepresentativeofLatviaconfirmedthatVATandexcisetaxwereappliedequallytodomestic
andimported goods.
Quantitative Import Restrictions, including Prohibitions, Quotas andLicensing Systems
46. Some members oftheWorking Party asked Latvia tospecify thebusiness activities subject
tolicensing. Latvia wasrequested tosupply information inaccordance withthequestionnaire onimport
licensing andspecifically asked toprovide acomprehensive list,byHStariff line,ofproducts subject
tonon-tariff measures, citing themeasure applied (prior import approval requirements, mandatory
import licences, import quotas, prohibitions, etc.), itslegal basis, anditsjustification under WTO
provisions. Further questions addressed specific issues suchasquantitative restrictions onimports
ofsugar andimport arrangements affecting grain, ethyl alcohol andspirits, andtobacco.
47. Therepresentative ofLatvia saidthatthefollowing restrictions onentrepreneurial activity had
beendetermined inaccordance withArticle 32oftheLaw"OnEntrepreneurial Activity":
(i) restrictions laiddown bytheStateGovernment orLocal Government laworregulations issued
bytheCabinet ofMinisters aiming atsecuring ofState interests;
(ii) restrictions effected within thecompetence determined bylocalGovernment law;
(iii) restrictions onindividuals carrying outanyformofentrepreneurial activity orintellectual work
requiring special qualifications concerning special knowledge andtesting ofit,asdetermined
byspecial lawsorregulations issued bytheCabinet ofMinisters; and
(iv) restrictions determined bytheBank ofLatvia concerning financial andcredit operations and
banking activity.WT/ACC/SPEC/LVA/1/Rev.1
Page19
Therestrictions onentrepreneurial activity were enforced through special permissions (licences) or
certificates ofprofessional qualification issued bytheCabinet ofMinisters orinstitutions authorised
byit,localgovernments, professional associations ortheBank ofLatvia. Licence feespayable tothe
Stateweredetermined bythelaworregulations issued bytheCabinet ofMinisters. Permission (licence)
orcertificate feeswould beestablished bytheissuing authority inaccordance withrules laiddown
bytheCabinet ofMinisters. TheStatereserved therighttomake certain typesofentrepreneurial activity
connected withsecurity oftheStateanditscitizens subject toStatemonopoly. Anydisputes arising
fromtheapplication ofrestrictions onentrepreneurial activity would besettled byahigher institution
oraCourt ofJustice.
48. InTable3,therepresentativeofLatviaprovidedtheinformationonnon-tariffmeasuresaffecting
imports andthelegalbasis forthese measures, which issummarized. Heconfirmed thatanimport
banonwhite sugar hadbeeninforce since May1993, buttheprohibition didnotapply torawsugar.
Import licences wereissued onanon-discriminatory basisregarding thecountry oforigin; sugar had
beenimported fromDenmark, Estonia, Germany, Lithuania, Ukraine andtheUnited Kingdom. He
stated thatimport restrictions onsugar hadbeenmaintained toprotect localmanufacturers while the
industry wasrestructured. Heagreed thattheexisting régime didnotcorrespond totheWTO
Agricultural Agreement andLatvia wasready toprepare adoption ofthenecessary legalamendments
tobring thesugar régime inlinewithWTO requirements. Latvia wasready toeliminate theimport
banonwhite sugar andtherestrictive import licensing onother sugar products bythetimeofits
accession totheWTO.
Table 3:Products subject tonon-tariff measures (import licensing)
HStariff line Description Legal basis WTO justification
Chapter 10 Cereals Law"OntheLatvian
grain market andState
grain reserves"
(Article 4)WTO Import Licensing
Agreement
Chapter 11 Products ofthemilling
industryLaw"OntheLatvian
grain market andState
grain reserves"
(Article 4)WTO Import Licensing
Agreement
Chapter 12 Oilbased plane seeds
andoleaginous fruit,
various grain, seeds and
fruit, straw andfodder.Law"OntheLatvian
grain market andState
grain reserves"
(Article 4)WTO Import Licensing
Agreement
1701 Cane orbeetsugar and
chemically puresucroseLaw"OnEntrepreneurial
Activity" (Article 32),
Law"OnSugar", and
Regulation No.61WTO Import Licensing
AgreementWT/ACC/SPEC/LVA/1/Rev.1
Page20
Chapter 22 Alcoholic beverages,
spirits andvinegarLaw"OnEntrepreneurial
Activity" andRegulation
No.37of
25January 1994WTO Import Licensing
Agreement
Chapter 23
except 2301, 2303 and
2307.Residues andwaste from
thefood industries;
prepared animal foddersLaw"OntheLatvian
Grain Market andState
Grain Reserves"
(Article 4)WTO Import Licensing
Agreement
Chapter 24 Tobacco products Law"OnEntrepreneurial
Activity" (Article 32)
andRegulation No.86of
14April 1994WTO Import Licensing
Agreement
49. Therepresentative ofLatvia saidthatquantitative restrictions concerned onlyHSproduct groups
1001 to1004 and1701. Licensing ofother products wasmaintained forstatistical purposes only.
TheState Cereals Bureau prepared anannual balance sheet ofgrain production andconsumption for
theGovernment.Tenderingproceduresforimportlicenceswererequiredonlyforwheat.Publictenders
would beorganized when theproposed imported quantity exceeded 1,000 tons. Actual import volumes
occasionally fellshort ofapproved quantities asimporters wereunable tousetheirentitlements due
tounforeseen problems.
50. Therepresentative ofLatvia noted thattheAlcohol Monopoly Department oftheMinistry of
Finance keptalistofofficially approved importers ofalcoholic beverages andintended tobegin regular
publication ofthelist.Thenumber oflicensed importers andtraders wasnotcontrolled orlimited
byanyother administrative means. Thelicensing system wasmaintained forreasons ofhealth and
social policy (toreduce illegal production andimportation) andforthecollection ofexcise taxes; these
objectives could notbeattained byother measures.
51. Withreference tothelicensing system fortobacco products, therepresentative ofLatvia said
thatthelicensing served statistical purposes andthecollection ofexcise taxes. Thedistribution of
imported tobacco products wasnotrestricted. AsperDecember 1995, 76enterprises hadbeenlicensed
forwholesaletrade,11enterprisesforimportingand2enterprisesfortheproductionoftobaccoproducts.
Procedures governing production, manufacture anddistribution ofpharmaceutical products contained
intheDrugs Register orVeterinary Drugs Register oftheRepublic ofLatvia, including licensing
provisionsforspecificpharmaceuticalactivities,wereoutlinedintheLaw"OnPharmaceuticalActivities".
52. Some members oftheWorking Party requested thatLatvia undertake toeliminate allmeasures
applied toenforce quantitative restrictions, including theimport licensing forgrains andthebanon
sugar imports, asofthedateofaccession andcommit nottointroduce, re-introduce orapply quantitativeWT/ACC/SPEC/LVA/1/Rev.1
Page21
restrictions onimports ornon-tariff measures suchaslicensing, quotas, bansandother restrictions
having equivalent effect thatcannotbejustified under theprovisions oftheWTO Agreements on
Technical Barriers toTrade, Sanitary andPhytosanitary Measures, Import Licensing Procedures and
Agriculture. Additionally, Latvia wasasked toconfirm thatimport licensing onother commodities,
especially wheat flour, cereal flour, cereal groats, cereal grains otherwise worked, sugar andanimal
feed,alcoholicbeveragesandtobaccoproducts,wereissuedforstatisticalpurposesonlyandadministered
inconformity withArticle XIoftheGATT 1994andtheAgreement onImport Licensing Procedures.
53. Therepresentative ofLatvia confirmed thatLatvia would implement theAgreement onImport
Licensing Procedures onthedateofaccession totheWTO. Hefurther confirmed thatallquantitative
restrictions, including import licensing forgrains andthebanonsugar imports, would beeliminated
uponaccession, asrequired byArticle XIoftheGATT 1994andtheAgreement onAgriculture. He
confirmed thatimport licensing onothercommodities, especially wheat flour, cereal flour, cereal groats,
cereal grains otherwise worked, sugar andanimal feedwereadministered inconformity withArticle XI
andtheAgreement onImport Licensing Procedures. Latvia would alsoensure thatlicensing andspecial
permit requirements ontheimportation ofalcoholic beverages andtobacco products would not,infact,
restrict theright toimport these products intoLatvia orinanywaydiscriminate against imported
products.
Customs Valuation
54. Some members oftheWorking Party asked Latvia toprovide additional information onits
customs valuation methods, noting inparticular thatterminology suchas"approximate valuation" and
valuation "according tothegoods ofthesame type" hadnocounterpart intheWTO Agreement on
Implementation ofArticle VIIoftheGATT 1994(theCustoms Valuation Agreement). Suchvaluation
practices were specifically prohibited inArticle 7.2oftheCustoms Valuation Agreement andthe
Agreement authorized nodelay intheimplementation ofthisprovision. Amember sought Latvia 's
commitmenttoapplyfullytheWTOprovisionsconcerningcustomsvaluationfromthedateofaccession,
including, inaddition totheAgreement ontheImplementation ofArticle VIIoftheGATT 1994, the
provisions fortheValuation ofCarrier Media Bearing Software forDataProcessing Equipment and
theprovisions ontheTreatment ofInterest Charges inCustoms Value ofImported Goods.
55. Therepresentative ofLatvia saidthatcurrent valuation practices were based ontheLawon
Customs Duty andRegulation No.27"OnEstimations ofCustoms Valuation Relating toImported
andExported Goods andOther Subjects" which interaliaallowed theuseofreference prices. LatviaWT/ACC/SPEC/LVA/1/Rev.1
Page22
acknowledged thedisparity between itslegislation andtheWTO Agreement onImplementation of
Article VII.Amendments toexisting ruleshadaccordingly beendrafted andwereawaiting approval
oftheCabinet ofMinisters andratification byParliament. ThenewCustoms Lawwasexpected to
enter intoforce on1July1997. Thevaluation methods inthenewCode werebased ontransaction
value; thevalue ofidentical goods; thevalue ofsimilar goods; theunitpricemethod andthecomputed
value method. Acopyofthedraftlawwasprovided totheWorking Party.
56. Therepresentative ofLatvia saidthatLatvia would undertake tointroduce customs valuation
legislation inaccordance withtherequirements ofArticle VIIoftheGATT 1994andtheAgreement
ontheImplementation ofArticle VIIoftheGATT 1994 by1July1997.
Other Customs Formalities
57. Therepresentative ofLatvia saidthatLatvia wasamember oftheWorld Customs Organization.
Adraftlawonaccession totheKyoto Convention hadbeensubmitted totheGovernment. Norms
laiddown intheKyoto Convention hadbeentaken intoaccount inthedevelopment ofthenewCustoms
Law.
Anti-Dumping, Countervailing Duties andSafeguard Régimes
58. Some members oftheWorking Party referred totheprovisions regarding anti-dumping and
countervailing duties inChapter IIoftheLaw"OnCustoms Duties (Tariffs)" andrequested information
onLatvia 'sintentions concerning theestablishment ofnew, broader legislation inthisarea. The
representative ofLatvia saidthatatpresent nodraftlegislation existed related tothisissue. Latvia
wasatthestageofexamining possibilities fortheintroduction ofanti-dumping andcountervailing duties
legislation, taking intoaccount itsspecific situation asasmall country andtheresources available in
theStatebudget forthepurpose ofeventual investigations. According totheexisting timetable, draft
legislation oncountervailing duties would bepresented totheCabinet ofMinisters by1998, anda
study ontheintroduction ofanti-dumping legislation would becompleted inthebeginning of1998.
59. Some members oftheWorking Party asked Latvia todescribe itssafeguards régime and
questioned whether existing legislation would beconsistent with GATT Article XIX andthe
WTO Agreement onSafeguards. Therepresentative ofLatvia replied thatthecurrent safeguards régime
wasbased onRegulation No.20"Regulations toProtect theDomestic Market forFoods StuffProduced
inLatvia". Theregulation addressed onlyagricultural products -inparticular liveanimals, grain,WT/ACC/SPEC/LVA/1/Rev.1
Page23
milk, meat, fish,potatoes andproducts made thereof -andhadbeenintroduced astherecent economic
transition haddisrupted sectors which normally would supply competitive products. However, the
regulations hadyettobeapplied. Theexisting régime wastemporary andwould bereplaced bynew
legislation.
60. TherepresentativeofLatviasaidthatintheelaborationofanylegislationconcerninganti-dumping
duties, countervailing duties andsafeguards, Latvia would ensure theirfullconformity withtherelevant
WTO provisions, including Article VIandXIXoftheGATT 1994 andtheAgreements onthe
Implementation ofArticle VI,theAgreement onSubsidies andCountervailing Measures andthe
Agreement onSafeguards. Latvia would alsoapply anyanti-dumping duties, countervailing duties
andsafeguard measures infullconformity withtherelevant WTO provisions. TheWorking Party
tooknoteofthese commitments.
2. Export Regulation
Customs Tariffs, FeesandCharges forServices Rendered, Application ofInternal Taxes toExports
61. Some members oftheWorking Party requested details onexport taxratesandplans tophase
outsuchtaxes.
62. Inresponse, therepresentative ofLatvia saidthatallgoods werezero-rated withtheexception
ofcertain wood products, metal waste andscrap, andantiquities. Thelistofconcerned products, by
HStariffline,andtherespective tariffratesisreproduced inTable 4.Export duties oncertain mineral
products falling within HSChapter 25wereeliminated witheffect from17July1996. Latvia would
abolish export duties byyear2000, withtheexception ofduties onspecific antiques.
Table 4:Export Duties
LCCN code
Description Basic rateofdutyRateofdutyfor
"themost
favourable regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
Wood intherough, whether ornotstripped of
barkorsapwood, orroughly squared
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
4403 91001 --Oak-tree round timber withlength above 1m
anddiameter above 14cm, dense M3* 50.0 50.0 50.0WT/ACC/SPEC/LVA/1/Rev.1
Page24
Table 4:Export Duties
LCCN code
Description Basic rateofdutyRateofdutyfor
"themost
favourable regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
4403 92001 --Beech round timber withlength above 1m
anddiameter above 14cm,dense M3* 60.0 60.0 60.0
4403 99901 ----Round timber withlength above 1.6m and
diameter 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 and
diameter 26cm andmore (veneer blocks, match
blocks andsaw-timber ofsortA),dense M3*
20.0 20.0 20.0
4403 99903 ----Round timber withlength above 1.6m and
diameter 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 and
diameter 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 1manddiameter
above 14cm, dense M3* 50.0 50.0 50.0
Printed books, brochures, leaflets andsimilar
printed matter, whether ornotinsingle sheets
4901 10002 --Published before 50-100 years* 50 50 0
4901 10003 --Older than100years* 100 100 0
-Other:
--Dictionaries andencyclopedias, andserial
instalments thereof
4901 91002 --Published before 50-100 years* 50 50 0
4901 91003 --Older than100years* 100 100 0
-Other:
4901 99002 --Published before 50-100 years* 50 50 0
4901 99003 --Older than100years* 100 100 0
7204 Ferrous waste andscrap; remelting scrap
ingots ofironorsteel 100 100 100
7404 00 Copper waster andscrap 20 20 20
7503 00 Nickel waste andscrap: 20 20 20
7602 00 Aluminium waste andscrap: 20 20 20
Works ofart,collectors 'pieces andantiques
-Paintings, drawings andpastels
9701 10002 --From 50to100years* 50 50 0
9701 10003 --Older than100years* 100 100 0
9701 90002 --From 50to100years* 50 50 0
9701 90003 --Older than100years* 100 100 0
Original engravings, prints andlithographs
9702 00002 --From 50to100years* 50 50 0
9702 00003 --Older than100years* 100 100 0WT/ACC/SPEC/LVA/1/Rev.1
Page25
Table 4:Export Duties
LCCN code
Description Basic rateofdutyRateofdutyfor
"themost
favourable regime"Rateofdutyfor
"The freetrade
regime"
% Ls % Ls % Ls
1 2 3 4 5 6 7 8
Original sculptures andstatuary, inany
material
9703 00002 --From 50to100years* 50 50 0
9703 00003 --Older than100years* 100 100 0
9706 00000 Antiques ofanageexceeding 100years 100 100 0
63. Therepresentative ofLatvia confirmed thatLatvia would abolish allexport duties by
1January 2000 withtheexception ofthedutyonantiques. Present export tariff ratesrelated only
tothegoods listed inTable 4Export Duties. Allcustoms tariff changes werepublished intheofficial
journal oftheRepublic ofLatvia -thenewspaper "Latvijas Vèstnesis".
Export Restrictions
64. Some members oftheWorking Party requested details onthelicensing régime onexports,
notably withregard totradeinmetals andpyrotechnical materials. Therepresentative ofLatvia replied
thatbusiness licences wereissued toregistered enterprises fordomestic purchasing andexports ofmetal
scrap inaccordance withtheLaw"OnEntrepreneurial Activity". Licensing oftradeinstrategic goods,
products, services andtechnologies hadbeenestablished forreasons ofinternal security andtofulfil
internationalobligationsonnon-proliferation.LatviahadestablishedanExportControlSystemcovering
munitions andexports ofdualusegoods based oninternational guidelines, incorporating theformer
COCOM Munitions ListandCouncil Regulation (EC) No3381/94.
Export Subsidies
65. Amember oftheWorking Party asked Latvia todescribe itsdutydrawback system. The
representative ofLatvia replied thatdutydrawback wasavailable fortemporary importation ofgoods
forprocessing, improvement, repair orreplacement duetospoilage, andre-exports inaccordance with
Chapter VIIoftheLaw"OnCustoms Duties (Tariffs)" withRegulation No.87"Import ofCommodities
andOther Items forProcessing" providing more specific procedures. Additional documentation was
required tocertify thatgoods would notbesoldinthedomestic market andtoindicate theforegone
amount ofimport taxes andVAT.WT/ACC/SPEC/LVA/1/Rev.1
Page26
Internal Policies Affecting Foreign Trade inGoods
Industrial Policy, including Subsidies
66. Amember oftheWorking Party noted thattheLatvian Government hadsignalled plans for
extensive investments ininfrastructure andwondered what thelikely effect would beonLatvia 's
exporting sectors. Herequested thatindustrial support programmes benotified inaccordance with
theAgreement onSubsidies andCountervailing Measures.
67. Therepresentative ofLatvia replied thattheGovernment aimed atimproving infrastructure
generally andwould nottarget anyparticular industry orenterprise. Heconfirmed thatLatvia did
notmaintain subsidies which metthedefinition ofaprohibited subsidy, within themeaning ofArticle 3
oftheAgreement onSubsidies andCountervailing Measures.
Technical Barriers toTrade, Sanitary andPhytosanitary Measures
68. Some members oftheWorking Party asked about thesystem ofstandards andproduct
certification inLatvia, including participation ininternational standards organizations, plans toadopt
andimplement theCode ofGood Practice (Annex 3oftheWTO Agreement onTechnical Barriers
toTrade), theacceptance ofcertificates issued byforeign bodies andaccreditation ofprivate certification
bodies.
69. Therepresentative ofLatvia stated thattheLatvian National Standardization andMetrology
Centre prepared national standards, allofwhich werevoluntary except those related tohuman health,
safety andtheenvironment. Standards were formulated intechnical committees comprising
representativesofrelevantMinistries,producersandotherexperts.TheCentrewasanaffiliatedmember
oftheEuropean Standardization Committee (CEN), acorresponding member oftheISO,andwould
betheresponsible body forimplementing theCode ofGood Practice. Certification ofgoods was
prescribed intheLaw"OntheProtection ofConsumer Rights"; three certification centres hadsofar
beennominated bytheCabinet ofMinisters: theLatvian National Certification Centre forFood,
Cosmetics andToys; theLatvian National Standardisation Centre forHousehold Electric Equipment;WT/ACC/SPEC/LVA/1/Rev.1
Page27
andtheBaltic Machinery Experimental Station forAgricultural andWood Equipment. TheNational
Accreditation Office intended tojoinISOCASCO. Certificates issued byforeign institutions were
recognized inaccordance withbilateral agreements. Safety standards andrequirements wereidentical
forimported anddomestic products. Latvia provided information ontechnical barriers totrade in
documentWT/ACC/LVA/4,Annex5.Alldraftstandardswerenotpublishedduetofinancialdifficulties.
However, draftstandards weredisseminated among allinterested parties fordiscussion andcomments.
70. Some members oftheWorking Party asked Latvia todescribe itsrégime ofsanitary and
phytosanitary measures inthelightofWTO requirements andoutline howtheprovisions oftheWTO
Agreement ontheApplication ofSanitary andPhytosanitary Measures would beimplemented after
accession. Amember wasparticularly concerned about transparency, asitappeared thatnewregulations
were notalways published prior toimplementation.
71. Therepresentative ofLatvia saidLatvia participated intheactivities oftheCodex Alimentarius
Commission, theInternational Office ofEpizootics (IOE) andtheEuropean andMediterranean Plant
Protection Convention andhoped tojointheInternational Plant Protection Organization in1996 or
1997. Latvia based itssanitary andphytosanitary measures onrecommendations oftheseorganizations
andonregulations inforce intheNordic countries. Latvia reported monthly tointernational
organizations (FAO, WHO andIOE)onprogress inimplementing international norms. Acompleted
questionnaire onsanitary andphytosanitary measures wasprovided totheWorking Party
(WT/ACC/LVA/12, Annex 2).
72. Therepresentative ofLatvia added thattheLaw"OnPlantProtection" provided theframework
foradministering phytosanitary measures. Sanitary measures werecovered intheLaw"OnVeterinary
Medicine", the"Pharmaceutical Law" andthe1995 "Food Law". Latvia wasintheprocess of
establishing adequate approval, control andinspection procedures asrequired bytheWTO Agreement.
VeterinarycontrolswereeffectedbytheVeterinaryDepartmentoftheMinistryofAgriculture.Imported
products wereaccompanied bycertificates issued bytheveterinary authorities oftheexporting country
inaccordance withLatvian quality requirements. Theproducts covered byveterinary regulations fell
under HSChapter headings 0100, 0200, 0300, 0400, 0407, 0409, 0410, 0500, 0714, 1000, 1200,WT/ACC/SPEC/LVA/1/Rev.1
Page28
1201, 1202, 1204-1208, 1211, 1212, 12149010, 1500, 1600, 2100, 2300, 2302, 2304-2306, 2308
and2309. TheState plant protection service wasresponsible forthecontrol ofproducts groups
0601-0603, 0701, 0703, 0706, 0708, 0713, 0714, 0801-0806, 0808, 0809, 0813, 090111, 090130,
0904, 0906-0908, 0910, 1000, 1101-1103, 1107, 1200, 1201, 1202, 1203, 1204, 1205, 1206, 1207,
1208, 1209, 1210-1212, 1214910, 1400, 1802, 1802, 2302-2306, 2308and2404. TheEnvironment
Health service institutions inspected products under HSheadings 0200, 0300, 0400, 0409, 0410, 0500,
0700, 0701, 0703, 0706, 0708, 0713, 0714, 0800-0806, 0808, 0809, 0813, 0900, 090111, 0904,
0906-0908, 0910, 1000, 1100-1103, 1107, 1201, 1202, 1204-1207, 1210-1212, 1300, 1500, 1600,
1700, 1800, 1801, 1900, 2000, 2100, 2200, 2402and2403. Latvia would accept exporters 'certificates
forprocessed foodproducts conforming toLatvia 'sregulations. Theofficial listofquarantinable pests
(plant) anddiseases (animals) wasprovided totheWorking Party.
73. TherepresentativeofLatviaagreedthatsanitaryandphytosanitarymeasuresshouldbepublished
inadvance ofimplementation toallow comments. ANational Food Centre would beestablished for
thedissemination ofinformation prior toLatvia 'saccession totheWTO. Heconfirmed that,from
thedateofaccession, Latvia intended tocomply fullywiththeobligations setoutintheTBTandSPS
Agreements.
Trade-Related Investment Measures (TRIMs)
74. Some members oftheWorking Party enquired about Latvia 'sintentions regarding notification
andelimination ofmeasures notinconformity withtheprovisions oftheWTO Agreement onTrade-
Related Investment Measures (TRIMs). Therepresentative ofLatvia saidthatLatvia didnotmaintain
anymeasuresinconsistentwiththeTRIMsAgreementandwouldnotinvokeprovisionsintheAgreement
thatprovide fortheprogressive elimination ofsuchmeasures within afixed period oftime.
State Trading Entities
75. Noting thatmore than500State-owned enterprises were involved inforeign trade in1994,
some members oftheWorking Party asked Latvia toprovide alistofallfirms wholly orpartly ownedWT/ACC/SPEC/LVA/1/Rev.1
Page29
ormanaged bytheState, specifying anyexclusive orspecial rights accorded totheseenterprises. Latvia
wasrequested tocomplete thequestionnaire onStatetrading. Amember feltthattheStateGrain Board
could meetthecriteria ofaState trading enterprise under Article XVII oftheGATT 1994 andthat
thedefinition might alsocover other enterprises engaged inagricultural production anddistribution,
including trade insugar; metals; alcoholic beverages; andthenatural monopolies managed bythe
State. Latvia wasalsoasked toprovide details onthetrading firms Interlatvija andLatvijas Labiba.
76. Therepresentative ofLatvia provided anotification onStatetrading totheWorking Party in
document WT/ACC/LVA/12 (Annex 3)describing thefunctioning oftheState Cereal Bureau. The
StateCereal Bureau wasaninstitution notengaged inregular grain trade; onoccasion grain hadbeen
boughttoreplenishreservesheldforfoodsecurityreasons.Domesticgrainwasfavouredinprocurement
fortheStatereserve.InstitutionssuchastheStateAlcoholMonopolyBoardandtheTobaccoDepartment
didnotengage intrade, butissued business licences toother operators intheirrespective areas. Other
State enterprises onlyheldthesame rights totrade astheprivate sector. Thetrading companies
Interlatvija andLatvijas Labiba werefullyprivatized in1991andtheGovernment hadnorôleintheir
activities.
77. TherepresentativeofLatviaconfirmedthathisGovernmentwouldapplyitslawsandregulations
governing thetrading activities ofState-owned enterprises andotherenterprises withspecial orexclusive
privileges infullconformity withtheprovisions oftheWTO Agreement, inparticular Article XVII
oftheGATT 1994 andtheUnderstanding onthatArticle andArticle VIIIoftheGATS.
FreeZones, Special Economic Areas
78. Therepresentative ofLatvia saidthataFreePortrégime existed inonepartoftheRigaTrading
Port, established bytheLaw"OnRigaFreePort", passed byParliament inNovember 1996. Projects
were under waytoestablish aFreePortrégime intheVentspils portandaSpecial Economic Zone
intheLiepaja region. TheLiepaja project wasdesigned topromote regional economic development
inadepressed region, andtohelprestructure andrebuild thetotally destroyed environment intheformer
Soviet Navy basearea. Theexisting andplanned FreePortrégimes andSpecial Economic ZoneprojectsWT/ACC/SPEC/LVA/1/Rev.1
Page30
were inalldetails corresponding tothenewLatvian Customs Code. Twolawsinpreparation "On
promotion ofdepressed regions" and"OnSpecial Economic Zones" would regulate andcoordinate
theprocess oftheestablishment ofSpecial Economic Zones inorder topromote economic development
inthedepressed areas.
Government Procurement
79. Some members oftheWorking Party asked about thestatus andcontent ofLatvian legislation
onpublic procurement including clarification oftheexceptions concerning thecaseof"exclusive rights"
and"urgent necessity" andLatvia 'sposition regarding possible membership ofthePlurilateral Trade
Agreement onGovernment Procurement. Intheirview, Latvia should commit itselftoaspecific date
bywhich tojointheAgreement onGovernment Procurement iftheoutcome ofthenegotiations on
anentity listwassatisfactory toall.
80. Therepresentative ofLatvia saidthatLatvia wasdrafting anewlawonPublic Procurement
based ontheAgreement onGovernment Procurement andtheUNCITRAL Model LawonProcurement.
TheLawwould allow theaward ofsupply contracts without bidorcompetition incases associated
withthecreation ofStatereserves ornational security anddefence inaccordance withspecific decisions
bytheCabinet ofMinisters, orincases ofprocurement oflessthanLs5,000 (local government or
Stateinstitutions) orLs3,000 (local government institutions). Single tendering could takeplace when
certain suppliers heldexclusive rights ongoods andservices; incircumstances ofurgent necessity;
when pastpurchases required thesamesource foradditional supplies; andfortheconclusion ofresearch
anddevelopment contracts.
81. TheLawonPublic Procurement waspassed byParliament on24October 1996. AnEnglish
version oftheLawwould beprepared andsubmitted totheWTO Secretariat. ThenewLawonPublic
Procurement, entering intoforce on1January 1997, stated thattendering withparticipation offoreign
competitors wasmandatory iftheexpected value ofconstruction works exceeded LS4million
(SDR 5million) ortheexpected value ofotherworks orsupplies exceeded Ls104,000 (SDR 130,000).
National treatment applied inthefieldofgovernment procurement.WT/ACC/SPEC/LVA/1/Rev.1
Page31
82. Therepresentative ofLatvia recalled thatLatvia wasgranted observer status intheCommittee
onGovernment Procurement on4June1996 (document GPA/W/16). Latvia intended tocommence
negotiations onaccession totheAgreement onGovernment Procurement inthesecond halfof1997
andhadbegun preparation oftheaccession documents. However, additional consultations would be
required withWTO experts before negotiations could start.
Transit
83. Some members oftheWorking Party asked Latvia todescribe therégime relating togoods
intransit. Thepresentative ofLatvia saidthatgoods carried intransit were checked attheborder.
Customs offices keptacopyofthecargo dispatch notesandcollected information forstatistical purposes.
Thesame procedures were followed forallgoods, including metals. Latvia charged notransit fee
atpresent, however, aconvoy fee-paidbythetransporter -waslevied ondangerous goods, tobacco,
foodproducts orperfume transported through Latvia. Certain non-dangerous goods weresubject to
asecurity deposit equal totheamount oftaxesdueonimportation ofsuchgoods inLatvia. Thesecurity
deposit would berefunded within twomonths provided thetransit regulations were adhered to.
Agricultural Policies
84. Some members oftheWorking Party asked Latvia toelaborate onitsagriculture régime,
includingtariffprotection,budgetarysupport,concessionalcredits,exportsubsidiesandtheprocurement
ofgrain. Some members noted tariffincreases onsome products andnewsupport measures ofrecent
date. Amember sought acommitment thatLatvia would eliminate export subsidies andpricecontrols
ongrain products.
85. TherepresentativeofLatviasaidthattheweightedaveragedutyinagriculturewas14.8percent,
byHStwo-digit product categories weighted average duties were asfollows:
Liveanimals 16.5percent
Meat andby-products 26.6 "WT/ACC/SPEC/LVA/1/Rev.1
Page32
Milk anddairy products; eggs; natural honey; etc. 27.1 "
Products ofanimal origin 12.1 "
Livetreesandother fruit 16.9 "
Vegetables, root-vegetables andtuberous plants 15.9 "
Fruit andnuts 0.8 "
Coffee, tea,mateandspices 0.5 "
Cereal crops 10.9 "
Products ofthemilling industry 18.5 "
Oilplant seeds andfruit 12.1 "
Lacquer, resin andother plant juices andextracts 13.3 "
Wadding material ofplant origin 15.0 "
Animal andvegetable fatsandoils 2.1 "
Meat products andmarine products 30.7 "
Sugar andsugar confectionery 9.2 "
Cocoa anditsderivatives 11.4 "
Cereal, flour, starch anddairy derivatives 20.7 "
Fruit, vegetable, nutderivatives, etc. 14.0 "
Miscellaneous foodstuffs 10.8 "
Non-alcoholic beverages, alcoholic drinks, vinegar 24.9 "
Food processing industry residues, ready-made animal feed 13.5 "
Tobacco anditssubstitutes 15.0percent
86. Therepresentative ofLatvia provided alistofsensitive products (Table 5)which attracted
highimport duties andforwhich rateshadbeenincreased in1994 inaccordance withtheproposals
oftheFarmers 'Union. Hestressed thattheproduction ofsensitive commodities accounted for
18percentoftotalemployment inLatvia andwasofvitalimportance totherural population.
Table 5:Sensitive products
HSCode Product Description
0102 Live bovine animals
0103 Live swineWT/ACC/SPEC/LVA/1/Rev.1
Page33
Table 5:Sensitive products
HSCode Product Description
0201 Meat ofbovine animals, fresh orchilled
0202 Meat ofbovine animals, frozen
0203 Meat ofswine, fresh, chilled
0204 Meat ofsheep orgoats, fresh, chilled orfrozen
0206 Edible offal ofbovine animals, swine, sheep, goats, horses, asses, mules orhinges fresh,
chilled orfrozen
0207 Meat ofedible offal, ofthepoultry ofheading No0105, fresh chilled orfrozen
0209 Pigfatfreeofleanmeat andpoultry fat(notrendered), fresh chilled, frozen, inbrine,
dried orsmoked
0210 Meat andedible meat offal, salted inbrine, dried orsmoked; edible flours andmeals of
meat ormeat offal
0401 Milk andcream, notconcentrated orcontaining added sugar orother sweetening matter
0402 Milk andcream, concentrated orcontaining added sugar orother sweetening matter
0403 Yoghurt
0404 Whey, whether ornotconcentrated orcontaining added sugar orother sweating matter not
elsewhere specified orincluded
0405 Butter andother fatsandoilsderived from milk
0406 Cheese andcurd
0407 Birds eggs, inshell, fresh
0603 Flowers fordecorative purpose
0701 Potatoes, fresh orchilled
0702 Tomatoes, fresh orchilled
0704 Cabbages, cauliflower, kohlrabi, kaleandsimilar edible brassicas, fresh orchilled
0706 Carrots, turnips, salad beetroot, salsify, celeriac, radishes andsimilar edible roots, fresh or
chilled
1001 Wheat andmeslin
1002 Rye
1003 Barley
1004 Oats
1008 Buckwheat, millet andcanary seed
1101 Wheat ormeslin flour
1102 Cereals flours other thanofwheat ormeslin
1103 Cereal grouts, meal andpellets
1104 Cereal grains otherwise worked, except riceofheading No1006
1105 Flour, meal andflakes ofpotatoes
1106 Flour andmeal ofthedried leguminous
1107 maltwhether ornotroosted
1108 Starches; insulin
1209 Seeds, fruitandspores ofakindused forsowing
1501 Lard, other pigfatandpoultry fat,rendered, whether ornotpressed
1502 Fatsofbovine animals, sheep orgoats, raworrenderedWT/ACC/SPEC/LVA/1/Rev.1
Page34
Table 5:Sensitive products
HSCode Product Description
1512 Sunflower -seed, safflower orcotton seed
1517 Margarine, edible mixtures orpreparations ofanimal orvegetable fatsoroiloroffractions
ofdifferent fats
1601 Sausages andsimilar products, ofmeat, meat offal orblood
1602 Other prepared orpreserved meat offal orblood
1701 Cane orbeetsugar andchemically pure sucrose, insolid form
1703 Molasses resulting from theextortion orrefining ofsugar
1704 Confectionery from sugar notcontaining cacao
1806 Cocoa powder, containing other sugar orother sweetening matter other
19 Products from flour, starch andmilk
2001 Vegetables, fruit, nutsandother edible parts ofplants, prepared orpreserved byvinegar or
acetic acid
2002 Tomatoes, prepared orpreserved otherwise thanbyvinegar oracetic acid
2003 Mushrooms andtruffles, prepared orpreserved otherwise thanbyvinegar oracetic acid
2004 Other vegetables prepared orpreserved otherwise thanbyvinegar oracetic acid, frozen
2005 Other vegetables prepared orpreserved otherwise thanbyvinegar oracetic acid, notfrozen
2006 Fruits, nuts, fruit-peel andother parts ofplants, preserved bysugar
2007 Jams, fruitjellies, marmalades, fruitornutpure andfruitornutpastes, being cooked
preparations, whether ornotcontaining added sugar orother sweetening matter
2009 Fruit juices andvegetable juices, unfermented andnotcontaining added spirit, whether or
notcontaining added sugar orother sweetening matter
2203 Beer from malt
2204 Wine offresh grapes
2207 Undenaturated ethyl alcohol ofanalcoholic strength byvolume 80% andhigher
2208 Undenaturated ethyl alcohol ofanalcoholic strength byvolume lessthan80% andlower
2302 Bran, sharps andother residues
2309 Preparations ofakindused inanimal feeding
87. Regarding domestic support, therepresentative ofLatvia saidthatLatvia maintained amarket
pricesupport forflax.According totheclassification suggested indocument WT/ACC/4, Statesupport
forflaxwasconsidered asprovided intheformofdirect payments totheproducers andinformation
wasgiven insupporting tables DS:1 andDS:9. Support forflaxwould besubject toreduction
commitments under theWTO Agreement onAgriculture. Subsidies forcereals inspecific regions,
seedmaterials andinputs weredeminimis support. Subsidies forpotatoes, cattle andseeds werealso
deminimis support. Latvia considered financing ofagricultural research, pestanddisease control,
advisory services andinfrastructure as"green box"measures. Farmers hadaccess tocredits atmarket
interest rates through aWorld Bank facility operated through theLatvian Agricultural Finance
Corporation. TheState itself didnotprovide credits butissued loanguarantees.WT/ACC/SPEC/LVA/1/Rev.1
Page35
88. Therepresentative ofLatvia saidthattheGovernment guaranteed theprice offoodgrain
purchased fortheStatereserve. In1995theprice guarantee covered 32,000 tonsbutonly5,700 tons
wereactually purchased andtheStateGrain Reserve hadimported 14,000 tons. Domestic grain prices
hadrecently beenlower thantheworld market prices. Inresponse toaspecific question onelimination
ofthese guaranteed prices, therepresentative ofLatvia saidthatLatvia would consider thepossibility
ofsettling thematter within twoyears afteraccession totheWTO.
89. TherepresentativeofLatviaaddedthatimportedagriculturalinputsinexportedfinishedproducts
wereexempt fromimport duties andVAT. Suchimports accounted for2.2percentofLatvia 'simports
ofagricultural products in1995. Before regaining independence, Latvia hadexported agricultural
products toother republics oftheUSSR atprices andquantities guaranteed bytheformer system.
Latvia hadprovided export subsidies formilkpowder, canned whole milk, cheese, butter andryein
1994 and1995. Hestressed thatLatvia wasnotprepared toeliminate export subsidies, butwould
reduce them consistently withtheWTO Agreement.
FishandFishProducts
90. Therepresentative ofLatvia saidthattheweighted average tariffonfishandcrustaceans falling
withinHSChapter3amountedto8.9percent.Preparedfishproducts(HSChapter16.04)andprepared
marine products (HSChapter 16.05) wereclassified assensitive products andthussubject tohighimport
duties intheLatvian Customs Tariff.
Trade inCivil Aircraft
91. Therepresentative ofLatvia saidthatLatvia would implement theAgreement onTrade inCivil
Aircraft without exceptions ortransitional period atthetimeofaccession.
Trade-Related Intellectual Property Rights (TRIPS)
92. Some members oftheWorking Party asked Latvia tocompare itsexisting régime withthe
WTO Agreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPS). Specific questions
addressed thetimeschedule forthefullimplementation oftheTRIPS Agreement, theenforcementWT/ACC/SPEC/LVA/1/Rev.1
Page36
ofintellectual property rights, theprotection ofcopyright andtheacceptance oftheBerne
Convention (1971) andtheRome Convention.
93. Therepresentative ofLatvia saidthat,asstated indocument WT/ACC/LVA/8 (pp.39-40),
existing legislation wasinconformity withtheWTO Agreement onTRIPS withtheexception ofthe
protection ofgeographical indications andlayout-designs (topographies) ofintegrated circuits -which
Latviawascommittedtoimplementbytheendof1995underabilateralagreement-andPartIII,sections
3and4oftheTRIPS Agreement (provisional andborder measures) which would beimplemented
by1999. Eachlawpertaining tointellectual property included ageneral clause stating thattheprovisions
ofaninternationalagreementprevailedovernationallegislationincasesofcontradiction.Theprovisions
oftheTRIPS Agreement would thusprevail overdomestic lawonLatvia 'saccession totheWTO.
Thecourt system wascurrently under reform tostrengthen itscapability toenforce intellectual property
rights.
94. Therepresentative ofLatvia saidthatLatvia adopted aCopyright LawinMay1993 which
includedprovisionsoncomputerprogrammesandprotectionofdatabases.However,thebasicprinciples
regarding rental rights forcomputer programmes would berefined toensure better implementation.
TheCriminal Code wasamended inOctober 1995inregard toviolation ofcopyright andneighbouring
rights. Latvia acceded totheBerne Convention inAugust 1995.
Policies Affecting Trade inServices
95. Therepresentative ofLatvia provided adescription ofLatvia 'sservices régime indocument
WT/L/63 (L/7526/Add.3). Specific questions bymembers oftheWorking Party focused onregulations
inthefinancialsectorandclarificationoflawswithimportantprovisionsregardinginvestmentinservices
sectors.
96. Withregard tothefinancial sector, therepresentative ofLatvia stated thatlicensing requirements
werethesamefordomestic andforeign entities. However, procedurally, anapplication fromaforeign
banktoestablish abranch orrepresentative office wasconsidered bytheBoard ofGovernors ofthe
Bank ofLatvia while other applications wereconsidered bytheExecutive Board oftheBank ofLatvia.
Applications could bedismissed ifthedocuments submitted forregistration didnotmeet thelegal
requirements orifthefoundation ofabankwasconsidered nottobeintheinterest ofLatvia.WT/ACC/SPEC/LVA/1/Rev.1
Page37
97. TherepresentativeofLatviasaidthatParliamenthadadoptedanewLaw"OnCreditInstitutions"
inOctober 1995. Under theLaw"Oninsurance" foreign investors could perform insurance activities
inLatvia through theestablishment ofcompanies orpartnerships withLatvians. Heconfirmed that
licences wereissued exclusively foronetypeofinsurance activity; insurers involved inlifeinsurance
wereprohibited fromoffering non-life insurance andviceversa. However, therestriction didnotextend
toreinsurance operations. Hestated thatthecriteria forregistration ofcredit institutions orenrolment
ofbroker companies were notinconsistent withArticle XVIoftheGeneral Agreement onTrade in
Services. Therepresentative ofLatvia saidthatmany service activities were subject tolicensing
according toRegulation No.321of31October 1995 "Onlimitation ofEntrepreneurial Activity".
Licensing hadbeenintroduced toensure aprofessional levelofservices andtheprotection ofconsumers.
Foreigners weregranted national treatment intheissuance oflicences tosupply individual professional
services. However, theLaw"OnEntrepreneurial Activity" allowed licences forsworn auditors, sworn
landsurveyors, sworn estimate practice, inspector activities, legaladviser practice, notary practice,
coach, sports instructor andspecialist practice, pharmaceutical practice, insurance mediation services
andother entrepreneurship mentioned inpart4ofitsArticle 32tobeissued onlytophysical persons.
Heconfirmed thatLatvia hadnolegislation onsafeguard measures related totrade inservices and
thatnorestrictions were applied ontransfers andcurrent payments forservices.
98. Therepresentative ofLatvia saidthattheStateenterprise "Latvijas Pasts" (Latvian Post) held
monopolyrightsonpostalservices."Lattelekom",ajointventurebetweenTiltsCommunications(British
andFinnish ownership) andtheLatvian Government, hadbeengranted anexclusive rightfor20years
toprovide telecommunication services.
99. Therepresentative ofLatvia noted thatLatvia 'sfreetrade agreements hadtraditionally not
covered trade inservices. However, Latvia hadnegotiated anAssociation (Europe) Agreement with
theEuropean Union, signed on12June1995, which would include tradeinservices andestablishment
issues. Latvia hadsigned agreements onemployment offoreign labour withGermany andSweden.
Heconfirmed thatLatvia wasnotapartytoanyagreement concerning mutual recognition ofprofessional
qualifications.WT/ACC/SPEC/LVA/1/Rev.1
Page38
Transparency
Onemember suggested:
[100. Therepresentative ofLatvia stated thatatthelatest from thedateofaccession, alllaws, and
other normative actsrelated totrade would bepublished intheOfficial Journal promptly. Hefurther
stated thatnolaw,ruleetc.related tointernational trade would become effective prior tosuch
publication.
101. Therepresentative ofLatvia saidthatatthelatest upon entry intoforce oftheProtocol of
Accession, Latvia would submit allnotifications (other thanthose required tobemade onanadhoc
basis) required byanyAgreement constituting partoftheWTO Agreement.]
Trade Agreements
102. Some members oftheWorking Party inquired about Latvia 'spreferential trade agreements.
Some members wereconcerned about theconsistency withArticle XXIV oftheGATT 1994 offree
trade agreements which excluded trade inagricultural products.
103. Therepresentative ofLatvia saidthatagreements fortheavoidance ofdouble taxation and
prevention offiscal evasion hadentered intoforcewithCanada, theCzech Republic, Denmark, Estonia,
Finland, Iceland, Lithuania, theNetherlands, Norway, Poland andSweden. Latvia hadentered into
intergovernmental agreements ontrade andeconomic cooperation, providing form.f.n. status, with
Armenia,Australia,Azerbaijan,CzechRepublic,Hungary,India,Moldova,Poland,RussianFederation,
Tadjikistan, Turkmenistan, Ukraine, United States andUzbekistan. Freetrade agreements hadbeen
concluded withtheEuropean Union, EFTA, theCzech Republic, theSlovak Republic, Slovenia, and
atrilateral freetradeagreement withEstonia andLithuania. These trading partners accounted fornearly
60percentofLatvia 'sforeign trade in1996.
104. AEurope Agreement between theEuropean Union andLatvia wassigned on12June1995.
TheFreeTrade Agreements withNorway andSwitzerland werereplaced byaFreeTrade Agreement
between Latvia andEFTA which entered intoforce on1June1996. Thisagreement wasconcluded
inaccordance withtheArticle XXIV oftheGATT 1994 andhadbeennotified totheWTO. TheWT/ACC/SPEC/LVA/1/Rev.1
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trilateral Protocol onTrade inAgricultural Products between Latvia, Estonia andLithuania wassigned
on16June1996 andwould enter intoforce on1January 1997.
105. Therepresentative ofLatvia saidthatthefreetrade agreement withtheEuropean Union had
beennotified totheWTO inJuly1995 indocument WT/REG/7/1. Latvia wascommitted toreduce
tariffs onagricultural imports fromtheEuropean Union inequal annual stepsbetween 1995and2000.
Reductions weregranted through tariffquotas onmeatandmeatproducts, yoghurt, flowers, cabbage,
cauliflower andmargarine while thetariff reductions applied forunlimited quantities ofvarious fruit
andfruitjuices, petfood, hairandsome processed products. Themain Latvian products subject to
concessions intheEUwere meatandmeatproducts, dairy products, chocolate andsweets.
106. Therepresentative ofLatvia stated thathisGovernment would observe theprovisions ofthe
WTO including Article XXIV oftheGATT 1994andArticle VoftheGATS initstrade agreements,
andwould ensure thattheprovisions oftheseWTO Agreements fornotification, consultation andother
requirements concerning preferential trading systems, freetrade areas andcustoms unions ofwhich
Latvia wasamember weremetfromthedateofaccession, insofarastheseprovisions hadnotalready
beenmetbyoneoftheother Parties tosuchanagreement.
Conclusions
107. TheWorking Party tooknoteoftheexplanations andstatements ofLatvia concerning itsforeign
trade régime, asreflected inthissummary. TheWorking Party tooknoteoftheassurances given by
Latviainrelationtocertainspecificmatterswhicharereproducedinparagraphs.................................
ofthissummary. TheWorking Party tooknoteofthecommitments given byLatvia inrelation to
certain specific matters which arereproduced inparagraphs ............................ ofthissummary.
TheWorking Party tooknotethatthese commitments hadbeenincorporated inparagraph ...ofthe
Protocol ofAccession ofLatvia totheWTO.
108. Having carried outtheexamination oftheforeign trade régime ofLatvia andinthelightof
theexplanations, commitments andconcessions made bytherepresentative ofLatvia, theWorking
Party reached theconclusion thatLatvia beinvited toaccede totheMarrakesh Agreement Establishing
theWTO under theprovisions ofArticle XII.Forthispurpose, theWorking Party hasprepared the
draftDecision andProtocol ofAccession reproduced intheAppendix tothisreport, andtakes noteWT/ACC/SPEC/LVA/1/Rev.1
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ofLatvia 'sSchedule ofSpecific Commitments onServices (document .......) anditsSchedule of
Concessions andCommitments onGoods (document .......) thatareannexed totheProtocol. Itis
proposed thatthese textsbeadopted bytheGeneral Council when itadopts thereport. When the
Decision isadopted, theProtocol ofAccession would beopenforacceptance byLatvia which would
become aMember thirty daysafteritaccepts thesaidProtocol. TheWorking Party agreed, therefore,
thatithadcompleted itswork concerning thenegotiations fortheaccession ofLatvia totheMarrakesh
Agreement Establishing theWTO.
[Tobecompleted ]WT/ACC/SPEC/LVA/1/Rev.1
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APPENDIX
ACCESSION OFLATVIA
Draft Decision
TheGeneral Council,
Having regard totheresults ofthenegotiations directed towards theestablishment oftheterms
ofaccession oftheRepublic ofLatvia totheMarrakesh Agreement Establishing theWorld Trade
Organization andhaving prepared aProtocol fortheAccession ofLatvia,
Decides, inaccordance withArticle XIIoftheMarrakesh Agreement Establishing theWorld
Trade Organization, thattheRepublic ofLatvia mayaccede totheMarrakesh Agreement Establishing
theWorld Trade Organization ontheterms setoutinthesaidProtocol.WT/ACC/SPEC/LVA/1/Rev.1
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PROTOCOL OFACCESSION OFLATVIA
TOTHE MARRAKESH AGREEMENT ESTABLISHING
THE WORLD TRADE ORGANIZATION
DRAFT
TheWorld Trade Organization (hereinafter referred toasthe"WTO"), pursuant totheapproval
oftheGeneralCounciloftheWTOaccordedunderArticleXIIoftheMarrakeshAgreementEstablishing
theWorld Trade Organization (hereinafter referred toas"WTO Agreement"), andtheRepublic of
Latvia (hereinafter referred toas"Latvia"),
Taking noteoftheReport oftheWorking Party ontheAccession ofLatvia totheWTO in
document WT/ACC/LVA/.... (hereinafter referred toasthe"Working Party Report"),
Having regard totheresults ofthenegotiations ontheaccession ofLatvia totheWTO,
Agree asfollows:
PartI-General
1. Upon entry intoforce ofthisProtocol, Latvia accedes totheWTO Agreement pursuant to
Article XIIofthatAgreement andthereby becomes aMember oftheWTO.
2. TheWTOAgreementtowhichLatviaaccedesshallbetheWTOAgreementasrectified,amended
orotherwise modified bysuchlegalinstruments asmayhaveentered intoforce before thedateofentry
intoforce ofthisProtocol. ThisProtocol, which shall comprise thecommitments referred toin
paragraph 86oftheWorking Party Report, shallbeanintegral partoftheWTO Agreement.
3. Except asotherwise provided forintheparagraphs referred toinparagraph 86oftheWorking
Party Report, those obligations intheMultilateral Trade Agreements annexed totheWTO Agreement
thataretobeimplemented overaperiod oftimestarting withtheentry intoforce ofthatAgreement
shallbeimplemented byLatvia asifithadaccepted thatAgreement onthedateofitsentry intoforce.WT/ACC/SPEC/LVA/1/Rev.1
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4. Latviamaymaintainameasureinconsistentwithparagraph1ofArticleIIoftheGATSprovided
thatsuchameasure isrecorded inthelistofArticle IIExemptions annexed tothisProtocol andmeets
theconditions oftheAnnex totheGATS onArticle IIExemptions.
PartII-Schedules
5. TheSchedules annexed tothisProtocol shall become theschedule ofConcessions and
Commitments annexed totheGeneral Agreement onTariffs andTrade 1994 (hereinafter referred to
asthe"GATT 1994") andtheSchedule ofSpecific Commitments annexed totheGeneral Agreement
onTrade inServices (hereinafter referred toas"GATS") relating toLatvia. Thestaging ofconcessions
andcommitments listed intheSchedules shallbeimplemented asspecified intherelevant partsofthe
respective Schedules.
6. Forthepurpose ofthereference inparagraph 6(a)ofArticle IIoftheGATT 1994tothedate
ofthatAgreement, theapplicable dateinrespect oftheSchedules ofConcessions andCommitments
annexed tothisProtocol shallbethedateofentry intoforce ofthisProtocol.
PartIII-Final Provisions
7. ThisProtocol shallbeopenforacceptance, bysignature orotherwise, byLatvia until.........
8. ThisProtocol shallenter intoforce onthethirtieth dayfollowing thedayofitsacceptance.
9. ThisProtocol shallbedeposited withtheDirector-General oftheWTO. TheDirector-General
oftheWTO shallpromptly furnish acertified copyofthisProtocol andanotification ofacceptance
thereto pursuant toparagraph 7toeachmember oftheWTO andLatvia.
10. ThisProtocol shallberegistered inaccordance withtheprovisions ofArticle 102oftheCharter
oftheUnited Nations.
11. Done atGeneva this...dayof....onethousand ninehundred andninety seven, inasingle
copyintheEnglish, French andSpanish languages eachtextbeing authentic, except thataSchedule
annexed hereto mayspecify thatitisauthentic inonlyoneormore ofthese languages.WT/ACC/SPEC/LVA/1/Rev.1
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ANNEX
SCHEDULE -REPUBLIC OFLATVIA
PartI-Goods
[Tobecirculated ]
PartII-Services
[Tobecirculated ]
[Tobecompleted]