RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/LVA/32
30 September 1998
(98-3835)
Working Party on the
Accession of Latvia
REPORT OF THE WORKING PARTY ON
THE ACCESSION OF LATVIA TO THE
WORLD TRADE ORGANIZATION1
Introduction
1. The Government of Latvia's request for accession to the General Agreement on Tariffs andTrade (GATT 1947) was circulated to Contracting Parties in November 1993.  At its meeting on
17 December 1993, the GATT 1947 Council of Representatives established a Working Party to
examine the application of the Government of Latvia to accede to the General Agreement under
Article XXXIII, and to submit to the Council recommendations which may include a draft Protocol ofAccession.  Membership of the Working Party was open to all Contracting Parties indicating their
wish to serve on it.  In pursuance of the Ministerial Decision of 14 April 1994 on Acceptance of and
Accession to the Marrakesh Agreement Establishing the World Trade Organization (WTO) and to the
Decision of 31 May 1994 of the Preparatory Committee for the WTO, the Working Party examined
the application of Latvia for membership in the WTO and agreed to pursue the market accessnegotiations for goods, including an agricultural country schedule, and for services.  In pursuance of
the Decision adopted by the WTO General Council on 31 January 1995, the existing GATT 1947
Accession Working Party was transformed into a WTO Accession Working Party.  The terms of
reference and the membership of the Working Party are reproduced in document
WT/ACC/LVA/6/Rev.2.
2. The Working Party met on 28-29 March and 13 November 1995;  22 March and
16 September 1996;  27 February 1997;  and 29 September 1998 under the Chairmanship ofMr. F. Theilgaard (Denmark).
Documentation
3. The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the
Foreign Trade Regime of Latvia (L/7526 with A ddenda 1, 2 and 3) and the questions submitted by
Members on the foreign trade regime of Latvia, together with the replies thereto (WT/L/49 andCorrigendum 1 and Addendum 1;  WT/ACC/ LVA/3, WT/ACC/LVA/4, WT/ACC/LVA/8 and
Corrigendum 1;  WT/ACC/LVA/12, WT/ACC/LVA/16) and other information provided by the
Latvian authorities (WT/ACC/LVA/5, WT/A CC/LVA/20, WT/ACC/LVA/27, WT/ACC/LVA/28,
WT/ACC/LVA/29, WT/Spec(95)6;  WT/SPEC/26).  The Government of Latvia made available to the
Working Party the following documentation:
- Law "On Judicial Power" of 18 June 1994;
- Law on Customs Duty with Annexes I (Impor t duty tariffs) and II (Export duty tariffs);
- Latvia's National Tariff Schedule;
- Law on the Bank of Latvia;
                                                     
1 The Working Party adopted the Report on an ad referendum  basis.WT/ACC/LVA/32
Page 2
- Law on Credit Institutions;
- Law "On Competition" of 18 June 1997;
- Law "On Protection of Topographies of Semiconductor Products" of 31 March 1998;
- Draft Law "On Trademarks and Indi cations of Geographical Origin";
- Law on Trademarks;
- Law on Industrial Design Protection;- Patent Law;
- Draft Regulations of the Cabinet of Ministers "Regulation Regarding Customs Control
Measures on Protection of Intellectual Property";
- Draft "Personal Data Protection Law";
- Excerpt of the Criminal Code of 6 October 1955 regarding Part III Section 5 of the TRIPS
Agreement (criminal procedures);
- Law "On Radio and Television" of 24 August 1995 with amendments;- Resolution and Law on Bookkeeping;
- Draft Commercial Law;
- Decree and Law on Joint Stock Companies;
- Resolution and Law on Income Tax;
- Resolution and Law on Limited Liability Companies;- Resolution and Law on Foreign Investment in the Republic of Latvia;
- Resolution and Law on Excise Tax;
- Law on Excise Tax on Mineral Oils;
- Resolution and Law on Turnover Tax;
- Law on Value-Added Tax of 9 March 1995 with amendments of 13 November 1997
(consolidated text);
- Law "On Enterprise Register" of 20 November 1990 with amendments;
- Resolution and Law of the Republic of Latvia on Entrepreneurial Activity;
- Regulation of the Cabinet of Ministers No. 348 of 7 October 1997 "On Licensing of Separate
Forms of Entrepreneurial Activity";
- Regulation of the Cabinet of Ministers No. 35 1 "Regulations of Circulation of Tobacco and
Tobacco Products" of 7 October 1997;
- Regulation on Food;
- Regulations of the Cabinet of Ministers No. 208 of 1 November 1994 on the Order of
Establishment and Administration of Import and Export Tariff Quotas;
- Regulations of the Cabinet of Ministers No. 24 of 17 January 1995 On Order By Which the
Special Authorizations (Licences) Shall Be Issued in Accordance With the Quotas of
Customs Tariffs;
- Regulations of the Cabinet of Ministers No. 20 of 17 January 1995 Regulations to Protect the
Domestic Market for Food Stuff Produced in Latvia;
- Customs Law of 11 June 1997;
- Section G of the Customs Law on Provisions  of the Application of Customs Duties;
- An evaluation of the compliance of this legislation with provisions in the Agreement on the
Implementation of Article VII of the GATT 1994 and legislation of the European
Communities;
- Regulations of the Cabinet of Ministers No. 27 of 31 January 1995 On Determining the
Customs Value of Import and Export Goods or Other Items;
- Regulation of the Cabinet of Ministers No. 428 of 17 December 1997 Procedure for
Calculating the Customs Value of Goods;
- Regulations of the Cabinet of Ministers No. 87 of 12 April 1994 On the Mandatory
Certification of Foodstuff, Perfumery and Toys;
- Programme of Reforms for the National Economy of Latvia "Latvia 2000";- Regulations of the Cabinet of Ministers No. 37 of 25 January 1994 On State Monopoly of
Alcohol and Alcoholic Beverages;WT/ACC/LVA/32
Page 3
- Regulations of the Cabinet of Ministers No. 248 of 20 June 1996 On State Monopoly of
Alcohol and Alcoholic Beverages;
- Regulation by the Bank of Latvia On Granting Licences (Permissions) to Perform Activities
of Credit Institutions;
- Regulation by the Bank of Latvia On Re gulation on Amending the Charter, Changing
Shareholders, the Initial Capital, the Management, the Chief Accountant, the Legal Address,the Name of a Credit Institution, and Undertakin g Merger or Split-up of Credit Institutions;
- Regulations of the Cabinet of Ministers No. 185 of 23 August 1994 On Formation of Prices
and Tariffs of Goods and Services;
- Law on Foreign Investment in the Republic of Latvia;
- the Official List of Quarantinable Pests;
- Founding Law of the Latvian Food Centre;
- Statutes of Information, Consultation and Training Centre of Goods and Services;- Law on Safety on Products, Services and Liability of Producer, Supplier of
26 September 1996;
- Law on Uniformity of Measurements of 11 March 1997;
- Law on Conformity Assessment of 20 August 1996;
- Law of the Republic of Latvia On Government and Municipal Procurement, effective
1 January 1997;
- Law on Pharmaceutical Operations of 27 April 1993;
- Law "On Pharmaceutical Activities" of 24 April 1997;
- Law on Veterinary Medicine of 6 March 1995;
- Law "On Supervision of Food Circulation" of 19 February 1998;- Regulations of the Cabinet of Minister s No.349"On Labelling of Foodstuffs" of
7 October 1997;
- Regulations of the Cabinet of Ministers N o. 170"On Standing Order for Food Additives" of
6 May 1997;
- Law on the Protection of Consumer Rights of 28 October 1992;- Law on Plant Protection of 20 October 1994;
- Regulation On the Indication of Durability Da te of Pre-packaged Foodstuffs (25 June 1996);
- Regulation On Procedure of Recognition in the Republic of Latvia of Conformity Assurances
and Approvals Issued Abroad in Mandatory Area (24 December 1996);
- Regulations of the Cabinet of Ministers No. 295 "On Procedure of Conformity Attestation of
Building Materials and Construction Products in Mandatory Area" of 5 August 1997;
- Regulation No. 463 of 24 December 1996 On th e Authorization of Testing and Calibration
Laboratories, Certification and Inspection Bodies in the Mandatory Area;
- Regulations of the Cabinet of Ministers No. 465"On Accreditation Testing and Calibration
Laboratories, Certification and Inspection Bodies" of 24 December 1996;
- Regulations of the Cabinet of Ministers No. 140 "On the Electrical Safety of Equipment" of
21 April 1998;
- Regulations of the Cabinet of Ministers No.161 "On the Electromagnetic Compatibility of
Apparatus" of 5 May 1998;
- Regulation of the Cabinet of Ministers No. 399 "On the Conformity Assessment of
Foodstuffs, Cosmetics and Toys" of 2 December 1997;
- Draft Regulations of the Cabinet of Ministers "On Labelling of Textiles";- Resolution of the Cabinet of Ministers No. 12 "On Order, How the Ministry of Economy
Coordinates the Exchange of Information in the Area of Technical Barriers to Trade and
Sanitary and Phytosanitary Measures" of 28 October 1997;
- Regulation of the Cabinet of Ministers No. 106 of 25 March 1997 On Regulations of Quotas
of Customs Tariffs;
- Law on Agriculture;
- Law "On Latvia Grain Market and State Gr ain Reserve" of 18 May 1993 with amendments;
- Conception on Use of Agricultural Subsidies and the Program Rationales for 1998-2002;WT/ACC/LVA/32
Page 4
- Latvia's Import Totals under each Harmonized System 8-digit category (f.o.b. values);  and
- Latvia's Import Data for 1994.
Introductory statements
4. The representative of Latvia stated that Latvia had achieved considerable results in
transforming a centrally-planned economy to a market-based economy since restoration of
independence in 1991.  Latvia had drafted several new trade laws and regulations modelled on WTOprinciples to establish a uniform and predictable trading environment for importers, exporters and
investors.  The fifteen countries of the European Communities had, counted as one entity, become
Latvia's principal trading partner.  External trade relations were emphasized by Latvia's geographical
position between East and West;  several bilateral trade agreements based on the most-favoured-
nation principle had been concluded and more were in progress.  Latvia had also concluded free trade
agreements with the European Communities and other countries in Europe.  However, bilateral and
regional arrangements alone could not provide the necessary stability for external trade relations.Latvia had therefore made a strong commitment to become a Member of the WTO.  The WTO
principles of national and MFN treatment had been incorporated in national legislation with particular
attention to transparency in the publication of all laws and regulations and a tariff-based trade regime.
Minimal tariffs were imposed on imported raw materials, spare parts and capital goods, the basic
average MFN import tariff was 15 per cent, and export tariffs were imposed only on some rawmaterials.  Non-discrimination between imported and domestically produced items applied in the
imposition of excise taxes and the turnover tax, the latter had been replaced by a value-added tax.
Any person or enterprise registered in Latvia could perform any legal import operation.  Exports of
spirits, ferrous and non-ferrous metals were subject to licensing with no underlying quotas.  Finally,
he pointed out that Latvia's effort to become a Member of the WTO was supported by all the majorpolitical institutions and that a broad national consensus existed regarding the importance of WTO
membership and the pursuit of liberal trade policies.
5. Many members of the Working Party welcomed Latvia's request for accession to the WTO
and expressed their readiness to work with Latvia in elaborating terms of accession that would support
the programme of transition to a market-based economy and Latvia's integration into the multilateraltrading system.  Some members welcomed the documentation provided and the statement made by the
representative of Latvia.  They also said that they looked forward to a detailed examination of Latvia's
policies and of the reasons for the adoption of certain measures, e.g. licensing requirements.  Some
members of the Working Party noted that Latvia had raised tariffs and introduced new trade
restrictions after the request for accession had been submitted and that further restrictions appeared tobe under consideration.  This was a disturbing trend, as applicant countries were expected not to
implement any measures during accession negotiations that could be considered inconsistent with the
WTO or that alter the basis for negotiations.  Latvia was accordingly requested to remove these
measures and notify the Working Party of proposed new restrictions and to supply all new relevant
laws and regulations to its members.
6. The Working Party then proceeded to review the economic policies and foreign trade regime
of Latvia and the possible terms of a draft Protocol of Accession to the WTO.  The views expressedby members of the Working Party are summarized below in paragraphs 7 to 130.WT/ACC/LVA/32
Page 5
ECONOMIC POLICIES
Foreign exchange and payments
7. The representative of Latvia said that his country had established one of the most liberal
foreign exchange regimes in the world.  Latvia had been a member of the International Monetary
Fund (IMF) since 1992.  The national currency - the Lats - was freely convertible, backed by thecurrency reserves of the Bank of Latvia.  Foreign exchange and local currency could be brought into
or taken out of Latvia in unlimited amounts.  Foreign entrepreneurs were free to repatriate profits in
any currency having paid the applicable taxes.  Corporate income tax amounted to 25 per cent,
incomes of natural persons were taxed at 25 or 35 per cent and a 10 per cent withholding tax was
levied on dividend payments to non-residents.  Some members welcomed the fact that the Lats was
freely convertible and stressed the importance of continuing current policies.
8. The representative of Latvia stated that Latvia had notified the International Monetary Fund
that it had accepted the obligations of Article VIII, sections 2, 3 and 4 of the IMF Articles of
Agreement with effect from 10 June 1994.  By accepting the obligations of Article V III, Latvia gave
confidence to the international community that it would pursue sound economic policies that would
obviate the need to restrict payments and transfer s for current international transactions, and thereby
contribute to a multilateral payments system free of restrictions.
Investment regime
9. Some members of the Working Party asked Latvia to describe the basic provisions of
legislation regulating investment and in particular identify any restrictions or registration measures
affecting foreign investment.
10. The representative of Latvia referred to the Law "On Entrepreneurial Activity" which
provided for licensing of several types of business activities (see "Trading Rights", paragraphs 31 to
40).  Such licences were issued for enterprises registered in Latvia on a non-discriminatory basis,
irrespective of nationality, to any applicant meeting the specific requirements.  All issues pertinent to
foreign investment - registration, investment protection, taxation, repatriation, dispute settlement,
restrictions on investment, safeguards and the applicability of international treaties - were regulatedthrough the Law "On Foreign Investment in the Republic of Latvia".
11. The representative of Latvia added that the Law on Foreign Investment in the Republic of
Latvia stated that foreign investors were granted the rights and duties provided for by the national
laws.  The Law on Foreign Investment contained no re strictions on foreign investment in any sector of
the national economy.  The Government had amended the Law on Foreign Investment in April 1996,deleting its Articles 3, 5 and 6 and thus terminating virtually all restrictions on foreign investment.
On 4 September 1996, Parliament had approved this amendment and requested the Government to
prepare adjustments to certain other laws to bring them in line with the new Law on Foreign
Investment.  As a result of this review, the limit on foreign ownership in radio and television
companies in the Law on Radio and Television had been raised from 20 per cent to 49 per cent.
Foreign ownership of wood cutting (logging) comp anies  and gambling business was also limited to
49 per cent in accordance with the Law on Forestry and the Law on Lotteries and Gambling,respectively. Laws on land ownership allowed wholly -owned foreign companies to own land if the
owners of the company were from countries with which Latvia had signed investment promotion and
protection agreements (31 countries at present).  Legal or private persons from other countries could
own land if at least 51 per cent of the shares in the company registered in Latvia belonged to Latvian
citizens or to foreigners from countries with whic h investment protection agreements had been signed.
On 5 December 1996, the Saeima had passed amendments to the Law on Land Privatization in Rural
Regions and on 8 May 1997 amendments to the Law on Land Reform in the Republic of Latvia CitiesWT/ACC/LVA/32
Page 6
which liberalized the land market in Latvia to a considerable extent.  According to the new rules,
statutory companies registered in the Enterprise Register could obtain land in rural areas and land
under State or municipal ownership in cities without restriction even when more than half their share
capital was owned by foreign persons.  Legal en tities could obtain land ownership with only few
restrictions.
State ownership and privatization
12. Some members of the Working Party requested details concerning the pace of privatization in
Latvia, noting an initial statement that privatization of agriculture had been completed by 1995 and
that 75 per cent of State-owned enterprises were privatized by 1996.  Latvia was also asked to
enumerate sectors or enterprises where State ow nership would be retained for a long period or
permanently.  Questions were also raised concerning the participation of foreign investors.  Some
members requested a report from Latvia on progress achieved to date in its privatization programme.
In addition, Latvia should be prepared to provide information on a periodic basis on its privatizationefforts, economic reforms, and implementation of any transitional arrangements negotiated in the
Protocol of Accession.
13. The representative of Latvia said that no particular sector would be excluded from
privatization. The main considerations were to improve company performance and to avoid the
creation of private monopolies.  A "List of Currently Non-Privatizable State Specialized AgriculturalEnterprises" was linked to restitution of property to former owners.  Enterprises operating in industry,
agriculture, trade and construction services would be privatized first, while sectors such as medical
care, social welfare services, medicine wholesale and certain agricultural sub-sectors would be
privatized over a longer time period.  The Government had also decided that a sell-off of
infrastructure (roads, railway, public transport, po stal services, etc.) would not be reasonable during
the first years of privatization.  Latvia provided a document (WT/L/49/Add.1) on privatization of
agriculture.  In July 1996, from a total of 613 agricultural statutory associations created at the first
stage of privatization of former collective and State farms by allocating shares according to initial
contributions of capital and labour, 207 had been fully privatized, 275 had chosen the voluntary
decision for self liquidation and 131 were still operating.  Privatization of farms used for training andresearch would be considered on an individual basis.   Foreign firms could participate in privatization;
Latvia had held four international tenders.  Foreign natural and legal persons could buy privatization
certificates only after having won the tender for a company undergoing privatization.  This restriction
did not apply to joint ventures or branches of foreign companies registered in Latvia.
14. Regarding privatization of industry, the representative of Latvia said that since 1 May 1994,
when the Latvian Privatization Agency was established, until 1 May 1998, 855  State enterprises
(asset units) had been assigned for privatization, 75 State enterprises assigned for liquidation,
State-owned equity holdings of 164 enterprises assigned for privatization, and 48 real estates and
89 plots of land assigned for sale by the Cabinet of Ministers.  The Privatization Agency was involved
in valuation of 323 restitution cases of property.  Privatization regulations had been approved for
879 State enterprises (asset units) or their parts, 111 State-owned equity holdings, and 29 real estates.
Sales agreements had been concluded for 821 State enterprises (asset units) or their parts,66 State-owned equity holdings, 43 enterprises to be liquidated and for 21 real estates.  The
privatization process was generally completed by the end of 1997, excluding large State-owned
companies, which do not operate as State-trading enterprises within the definition of Article XVII and
where privatization would be completed in 1999.  Completion of privatization implied mass
privatization, i.e. involving all inhabitants of Latvia and including 95 per cent of all State-ownedenterprises.
15. The representative of Latvia added that privatization would be completed by the end of 1998
with exception of 4 large State owned joint st ock companies "Latvenergo" (Latvian Energy),WT/ACC/LVA/32
Page 7
"Ventspils nafta" (Ventspils Oil), "Latvijas Kugniecîba" (Latvian Shipping Company) and the limited
liability company "Lattelekom".  The State join t stock company "Latvenergo" dealt with energy
generation and had a monopoly in energy transmission and distribution.  These three operations had
been separated through a restructuring of the company.  The Government intended to announce an
action plan on the restructuring and privatization of "Latvenergo" and to establish a competitive and
well-regulated electricity sector by mid-1998.  The Latvian Privatization Agency would sell aminority share of the thermo-generation system to strategic investors by the beginning of 1999 and the
remaining State share would be sold to general public in 1999.  The State joint company "Ventspils
nafta" (Ventspils Oil) was the largest oil and petroleum product terminal on the coast of the Baltic
Sea.  It also offered transit services such as handling and storage of oil and petroleum products, and
importation of petrol.  The intention was to merge "Ventspils nafta" with the company "LaSaM", the
owner of the oil pipeline.  In Autumn 1997, a minority stake of the State shares had been sold to the
general public against privatization certificates.  In 1998, the share portfolio would be placed on theinternational capital market.  The State Joint stock company "Latvijas kugniecîba" (Latvian Shipping
Company) ranked among the world’s twenty largest shipping companies in terms of number of
vessels owned.  It operated fleets in the tanker, reefer and dry cargo markets with a large number of
subsidiary firms and investments.  As a first phase in the privatization, up to 35 per cent - mostly new
shares issued by the company - would be offered to strategic investors.  A closed list of registeredstrategic and financial investors existed (14 in total).  Having conducted several rounds of
negotiations with each of these registrants, the Latvian Privatization Agency had shortlisted two
strategic investors who were allowed to perform due  diligence of the company with the intention to
receive final bids from the investors by mid-1998.  The limited liability company "Lattelekom",  part-
owned (51 per cent) by the State, provided loca l and long distance fixed public telecommunication
services with a monopoly status until 2003.  The management of the State shares had been transferred
to the Latvian Privatization Agency in order to prepare the company for privatization.  The company
would be transformed into a joint stock company, and up to 25 per cent of its shares would be sold
against privatization certificates and cash by 2000.
16. According to Article 4 of the Law on the Priv atization of State and Municipal Property, any
person or legal entity eligible to purchase liquid and/or fixed assets in Latvia could be a privatization
subject.  The term "privatization subject" was defined according to the Law on Privatization of State
and Municipal Asset Units as any specific person or legal entity eligible to obtain State or municipal
property during the privatization process.  The Latvian State or a municipality, a State or municipal
enterprise, a State or municipal company, or a company in which private funds did not exceed25 per cent of the equity capital, could not be privatization subjects.  The representative of Latvia
confirmed that national treatment applied for the participation of foreigners in privatization
programmes.  There were no restrictions on the acquisition of privatized State and municipal property.
17. As of 1 May 1998, 1,157 State enterprises in total had been assigned for privatization
(96.3 per cent of all State enterprises).  Among them, 302 had been privatized in 1992-1994, while the
remainder (855) had been assigned for privatization in 1994-1997.  The representative of Latvia
provided further up-dated information on progress in privatization of these assigned enterprises inTable 1.  In total, 66 per cent of all Latvian employees were working in the private sector by the end
of 1997.  In order to attract foreign investments, the Privatization Agency had organized four
international tenders, offering 153 medium and large enterprises.  A special Public Offering
Programme had been created to encourage participation of Latvia's population.  During several rounds
of the Public Offering Programme 63 large enterprises had been offered to the public as at1 January 1998.WT/ACC/LVA/32
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Table 1:  Information on the Progress of the Privatization Process of State Enterprises
1 May 1994 - 1 May 1998
Activity Total Small objects
(less than 50
employees)Medium-sized
objects
(50-500 empl.)Large objects
(More than 500
empl.)
Enterprises assigned for privatization 855 561 257 37
Enterprises transferred from the Ministry
of Agriculture40 39 1 0
Enterprises transferred for liquidation 75 75 0 0
Repeated privatization 15 13 2 0
Privatization objects after split of
enterprises1,577 1,257 283 37
Privatization cancelled or enterprises
merged with other companies188 182 5 1
Privatization temporarily stopped 6 4 2 0
Restitution process initiated 58 53 5 0
Liquidation or insolvency procedure
initiated187 140 41 6
Privatization Regulations approved 879 661 194 24
Transactions concluded:
- purchase agreements signed 813 600 192 21
- invested into private companies 4 2 2 0
- privatized without majority owner 4 0 2 2
- privatized by the Ministry of
Agriculture36 36 0 0
Proceeds of sale in LVL million:
- cash 46.2
- privatization vouchers 60.6
18. The representative of Latvia confirmed the readiness of Latvia to ensure the transparency of
its ongoing privatization programme and to keep WTO Members informed of its progress in the
reform of its transforming economic and trade regime.  He stated that his Government would provide
annual reports to WTO Members on developments in its programme of privatization as long as theprivatization programme would be in existence along the lines of that provided to the Working Party.
He also stated that his Government would provide annual reports on other issues related to its
economic reforms as relevant to its obligations under the WTO until 1 January 2003.  The Working
Party took note of these  commitments.
Pricing policies
19. Noting that Latvia had relaxed price controls on many goods and services, some members of
the Working Party requested Latvia to provide details on remaining restrictions, including minimum
and maximum prices, particularly for sectors not considered natural monopolies.  Latvia was asked to
list the imported products subject to price controls by Harmonized System (HS) tariff line.  A member
noted that Latvia exercised price controls in a number of sectors, including some which were nottraditionally considered natural monopolies, but intended to reduce its price controls to the extent
possible.  This member stated that price controls  should be listed in an Annex.  Moreover, Latvia
should exercise its authority in this area in a manner that did not damage imports or otherwise act to
inhibit trade.  This member also sought a commitment from Latvia that current and future price
controls be applied in a WTO-consistent fashion a nd would be published in the official journal and
that Latvia would take account of the interests of exporting WTO Members as provided for in
Article III.9 of the GATT 1994.WT/ACC/LVA/32
Page 9
20. The representative of Latvia replied that price control and regulation was carried out
according to separate laws and affected products related to energy;  the forestry sector (the price of
stumpage);  publishing of school books financed  from the State budget;  pharmaceuticals;  postal
services;  port services;  airport services;  archives;  and housing rents, power-supply and residential
services.  Minimum and maximum prices were stipulated for the following domestic and imported
services:  transit services for oil and oil products by pipeline;  reloading of oil and oil products inports;  transit shipment of oil and oil products by railway transport;  long-distance transportation of
passengers and luggage by motor transport;  transportation of passengers and luggage by motor
transport in international lines;  international transportation of cargo and passengers by railway
transport according to international agreements;  transportation of cargo and passengers by domestic
railway;  ship services in ports;  and rents (maximum level).  The State did not control the prices of
imported goods.  However, the profit margin was regulated with respect to pharmaceutical products.
The final sales price could not exceed  - by more than 20 per cent - the ex-factory sales price fordomestic goods and, in respect of imports, the duty paid and tax-inclusive value of goods at the time
of importation.  Latvia planned to deregulate controls on the profit margin with respect to
pharmaceuticals not covered by the health insurance system by Autumn 1998.  All the goods and
services currently subject to State price controls in Latvia are listed in Table 2.  The representative of
Latvia stated that the prices of goods and services in every sector of Latvia were determined freely bymarket forces with the exception of those noted in Table 2 and that price control and regulation was
carried out according to particular laws, all of which were published in the official journal of the
Republic of Latvia "Latvijas Vèstnesis".  Price controls were carried out in accordance with separate
laws passed by Latvia's Parliament (Saeima) and price levels were determined by the respective
bodies authorized by law.  Further price controls could be introduced in order to protect consumers.
Table 2:  Goods and Services Subject to State Price Controls
Classification (Harmonized
System or Common Products
Classification)Product or Sector
HS 2711 11 Natural gas (to the population);
HS 2716 00 Electrical power;
HS 2716 00 Heating energy;
CPC ex 91131 The forestry sector (stumpage fees);
CPC ex 88442 Publishing of school books financed from the State budget;
HS 3002; 3004; 3005; 3006 Pharmaceuticals;
CPC 7511 Postal services;
CPC 74510; 74520; 74530; 74540 Port services;
CPC 74610; 74620 Airport services;
CPC 96312 Archives;
CPC 82101; 82102 Housing rents and residential services;
Minimum and maximum prices are stipulated for the following domestic
and imported services:
CPC 71310 Transit services for oil and oil products by pipeline;
CPC 74190 Reloading of oil and oil products in ports;
CPC 71122 Transit shipment of oil and oil products by railway transport;
CPC ex 71211 Long-distance transportation of  passengers and luggage by motor
transport;
CPC ex 71211 Transportation of  passengers and luggage by motor transport in
international lines;
CPC 7111; 7112 International transportation of cargo and passengers by railway
transport according to in ternational agreements;
CPC 7111; 7112 Transportation of cargo and passengers by domestic railway;
CPC 72140; 72130 Ship services in ports and rents (maximum level).WT/ACC/LVA/32
Page 10
21. The representative of Latvia stated that in the application of price controls now or in the
future, Latvia would apply such measures in a WTO-consistent fashion, and take account of the
interests of exporting WTO Members as provided for in Article III.9 of the GATT 1994.  Latvia
would publish the list of goods and services subject to State controls and any that are introduced or
re-introduced in the future in its Official Journal.  The Working Party took note of these
commitments.
Competition policy
22. Some members of the Working Party noted that Latvia intended to harmonize its legislation
on competition with that of the European Communiti es over a four-year period.  Latvia was asked to
provide information on the present status of draft legislation, outline existing provisions regarding
mergers and to provide a list of sectors considered "natural monopolies".
23. The representative of Latvia replied that the Law "On Competition and Restriction of
Monopoly" of 1991 had been revised.  In June 1997, the Saeima (Parliament) had adopted a newCompetition Law which entered into effect on 1 January 1998.  The new Law prohibited restrictive
arrangements and abuse of dominant position and contained provisions on merger control and
prohibition of unfair competition.  The Law provided for the Cabinet of Ministers to establish a
Competition Council to supervise implementation of the Law.  The Competition Council was
empowered to ascertain violations of the Competition Law and enterprises were bound by itsdecisions.  The Council was also authorized to set penalties.  An enterprise gaining control of more
than 25 per cent of the Latvian market for groups of goods or services as a result of a merger or the
formation of a partnership would need to notify the Institution for the Control of Monopoly Action
and Development of Competition.  The new Competit ion Law stipulated that notifications would need
to be made if the combined turnover of the enti ty resulting from the merger amounted to at least
25 million Lats in the financial year preceding the merger, and at least one of the merger participants
held a dominant position in the relevant market prior to the merger.  Natural monopolies existed in
energy, communication services, transport, water supply and sewerage.  Monopoly enterprises
included the State stock companies "Latvijas gâze" (Latvian Gas), "Latvenergo" and "Latvijas
dzelzcels" (Latvian Railways);  "Lattelekom"  - a limited liability company;  suppliers of heating; andself-government enterprises in water-supply and sewerage.  However, competition (including foreign
participation) was present in the supply of natural gas and in energy and telecommunication sub-
sectors.
FRAMEWORK FOR MAKING AND ENFORCING POLICIES
24. A member asked that Latvia indicate which bodies were responsible for the administration of
trade policies and indicate that sub-central governments did not make policies affecting international
trade.
25. The representative of Latvia replied that the legislative body of the Republic of Latvia was the
Saeima (Parliament), the constitutional basis of which was provided in section 2 of the Satversme
(Constitution).  The regulation of internal proceedings of the Saeima was contained in the Rules of
Procedure.  The Satversme stated that the Saeima was the highest legislative body and it possessed thediscretionary power.  The Saeima was the highest body of State power, and, according to section 5 of
the Satversme, it possessed the right to adopt laws and statements with the highest legal force after the
Satversme.  This prerogative included adoption of laws related to trade and monopolies and guidelines
for the trade policy of the Republic of Latvia.  In this field, the powers of the Saeima were not limited
to the extent that they were compatible with the Satversme.WT/ACC/LVA/32
Page 11
26. Executive power in Latvia was given to the Cabinet of Ministers.  The general principles of
the functioning of the Cabinet were contained in section 4 of the Satversme.  The Cabinet would
discuss all draft laws drawn up by Ministries and all questions concerning the competence of various
Ministries, the number and the functions of which were stated according to special rules.  The
functioning of the Cabinet of Ministers was regulated by the Law "On the Composition of the Cabinet
of Ministers" of 15 July 1993 (as amended on 23 May 1996), Regulation No. 5 of the Cabinet ofMinisters and by special by-laws or governing regulations of each Ministry, always approved by a
relevant Regulation of the Cabinet of Ministers.  The Cabinet of Ministers was formed by a person
entrusted to that task by the President of State.  In  order to fulfil their duties, the Prime Minister and
the Ministers had to receive a vote of confidence by the Saeima.  The Saeima expressed a vote of
confidence by means of special resolution after the report of the Prime Minister on the composition
and the planned activities of the Cabinet in case of approval.  The important point was that, according
to Regulation No. 160 "On the Internal Order and the Functioning of the Cabinet of Ministers" of1 June 1996, every draft regulation or statement submitted to the State Chancellery for approval by
the Cabinet of Ministers would receive legal opinions from interested Ministries and other institutions
to ensure that draft legislation would be compatible with the laws in force and international treaties
and conventions signed and ratified by the Republic of Latvia.  The task of the State Chancellery was
to verify whether a draft was compatible with the Declaration of the relevant Cabinet of Ministerswhere the principal guidelines of its activities were mentioned.  The Declaration was binding on the
Cabinet.
27. Cabinet decisions were presented in the form of regulations, instructions, orders or
recommendations. The Cabinet could issue regulations when:  (i) a law specifically authorized the
Cabinet to issue regulations.  Such authorization w ould need to provide details of the main rules and
outline the content of the regulations;  (ii) a relevant issue was not regulated by a law;  and (iii) in
accordance with the Article 81 of the Satversme, if there was an urgent necessity between sessions of
the Saeima, the Cabinet was entitled to issue regulations having the force of law.  However, Article 81
stated that such regulations could not modify laws concerning elections to the Saeima, the procedure
and the judicial issues and the Constitution, the budget and budget rights, and laws already passed bythe Saeima in power.  Moreover, such regulations sh ould not apply to amnesty, issuance of Treasury
notes, State taxes, customs, railway tariffs and State loans and should become null and void if not
presented to the Saeima within three days of the opening of the session of the Saeima.
28. The rights of the judiciary power were stated by the Law "On the Judicial Power", by the
Codes of Civil and Criminal Procedure, by the Ci vil Code and by special laws on various judicial
institutions "On  the Bar", "On the Public Prosecu tor Service", etc.  International trade and monopoly
issues were qualified by the judicial institutions as other similar cases.  The judiciary institutions had
the right to settle disputes arising from questions of international trade and monopoly in accordance
with the laws and regulations in force in the Republic of Latvia.  The system of Courts of Justice had
three levels.  The first instance was the District Court or City Court, the instance of appeal was the
Regional Court, and the instance for causation was the Supreme Court.  The very important point was
that, specially concerning questions of international commercial relations, settlement of disputes couldbe reached by means of the arbitral court.
29. The Ministry of Economy was the competent institution for the administration of trade
policies according to Article 2.3 of Regulation No. 304 of the Cabinet of Ministers "The  Governing
Regulations of the Ministry of Economy" (of 19 August 1997).  The Ministry of Economy, in co-
operation with the Ministry of Foreign Affairs and other relevant Ministries, formulated andimplemented the general principles of the domestic  and foreign trade policy of the State.  Trade-
related powers of local and municipal governments were defined in Articles 14, 15 and 21 of the Law
"On Local Governments" and concerned the introduction of local taxes and issuance of activity
licences when such activities were subject to licensing by local and municipal governments under the
respective Laws.  The Law "On Taxes and Duties" (Article 12) provided a list of duties which couldWT/ACC/LVA/32
Page 12
be determined by local governments, and the Law "On Entrepreneurial Activity" and Regulation
No. 434 of 19 November 1996 stipulated that local and municipal governments issued activity
licences for pre-school educational institutions, shooting galleries, cremation activities and local
transportation of passengers.
30. The representative of Latvia confirmed that sub-central administrative authorities, e.g. local
administrative bodies, have no jurisdiction or authority to establish regulations or taxes on goods andservices in Latvia independent of the central authorities and that application of these measures are
exclusively the responsibilities of the executive and legislative branches of the central government.
Central authorities will eliminate or nullify measures taken by sub-central authorities in Latvia that
are inconsistent with WTO provisions from the date of accession.  The Working Party took note of
this commitment.
POLICIES AFFECTING TRADE IN GOODS
Trading rights
31. Some members of the Working Party noted that  laws and regulations relating to the right to
trade in goods (also sometimes referred to as "registration requirements" or "activity licensing")
should not restrict imports of goods in violation of the general prohibition on quantitative restrictions
in GATT Article XI:1, nor should they discrimina te against imported goods in violation of the
non-discrimination provisions of GATT Article III:4.  Furthermore, fees and charges levied on the
right to import should be limited to the approximate cost of services rendered (Article VIII:1(a)) and
taxes and charges on the right to trade in imported goods should not lead to discrimination in favour
of like domestic products (Article III:2).
32. The representative of Latvia replied that in accordance with the Law "On Entrepreneurial
Activity", enterprises and entrepreneurial activity shou ld be registered in Enterprise Register of the
Republic of Latvia.  The requirement to register concerned entrepreneurial associations and
enterprises, including branches and representation offices performing entrepreneurial activity on the
territory of the Republic of Latvia.  All registered entrepreneurs, i.e. enterprises and entrepreneurial
associations, carried out their activities under equal rights.  Any activity of unregisteredentrepreneurial associations and enterprises was prohibited.  The registration procedure and the
information to be submitted was regulated by the Law "On Enterprise Register".  Foreigners could
also carry out entrepreneurship in accordance with the Law "On Foreign Investment in Republic of
Latvia".  In accordance with the Law "On Entrepreneurial Activity" and the Rules of the Cabinet of
Ministers "On Restrictions of Entrepreneurship", only State enterprises had the right to produce andpress securities, banknotes, coins, stamps and cards of gambling games. For other kinds of
entrepreneurship restrictions were prescribed by the issuing of business activity licence or certificate.
The kinds of entrepreneurship requiring certificate or business activity licence were listed in the
above-mentioned Rules of the Cabinet  of Ministers.
33. Some members of the Working Party asked Latvia to specify the business activities subject to
licensing.  The representative of Latvia said that certain forms of entrepreneurial activity required a
special permit (licence).  Limitations on entrepreneurial activity applied when such limitations wereset forth in international treaties, conventions or any other norms of international law which were
binding to Latvia, or when deemed necessary by Latvia for the protection of the interests of society,
i.e. the protection of public morals, human, animal and plant life, and health or public security.  The
following restrictions on entrepreneurial activity had been determined in accordance with Article 32
of the Law "On Entrepreneurial Activity":WT/ACC/LVA/32
Page 13
(i) restrictions laid down by the State Government or local government law or
regulations issued by the Cabinet of Ministers aiming at protecting essential State
security interests;
(ii) restrictions effected within the competence determined by local government law;
(iii) restrictions on individuals carrying out any form of entrepreneurial activity or
intellectual work requiring special qualifications concerning special knowledge andtesting of it, as determined by special laws or regulations issued by the Cabinet of
Ministers;  and
(iv) restrictions determined by the Bank of Latvia concerning financial and credit
operations and banking activity.
The restrictions on entrepreneurial activity were enforced through special permits (licences) or
certificates of professional qualification issued by the Cabinet of Ministers, Ministries or State
institutions subordinate to and supervised by Ministries in accordance with statutory Acts;  theauthorized representative of the Strategic Im portance Export and Import Control Board; local
governments (municipal authorities of cities, towns, pagasts and city districts);  professional
associations;  or the Bank of Latvia.  The maximum validity of a special permit (licence) was five
years, the minimum validity one year.  The special permit (licence) could also be issued for an
individual transaction.  Licence fees payable to the State were determined by the law or regulationsissued by the Cabinet of Ministers.  Permission (licence) or certificate fees would be established by
the issuing authority in accordance with rules laid down by the Cabinet of Ministers.  The State
reserved the right to make certain types of entrepreneurial activity connected with security of the State
and its citizens subject to State monopoly.
34. The representative of Latvia said that any disputes arising from the application of restrictions
on entrepreneurial activity, such as refusals to issue a special permit (licence) or cancellations, would
be settled by a higher institution or a Court of Justice.  A decision to reject an application to perform
an entrepreneurial activity would need to be issued within 10 days (a time-limit of 30 days had
applied until 1 January 1998) upon receipt by the responsible authority.  An issuing authority was
entitled to cancel a special permit (licence) issued on the basis of false information, or if the recipient
violated any normative acts or conditions specified in  the special permit (licence).  The recipient of a
special permit (licence) was responsible for its proper use and was not entitled to assign it to any other
person.
35. The representative of Latvia said that the scope of the licensing system had been reduced
gradually;  in 1996 it had covered 47 goods-related business activities.  Latvia continued to reduce the
number of business activities licensed according to Regulations of the Cabinet of Ministers No.348
"On Licensing of Separate Forms of Entrepreneurial Activity".  The Government had reviewed the
licensing system and elaborated special regulations on import licensing in accordance with the WTO
Agreement on Import Licensing Procedures.  The new regulations were adopted on 7 October 1997
and came into effect on 1 January 1998.  These regula tions provided for auto matic licensing with no
limitation on the number of licences granted.  Import licences were not used to restrict trade and
requirements were applied in a non-discriminatory manner.  An import licence should be issuedwithin 10 days, application forms should be as simple as possible, and the licence fee constituted the
cost of services rendered.
36. The representative of Latvia noted that the Alcohol Monopoly Department of the Ministry of
Finance kept a list of officially approved importers of alcoholic beverages and intended to begin
regular publication of the list.  The number of licensed importers and traders was not controlled orlimited by any other administrative means.  The licensing system was maintained for reasons of healthWT/ACC/LVA/32
Page 14
and social policy (to reduce illegal production and importation);  these objectives could not be
attained by other measures.  Imported and domestic products were subject to the same requirements.
The representative of Latvia provided additional information on the licensing regime in a
Questionnaire on Import Licensing of Alcoholic Beverages and Tobacco (document
WT/ACC/LVA/27).  As per 1 May 1998, 92 enterprises had been licensed for wholesale trade,
27 enterprises for importation and 22 enterprises for the production of alcoholic beverages.
37. A member understood that Latvia had made tobacco products subject to activity licensing to
control the internal market and import licensing to enforce the collection of excise taxes.  This
member was concerned that controls on the internal market operated as a barrier to trade and the use
of licensing to assure collection of excise taxes was an unnecessary border aberration.  The
representative of Latvia replied that the licensing served statistical purposes only;  the collection of
excise taxes on tobacco products and other items was regulated by the Law "On the Excise Tax".
Entrepreneurial activity related to tobacco goods was licensed, in accordance withRegulations No. 351 "On Circulation of Tobacco Products" of 7 October 1997,  to protect the legal
domestic market against illegal production and protect consumers' interests against low-quality or
dangerous products.  He added that licensing of entrepreneurial activities was not a mechanism for
direct market control, but that the legal domestic market required regulation to ensure that uniform
conditions applied in production, importation, exportation, sale, storage and transportation, and for theState to obtain the necessary statistical basis to maintain proper order.  He stressed that the
distribution of imported tobacco products was not re stricted.  As per 1 May 1998, 119 enterprises had
been licensed for wholesale trade, 13 enterprises for importing and 4 enterprises for the production of
tobacco products.
38. The representative of Latvia said that procedures governing production, manufacture and
distribution of pharmaceutical products contained in the Drugs Register or Veterinary Drugs Register
of the Republic of Latvia, including licensing provisions for specific pharmaceutical activities, were
outlined in the Law "On Pharmaceutical Activities".  The Law required entrepreneurial activity
licences to operate a pharmacy, a pharmaceutical or veterinary wholesale company, or to manufacture
medical and veterinary medical products.  The requirements for obtaining these licences were basedon criteria to ensure consumer protection and product quality.
39. The representative of Latvia confirmed that the former State monopoly in foreign trade had
been abolished and that no restrictions existed on the right of individuals and enterprises to import and
export goods into Latvia's customs territory, except as provided in WTO Agreements.  He confirmed
that individuals and firms were not restricted in their ability to import or export based on theirregistered scope of business and the criteria for enrolment in the Register of Enterprises in Latvia
were generally applicable and published in the official journal of the Republic of Latvia "Latvijas
Vèstnesis".
40. The representative of Latvia confirmed that from the date of accession Latvia would ensure
that its laws and regulations relating to the right to trade in goods and all fees, charges or taxes levied
on such rights would be in full conformity with its WTO obligations, including Articles VIII:1(a),
XI:1 and III:2 and 4 of the GATT 1994 and that it would also implement such laws and regulations infull conformity with these obligations.  The Working Party took note of this commitment.
1. Import Regulation
Customs tariff
41. A member of the Working Party noted that the collection of customs duties appeared to have
been inefficient in Latvia and wondered what pl ans Latvia might have for improving its customs
system as part of the accession to the WTO.  The representative of Latvia replied that organizationalWT/ACC/LVA/32
Page 15
improvements had been discussed with the World Customs Organization and included the revision of
legislation, the review of the structure and functions of the customs administration, further training of
customs staff and additional technical equipment.  The organizational improvements of the customs
system had been finalized by 1 July 1997 with the entry into force of the new Customs Law.  He
added that the Law "On Customs Duties (Tariffs)" had been in force since 1 December 1994.
42. The representative of Latvia announced his Government's readiness to enter into bilateral
tariff negotiations in March 1995 (document WT/L/57).  The tariff concessions resulting from these
negotiations are included in its Schedule of Conc essions and Commitments on Goods annexed to the
draft Protocol of Accession of Latvia which is reproduced in the Appendix to this Report (see
paragraph 132 below).
Other duties and charges
43. The representative of Latvia confirmed that Latvia levied no duties and charges on imports
other than ordinary customs duties.  Any such charges applied to imports after accession would be inaccordance with WTO provisions.  He further confirmed that Latvia would not list any other charges
in its Goods Market Accession Schedule under Ar ticle II:1(b) of the GATT 1994, binding such
charges at "zero".
Tariff rate quotas, tariff exemptions
44. Some members of the Working Party noted that Latvian legislation authorized the opening of
tariff quotas to facilitate importation of goods in temporary short supply and requested further details.
A member urged Latvia to bring this system into conformity with WTO provisions and to consider
using tariff protection only and allow market forces to determine trade.
45. The representative of Latvia said that the legal basis for the opening of tariff quotas on any
item was the Law "On Customs Duties (Tariffs)" and Regulations No. 208 "Establishment andAdministration of Import and Export Tariff Qu otas" and No. 24 "Authorizations for Licences".
Exceptionally, the Cabinet of Ministers had approved a tariff quota for imports of high-quality seeds
in 1995, 1996 and 1997 due to a shortage of domestic supply.  The State Cereals Bureau could open
tariff quotas with an in-quota tariff of 0.5 per cent when its annual forecasts indicated a shortfall in
Latvian production of certain types of grain.  The Cabinet of Ministers had issued Regulation No. 85"On Customs Tariff Quotas for Grains" stipulating that 20,000 tonnes of rye and 50,000 tonnes of
feed grain could be imported at 0.5 per cent tariff until 1 June 1997.  The tariff quotas had been
distributed by public tender organized by the State Cereals Bureau with import licences issued by the
Ministry of Agriculture.
46. The representative of Latvia agreed that the tariff quota regime for grain imports was not
consistent with WTO requirements and Latvia was revising its legislation to ensure conformity with
the Agreement on Import Licensing Procedures.  Regulations Nos. 208 and 24 had been revoked and
replaced by Regulation No. 106 "On Customs Tariff Quotas", effective 25 March 1997, and issued in
accordance with the Law "On International Agreements of the Republic of Latvia".  The
representative of Latvia said that in June 1997 the Saeima (Parliament) had adopted amendments to
the Law "On Latvia's Grain Market and State Grain Reserves" according to which quantitative
restrictions on grain were abolished and the licensing system replaced by automatic import licensing.The Saeima had also adopted amendments to the Law "On Customs Duties (Tariffs)" in June 1997,
abolishing the order enabling the Cabinet of Ministers to establish tariff quotas.  Regulation No. 106
"On Customs Tariff Quotas" of 25 March 1997 determined the procedure for implementing tariff
quotas, established in accordance with international treaties, on the territory of the Republic of Latvia
as well as the procedure for issuing special permits (licences) ensuring the administration of tariffquotas.  Tariff quotas established in accordance with international treaties provided for limitedWT/ACC/LVA/32
Page 16
amounts of goods imported under reduced or zero tari ff rate.  The fulfilment or non-fulfilment of
preferential tariff quotas did not restrict imports from MFN trading partners at the MFN tariff rate.
The representative of Latvia confirmed that in the event that Latvia would use MFN tariff quotas in
the future, imports under preferential tariff rate quotas would not be counted against MFN tariff rate
quotas.
Fees and charges for services rendered
47. A member of the Working Party asked Latvia to clarify what fees and charges, if any, were
applied for services rendered related to importation or exportation.  The representative of Latvia
confirmed that Latvia levied no fees or charges for services rendered related to importation or
exportation, except fees for issuing certain activity licences and charges such as port charges and
warehousing charges.  None of these fees or charges were levied on imports or exports on an
ad valorem  basis.
48. The representative of Latvia confirmed that from the date of accession Latvia would impose
any fees or charges for services rendered related to importation or exportation only in conformity with
Article VIII of the GATT 1994.  Information regarding the application and level of any such fees,
revenues collected and their use would be provided to WTO Members upon request.  The Working
Party took note of these commitments.
Application of internal taxes
49. Some members of the Working Party asked for details on the excise tax system in Latvia and
its application on imports and domestic goods.  Latvia was requested to indicate, by HS tariff line, the
levels and points of sale at which taxes were applied to imports and describe the components of the
taxable base.
50. In reply, the representative of Latvia said that excise taxes were levied on alcohol, tobacco,
motor vehicles, petroleum products and jewellery.  The excise tax rates (Annex 1) were identical for
imported and domestically produced items.  The tax base for Latvian products was the sales price in
domestic currency, taxes on imports were levied on a tariff-inclusive basis.  Only tobacco products
and alcohol carrying tax labels could be sold in Latvia.  Enterprises licensed to import or manufacture
tobacco products for sale ordered labels from the State Revenue Service.  The requested quantity oflabels would be supplied within 14 days against payment of excise tax and VAT.  The labels
themselves were not subject to any separate charge as the cost of issuing tax labels was included in
the rate of excise tax.  Exports, re-exports and goods in transit were exempt from excise tax in
accordance with Article 4 of the Law "On Excise Tax".  Exemptions from excise taxes had also been
established for a number of products, enumerated in Table 3.
Table 3:  Exemptions from Excise Tax
Excise tax shall not be levied on the following:
Precious metals, precious stones and products from said metals and stones imported and purchased for the
needs of the Precious Metal Fund of the Republic of Latvia;
Goods used for production (technological needs) of goods listed in Article 3;
Rectified alcohol:
(i) for the purposes of medicine and veterinary medicine;
(ii) for the needs of research and development;(iii) for pharmaceutical industry.
Tobacco dust and tobacco products used for production of insecticides;WT/ACC/LVA/32
Page 17
Precious metals for making dentures;
Goods for export;
Cars with spark-ignition internal combustion reciprocating engine, working volume of engine cylinders of
which does not exceed 1,600 cm³;
Cars with compression ignition internal combustion reciprocating engine (diesels or semi-diesels), workingvolume of engine cylinders of which does not exceed 1900 cm³;
Cars older than 7 years from the date of industrial production;
Cars with electrical engine (electrocars).
The Cabinet may determine the maximum amount of goods that are excise tax-exempt when imported forconsumption into the customs territory of the Republic of Latvia.
Excise tax shall not be levied on transit cargo shipping and reexport.
Excise tax shall not be levied on natural persons importing alcoholic drinks up to one litre or one unit in
original packaging that does not exceed 3 litres in total amount, as well as cigarettes - up to 200 cigarettes per
person.
Excise tax shall not be levied on natural and legal persons selling cars if excise tax for the respective car has
already been paid once.
If an enterprise (entrepreneurial company) exports self-produced or unused goods for which raw material tax
has been paid, the excise tax transferred into the budget shall be reimbursed from the State budget.
The excise tax paid for cars exported from the Republic of Latvia within three months after their import shallbe reimbursed from the State budget.
51. Noting that a Value Added Tax (VAT) had replaced the turnover tax in Latvia, some
members of the Working Party requested information on the application of the VAT, including
product- or user-specific exemptions.  The representative of Latvia replied that VAT had replaced the
turnover tax on 1 May 1995.  VAT was levied at the rate of 18 per cent.  VAT was levied on a tariff-
inclusive basis and excise taxes were added to the tax base of imported and domestic products.Exemptions from VAT were determined in accordance with Articles 6 and 7 of the Law "On the
Value Added Tax".  In all, 26 types of goods and services were exempt from VAT while nine services
related to exporting and international transport were zero-rated (Annex 2).  The latest amendments to
the Law "On Value Added Tax" had entered into force on 1 January 1998.
52. In response to specific questions by some members of the Working Party in pursuance of
Article III of the GATT 1994 regarding VAT exemptions for books and mass-media goods published
or (in the case of mass media goods) registered in Latvia, he assured the Working Party that the
exemption was also applicable to imported films.  The representative of Latvia stated that the VAT
exemptions offered on publications and mass me dia goods had been revoked, and that national
treatment had been applied both for domestic and foreign publications and mass media goods since1 January 1998.
53. The representative of Latvia stated that, from the date of accession, Latvia will apply its
domestic taxes, including those on products listed in paragraphs 50 to 52 and Tables 3 and Annex 1 in
strict compliance with Article III of the GATT 1994, in a non-discriminatory manner to imports
regardless of country of origin and to domestically-produced goods.  The Working Party took note of
this commitment.
Quantitative import restrictions, including prohibitions, quotas and licensing systems
54. Latvia was requested to supply information in accordance with the questionnaire on import
licensing and specifically asked to provide a comprehensive list, by HS tariff line, of products subjectWT/ACC/LVA/32
Page 18
to non-tariff measures, citing the measure applied (prior import approval requirements, mandatory
import licences, import quotas, prohibitions, etc.), its legal basis, and its justification under WTO
provisions.  Further questions addressed specific issues such as quantitative restrictions on imports of
sugar and import arrangements affecting grain, ethyl alcohol and spirits, and tobacco.  Concerned
about potential barriers to trade, some members asked Latvia to elaborate on how its licensing
system - which restricted imports of certain goods - worked and sought a clear commitment fromLatvia that all measures applied to enforce quantitative restrictions would be eliminated as of the date
of accession.
55. The representative of Latvia provided the information on non-tariff measures affecting
imports and the legal basis for these measures, which is summarized in Table 4.  He confirmed that an
import ban on white sugar had been in force since May 1993, but the prohibition did not apply to raw
sugar.  Import licences were issued on a non-discriminatory basis regarding the country of origin;
sugar had been imported from Denmark, Est onia, Germany, Lithuania, Ukraine and the
United Kingdom.  He stated that import restrictions on sugar had been maintained to protect local
manufacturers while the industry was restructured.  He agreed that the existing regime did not
correspond to the WTO Agriculture Agreement and Latvia was ready to prepare adoption of the
necessary legal amendments to bring the sugar regime in line with WTO requirements.
Table 4:  Business Activity Licensi ng on Importation of Certain Products
HS tariff line Description Legal basis
Chapter 10 Cereals Law "On the Latvian grain market and
State grain reserves" (Article 4)
Chapter 11 Products of the milling industry Law "On the Latvian grain market and
State grain reserves" (Article 4)
Chapter 12 Oil based plane seeds and oleaginous
fruit, various grain, seeds and fruit,
straw and fodder.Law "On the Latvian grain market and
State grain reserves" (Article 4)
Chapter 1701 Cane or beet sugar and chemically
pure sucroseLaw "On Entrepreneurial Activity"
(Article 32),  Law "On Sugar", RegulationNo. 348 of 7 October 1997, andRegulation No. 69 of 30 March 1998
Chapter 22 Alcoholic beverages, spirits and
vinegarLaw "On Entrepreneurial Activity" and
Regulation No. 348 of 7 October 1997
Chapter 23except 2301, 2303
and 2307.Residues and waste from the food
industries; prepared animal foddersLaw "On the Latvian Grain Market and
State Grain Reserves" (Article 4)
Chapter 24 Tobacco products Law "On Entrepreneurial Activity"
(Article 32), Regulation No. 86 of 14April 1994, and Regulation No. 351 of7 October 1997
56. The representative of Latvia said that quantitative restrictions on grain had been abolished by
the amendments to the Law "On Latvia's Grain Market and State Grain Reserves" adopted by the
Saeima (Parliament) in June 1997.  Quantitative restrictions on sugar were abolished by amendments
to the Law "On Sugar" (adopted by the Saeima in November 1996) and Regulations No. 61, adopted
by the Cabinet of Ministers in March 1997.  Licensing for all products would be automatic accordingto the WTO Agreement on Import Licensing.
57. Some members of the Working Party requested that Latvia undertake to eliminate all
measures applied to enforce quantitative restrictions, including the non-automatic import licensing for
grains and the ban on sugar imports, as of the date of accession and commit not to introduce, re-WT/ACC/LVA/32
Page 19
introduce or apply quantitative restrictions on imports or non-tariff measures such as licensing,
quotas, bans and other restrictions having equivalent effect that can not be justified under the
provisions of the WTO Agreements on Technical Barriers to Trade, Sanitary and Phytosanitary
Measures, Import Licensing Procedures and Agriculture.  Additionally, Latvia was asked to confirm
that import licensing on other commodities, especially wheat flour, cereal flour, cereal groats, cereal
grains otherwise worked, sugar and animal feed, alcoholic beverages and tobacco products, wereissued for statistical purposes only and administered in conformity with Article XI of the GATT 1994
and the Agreement on Import Licensing Procedures.
58. The representative of Latvia confirmed that as from 1 July 1997 Latvia maintained no
quantitative import restrictions on any products.
59. The representative of Latvia confirmed that Latvia would, from the date of accession,
eliminate and shall not introduce, re-introduce or apply quantitative restrictions on imports or other
non-tariff measures such as licensing, quotas, bans, permits, prior authorization requirements,licensing requirements and other restrictions having equivalent effect that cannot be justified under
the provisions of the WTO Agreement.  This will include the current licensing restrictions on certain
products in Chapters 10, 11 and 12 and the import ban on sugar products in section 1701 of Latvia's
tariff schedule.  He added that the special import permits required for the importation of alcoholic
beverages and tobacco are granted automatically to all who request them and would not restrict the
right to import these products into Latvia or in any way discriminate against imported products.  He
further confirmed that the legal authority of the Government of Latvia to suspend imports and exports
or to apply licensing requirements that could be used to suspend, ban, or otherwise restrict the
quantity of trade will be applied from the date of accession in conformity with the requirements of the
WTO, in particular Articles XI, XII, XIII, XVIII, XIX, XX and XXI of the GATT 1994, and theMultilateral Trade Agreements on Agriculture, Sanitary and Phytosanitary Measures, Import
Licensing Procedures, Safeguards and Technical Barr iers to Trade.  The Working Party took note of
these commitments.
Customs valuation
60. Some members of the Working Party asked Latvia to provide additional information on its
customs valuation methods, noting in particular that terminology such as "approximate valuation" and
valuation "according to the goods of the same type" had no counterpart in the WTO Agreement on
Implementation of Article VII of the GATT 1994 (the Customs Valuation Agreement).   Such
valuation practices were specifically prohibited in Article 7.2 of the Customs Valuation Agreement
and the Agreement authorized no delay in the implementation of this provision.  A member soughtLatvia's commitment to apply fully the WTO provisions concerning customs valuation from the date
of accession, including, in addition to the Agreement on the Implementation of Article VII of the
GATT 1994, the provisions for the Valuation of Carr ier Media Bearing Software for Data Processing
Equipment and the provisions on the Treatment of Interest Charges in Customs Value of Imported
Goods.
61. The representative of Latvia said that valuation practices had been based on the Law "On
Customs Duty (Tariffs)" and Regulation No. 27 "On Estimations of Customs Valuation Relating toImported and Exported Goods and Other Subjects" which, inter alia , allowed the use of reference
prices.  Latvia had acknowledged the disparity between its legislation and the WTO Agreement on
Implementation of Article VII.  Amendments to existing rules had accordingly been drafted and
submitted for ratification by Parliament.  Amendments to the Law "On Customs Duty (Tariffs)" had
entered into force on 1 July 1997 and the Articles related to the determination of customs value,including the use of reference prices, had been deleted.  The new Customs Law (Customs Code) had
been adopted by Parliament and entered into force on 1 July 1997.  The valuation methods in the new
law were based on transaction value;  the value of identical goods;  the value of similar goods;  theWT/ACC/LVA/32
Page 20
unit price method and the computed value method.  A copy of the law was provided to the Working
Party.  Secondary legislation to implement the Customs Law (Regulations of the Cabinet of Ministers
No. 428 "On Procedure for Calculating the Customs Value of Goods", adopted on 17 December 1997)
came into effect on 1 January 1998.  The Customs Law provided the methods for determining
customs value in accordance with the requirements of Article VII of the GATT 1994 and the
Agreement on Implementation of Article VII of the GATT 1994.  He confirmed that the use ofreference prices for the determination of customs value had been eliminated by the introduction of the
new legislation.
62. The representative of Latvia confirmed that Latvia would fully apply the WTO provisions
concerning customs valuation from the date of accession without recourse to a transition period,
including the Agreement on the Implementation of Article VII of the GATT 1994 including its
provisions on methods of appraisement and Annex I (Interpretative Notes) and Article 13 of the
Agreement, as well as the provisions for the Valuation of Carrier Media Bearing Software for DataProcessing Equipment (Decision 4.1).  The Wo rking Party took note of these commitments.
Other customs formalities
63. The representative of Latvia said that Latvia was a member of the World Customs
Organization.  A draft law on accession to the Kyoto Convention had been approved by the Cabinet of
Ministers and  submitted to the Saeima.  Norms incorporated in the Kyoto Convention had been takeninto account in the development of the new Customs Law.
Anti-dumping, countervailing duties and safeguard regimes
64. Some members of the Working Party referred to the provisions regarding anti-dumping and
countervailing duties in Chapter II of the Law "On Customs Duties (Tariffs)" and requested
information on Latvia's intentions concerning the establishment of new, broader legislation in thisarea.  The representative of Latvia said that at present no draft legislation existed related to this issue.
Latvia was at the stage of examining possibilities for the introduction of anti-dumping and
countervailing duty legislation, taking into account its specific situation as a small country and the
resources available in the State budget for the purpos e of eventual investigat ions.  According to the
existing timetable, a draft Anti-Dumping Law could be presented to the Cabinet of Ministers by theend of 1998.
65. Some members of the Working Party asked Latvia to describe its safeguards regime and
questioned whether existing legislation would be consistent with GATT Article XIX and the
WTO Agreement on Safeguards.  The representative of Latvia replied that the current safeguards
regime was based on Regulation No. 20 "Regulations to Protect the Domestic Market for Foods StuffProduced in Latvia".  The regulation addressed only agricultural products - in particular live animals,
grain, milk, meat, fish, potatoes and products made thereof - and had been introduced as the recent
economic transition had disrupted sectors which normally would supply competitive products.
However, the regulations had yet to be applied.  The existing regime was temporary and would be
replaced by new legislation.
66.  The representative of Latvia said that Latvia would not apply any anti-dumping,
countervailing or safeguard measure until it had implemented appropriate laws in conformity with theprovisions of the WTO Agreements on the Implementation of Article VI, on Subsidies and
Countervailing Measures, and on Safeguards.  In the elaboration of any legislation concerning anti-
dumping duties, countervailing duties and safeguards , Latvia would ensure their full conformity with
the relevant WTO provisions, including Article VI and XIX of the GATT 1994 and the Agreement on
the Implementation of Article VI, the Agreement on Subsidies and Countervailing Measures and theAgreement on Safeguards.  After such legislation was implemented, Latvia would only apply anyWT/ACC/LVA/32
Page 21
anti-dumping duties, countervailing duties and safeguard measures in full conformity with the
relevant WTO provisions.  The Working Party took note of these commitments.
2. Export Regulation
Customs tariffs, fees and charges for services rendered, application of internal taxes to exports
67. Some members of the Working Party requested details on export tax rates and plans to phase
out such taxes.
68. In response, the representative of Latvia said that all goods were zero-rated with the exception
of certain wood products, metal waste and scrap, and antiquities.  Export duties on certain mineral
products falling within HS Chapter 25 were eliminated with effect from 17 July 1996.  Latvia would
abolish export duties by year 2000, with the exception of duties on specific antiques.  Amendments to
the Law "On Customs Duties (Tariffs)" had entered into force on 1 July 1997.  According to these
amendments, Parliament had established a timetable for the elimination of export tariffs on items
falling within HS Chapters  44 and 72.  The list of products subject to export taxes, by HS tariff line,and the respective tariff rates are reproduced in Annex 3.
69. The representative of Latvia confirmed that present export tariff rates related only to the
goods listed in Annex 3 Export Duty Tariffs.  All customs tariff changes were published in the official
journal of the Republic of Latvia - the newspaper "Latvijas Vèstnesis".  Latvia would abolish all
export duties listed in Annex 3 by 1 January 2000 with the exception of the duty on antiques.  Thetimetable for elimination of export duties would be similar for regional trade agreement partners and
partners to which MFN treatment was applied as indicated in Annex 3.  The Working Party took note
of these commitments.
Export restrictions
70. Some members of the Working Party requested details on the licensing regime on exports,
notably with regard to trade in metals and pyro technical materials.  The representative of Latvia
replied that business licences were issued to registered enterprises for domestic purchasing and
exports of metal scrap in accordance with the Law "On Entrepreneurial Activity".  Licensing of trade
in strategic goods, products, services and technologies had been established for reasons of internal
security and to fulfil international obligations on non-proliferation.  Latvia had established an ExportControl System covering munitions and exports of dual use goods based on international guidelines,
incorporating the former COCOM Munitions List  and Council Regulation (EC) No. 3381/94.  The
representative of Latvia confirmed that the licensing of exported metals was used for statistical
purposes only and that the number of export licences issued was not limited.
Export subsidies
71. A member of the Working Party asked Latvia to describe its duty drawback system.  The
representative of Latvia replied that duty drawback was available for temporary importation of goods
for processing, improvement, repair or replacement due to spoilage and re-exports in accordance with
Chapter VII of the Law "On Customs Duties (Tariffs)" with Regulation No.  87 "Import of
Commodities and Other Items for Processing" providing more specific procedures.  Additional
documentation was required to certify that goods would not be sold in the domestic market and to
indicate the foregone amount of import taxes and VAT.  The rebate of import charges in the dutydrawback programme did not exceed the value of the taxes and tariffs incorporated in the exported
product.  He confirmed that Latvia maintained no quantitative restrictions related to the duty
drawback scheme.WT/ACC/LVA/32
Page 22
72. The representative of Latvia said that his Government intended to support an expansion of the
activities of the "Latvian Export Credit", a State Joint-Stock Company.  This company had been
established on 20 January 1995 according to Order No.519-r of the Cabinet of Ministers of the
Republic of Latvia "On the State Joint Stock Company 'Latvian Export Credit'".  The main aim of the
company was to promote exports of manufactured goods, services and technology offered by Latvian
entrepreneurs to other countries and to enable Latvian entrepreneurs to manage export and importtransactions, providing them with the corresponding insurance and guarantee system.  Latvian Export
Credit (LEC) offered export guarantees - export pa yment guarantees, export finance guarantees, buyer
credit guarantees and letter of credit guarantees - and import guarantees, i.e. import payment
guarantees and import finance guarantees.  LEC had thus far not provided "classical" export credits,
i.e. credits extended by the export credit agency of the exporting State or by the exporter directly to
buyers of goods and services abroad, but rather made short-term credits available to producer-
exporters to help stabilize their cash flow while they  were awaiting receipt of due payments from their
customers abroad.  These credits were extended on the basis of commercial principles and on
conditions similar to those offered by commercial banks.  He stated that these credit services did not
distort competition as the State did not subsidize export crediting activities and LEC operated with a
profit.  LEC was planning to start providing "classical" export credits on conditions (interest rate,
duration, etc.) which would comply with the OECD Arrangement on Guidelines for OfficiallySupported Export Credits.
3. Internal Policies Affecting Foreign Trade in Goods
Industrial policy, including subsidies
73. A member of the Working Party noted that the Latvian Government had signalled plans for
extensive investments in infrastructure and wondered what the likely effect would be on Latvia'sexporting sectors.  He requested that industrial support programmes be notified in accordance with the
Agreement on Subsidies and Countervailing Measures.  The representative of Latvia replied that the
Government aimed at improving infrastructure generally and would not target any particular industry
or enterprise.
74. The representative of Latvia added that the structural policy of his Government aimed at
successful transition to a competitive market economy operated by viable industrial enterprises.  The
Ministry of Economy had drafted a "Concept of  Government Strategy in Industry and National
Programme of Small and Medium Enterprise Development" which discussed issues such as
investment promotion, industrial cooperation, i ndustry restructuring and job creation.  The
development of small and medium-sized enterprises was considered particularly important and theGovernment encouraged and supported entrepreneur ship through training and network programmes.
Business Advisory Service Centres, enterprise fora and educational "workbooks" had been established
to facilitate management training and business networks.  Higher education institutions also offered
special training courses for entrepreneurs.  The Government had also elaborated a regional
development policy under which grants and loans would be provided for the establishment and
expansion of small and medium-sized enterprises and the development of energy-saving technology.
Risk financing would be provided through a new institution, the Regional Development Fund.
Another important element of Latvia's industry policies was the restructuring and privatization of
State enterprises with emphasis on the participation of foreign investors.
75. The representative of Latvia stated that with regard to non-agricultural subsidies, Latvia was
preparing draft notifications under Article 25 of the Agreement on Subsidies and Countervailing
Measures.  However, apart from very minor subsidy programs related to energy and fish conservationand public transportation, the most significant forms of subsidies in the Republic of Latvia were tax
deferrals to assist the privatization of State enterprises; special capital injections to troubled banksWT/ACC/LVA/32
Page 23
during a period of heavy economic transition; and loan guarantee programs. Small and medium sized
enterprises benefited from reduced rate of corporate income tax.
76. The representative of Latvia confirmed that Latvia did not maintain subsidies including
export subsidies which met the definition of a prohibited subsidy, within the meaning of Article 3 of
the Agreement on Subsidies and Countervailing Measures and that it would not introduce such
prohibited subsidies in the future.
77. The representative of Latvia confirmed that any subsidy programmes would be administered
in line with the Agreement on Subsidies and Countervailing Measures and that all necessary
information on programmes to be notified, if such exist, would be provided to the Committee on
Subsidies and Countervailing Measures in accordance with Article 25 of the Agreement upon entry
into force of Latvia's Protocol of Accession.  The Working Party took note of this commitment.
Technical barriers to trade, sanitary and phytosanitary measures
78. Regarding technical barriers to trade, some members of the Working Party asked about the
system of standards and product certification in Latvia, including participation in international
standards organizations, plans to adopt and impl ement the Code of Good Practice (Annex 3 of the
WTO Agreement on Technical Barriers to Trade), the acceptance of certificates issued by foreign
bodies and accreditation of private certification bodies.
79. The representative of Latvia provided inform ation on technical barriers to trade in document
WT/ACC/LVA/4, Annex 5.  He added that in orde r to fulfil the obligations laid down by the
Agreement on Technical Barriers to Trade (the TBT Agreement), notably its Article 2 "Technical
Regulations and Standards", Latvia had developed a National Standardization System approved by the
Cabinet of Ministers on 8 August 1995.  The Latvian National Centre of Standardization and
Metrology had been established to perform all activ ities related to the adoption of standards.  The
Centre was an affiliated member of the European Standardization Committee (CEN) and a
corresponding member of the ISO.  The Centre applied ISO Guide 21 which outlined the principles
regarding adoption of international standards.  In all, 21 technical committees had been established
under the auspices of the Centre and their main tasks were to implement and harmonize the Latvian
standardization system with international sta ndards.  Membership in the technical committees
reflected all interested parties concerned, i.e. representatives of relevant Ministries, producers and
other experts.  Latvia was preparing mass implemen tation of international standards using the "cover
sheet" method, allowing the adoption of approximately 500 standards per year.  Specific Latvian
standards were implemented only in very narrow  areas of purely national interest.  In view of
Article 4 of the TBT Agreement, Latvia was observing and implementing the Code of Good Practicefor the Preparation, Adoption and Application of Standards.  The Latvian National Centre of
Standardization and Metrology was the respons ible body for implementing the Code of Good
Practice.  A new Law "On Standardization" was in preparation with the objective to define the tasks
of standardization, governing principles an d the organization of standardization work.
80. Concerning Article 5 of the TBT Agreement,  Parliament had adopted laws "On Conformity
Assessments", "On Safety of Products, Services and Liability of Producer and Supplier" during 1996
and a Law "On Uniformity of Measurements" in 1997.  Latvia had adopted as national standardsEN 45000, ISO 9000 and ISO Guides 21, 22, 25 and 58 to ensure harmonized conformity assessment
procedures (for products) and quality systems (for manufacturers).  Conformity assessment in the
mandatory area, i.e. related to the protection of  human health, safety and the environment, was
carried out by competent testing and calibration laboratories and certification and inspection bodies
authorized by the Cabinet of Ministers.  The competence of testing and calibration laboratories andcertification and inspection bodies was assured by m eans of accreditation or equivalent procedures in
accordance with ISO/IEC Guides 25 and 58.  Latvia operated a unified accreditation system inWT/ACC/LVA/32
Page 24
accordance with international principles and relevant ISO provisions.  Accreditation was accorded by
the Latvian National Accreditation Office (LATAK), an independent body under the supervision of
the Ministry of Economy.  LATAK assured the determination of competence of the conformity
assessment bodies.  Currently, LATAK had accredited 72 testing laboratories and 4 certification
bodies.  As of 16 August 1997, LATAK was an affiliated member in the European Co-operation for
Accreditation of Laboratories Organization and was undergoing procedures for accession to the
European Accreditation of Certification Organization.
81. The representative of Latvia said that conformity assessment of goods was prescribed in the
Law "On the Protection of Consumer Rights", "On th e Safety of Products, Services and Liability of
Producer and Supplier", "On Conformity A ssessment" and the Law "On Uniformity of
Measurements".  Three third-party certification centres had so far been nominated by the Cabinet of
Ministers:  the Latvian National Certification Centre for food, cosmetics and toys;  the Latvian
National Standardisation Centre for household electric equipment;  and the Baltic MachineryExperimental Station for agricultural and wood equipment.  These Centres were under accreditation
procedures.  Conformity assessment in the mandatory area, i.e. related to the protection of human
health, safety and the environment, was carried out by competent testing and calibration laboratories
and certification and inspection bodies authorized by the Cabinet of Ministers.  The National
Accreditation Office intended to join ISO CASCO.  Certificates issued by foreign institutions wererecognized in accordance with bilateral agreements and corresponding regulations on unilateral
recognition.  Safety standards and requirements were identical for imported and domestic products.
Draft standards were disseminated among all interested parties and were available for any discussion
and comments.
82. Referring to Article 10 of the TBT Agreement, the representative of Latvia said that Latvia
had ensured the existence of an enquiry point to handle all reasonable enquiries from or to other WTO
Member States and interested parties starting from 1 January 1998.  The enquiry point established in
the Ministry of Economy was also responsible for providing relevant documents regarding technical
regulations, standards and conformity assessment procedures in Latvia.  The Resolution of the
Cabinet of Ministers No.12"On Order, How the Ministry of Economy Coordinates the Exchange of
Information in the Area of Technical Barriers to Trade and Sanitary and Phytosanitary Measures" of
28 October 1997 established an obligation for Ministries and other relevant organizations to submit
information on TBT and sanitary and phytosanitary measures to the Ministry of Economy at the
earliest possible stage.  The Regulations provided the possibility for other countries to comment on
draft technical regulations, proposed conformity assessment procedures, and SPS measures.  Thepractical work had started to create the relevant data bases and collect information to be notified.
Currently, transparency of the adopted technical regulations and sanitary and phytosanitary measures
was ensured by their publication in the official newspaper "Latvijas Vestnesis".
83. Some members of the Working Party asked Latvia to describe its regime of sanitary and
phytosanitary measures in the light of WTO requirements and outline how the provisions of the WTO
Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) would be
implemented after accession.  A member was particularly concerned about transparency, as itappeared that new regulations were not always published  prior to implementation.
84. The representative of Latvia said Latvia participated in the activities of the Codex
Alimentarius Commission, the IOE (Office Internat ional des Epizooties) and the European and
Mediterranean Plant Protection Convention and hope d to join the International Plant Protection
Organization.  Latvia based its sanitary and phytosanitary measures on recommendations of theseorganizations and on regulations in force in the Nordic countries.  Latvia reported monthly to
international organizations (FAO, WHO and IOE) on progress in implementing international norms.
A completed questionnaire on sanitary and phytosanitary measures was provided to the Working
Party (WT/ACC/LVA/12, Annex 2).WT/ACC/LVA/32
Page 25
85. The representative of Latvia added that the Law "On Plant Protection" provided the
framework for administering phytosanitary measures.  Sanitary measures were covered in the Law
"On Veterinary Medicine", the "Pharmaceutical Law" and the 1995 "Food Law".  Imported products
were accompanied by certificates issued by the veterinary authorities of the exporting country in
accordance with Latvian quality requirements.  Latvia would accept exporters' certificates for
processed food products conforming to Latvia's regulations.  The official list of quarantinable pests(plant) and diseases (animals) was provided to the Working Party.  The sanitary and phytosanitary
measures applied by Latvia and the corresponding product coverage is presented in Table 5.
Table 5:  Products Subject to Sanitary and Phytosanitary Measures
HS tariff line Product description Measure
0100 Live animals; animal products Veterinary regulations
0200 Meat and edible meat offal Veterinary regulations
0300 Fish and crustaceans, molluscs and other aquatic
invertebratesVeterinary regulations
0400 Dairy produce;  bird’s eggs;  natural honey;  edible products
of animal origins, not elsewhere specified or includedVeterinary regulations;
Environment Healthregulations
0500 Products of animal origin, not elsewhere specified or
includedVeterinary regulations
0601 Bulbs, tubers, tuberous roots, corms, crowns and rhizomes,
dormant in growth or in flower;  chicory plants and roots
other than roots of heading No 12.12Plant protection regulations
0602 Other live plants (including their roots), cuttings and slips,
mushroom spawnPlant protection regulations
0603 Cut flowers and flower buds of a kind suitable for bouquets
or for ornamental purposes, fresh, dried, dyed, bleached,impregnated or otherwise preparedPlant protection regulations
0700 Edible vegetables and certain root and tubers Plant protection regulations;
Food control regulations
0800 Edible fruit and nuts; peel of citrus fruit or melons Environment Health
regulations;Plant protection regulations
0900 Coffee, tea, mate and spices Plant protection regulations
1000 Cereals Plant protection regulations
1100 Products of milling industry; malt; starches; inulin Plant protection regulations
1200 Oil seeds and oleaginous fruits; miscellaneous grains, seeds
and fruit;  industrial or medicinal plants;  straw and fodderVeterinary regulations;
Plant protection regulations
1201 Soya beans, whether or not broken Environment Health
regulations
1202 Ground - nuts, not roasted or otherwise cooked, whether or
not shelled or brokenEnvironment Health
regulations
1300 Lac;  gums;  resins and other vegetable saps and extracts Plant protection regulations;
Food control regulations
1400 Vegetable plaiting materials;  vegetable products not
elsewhere specified or includedPlant protection regulations
1500 Animal or vegetable fats and oils and their cleavage
products;  prepared edible fats;  animal or vegetable waxesVeterinary regulations;
Plant protection regulations;Food control regulations
1600 Preparations of meat, of fish or of crustaceans, molluscs or
other aquatic invertebratesVeterinary regulations;
Plant protection regulations;Food control regulationsWT/ACC/LVA/32
Page 26
HS tariff line Product description Measure
1700 Sugar and sugar confectionery Environment Health
regulations;Food control regulations
1800 Cocoa and cocoa preparations Environment Health
regulations;
Food control regulations
1801 Cocoa beans, whole or broken, raw or roasted Plant protection regulations
1802 Cocoa shells, husks, skins and other cocoa waste Plant protection regulations
1900 Preparations of cereals, flour, starch or milk; pastrycooks'
productsEnvironment Health
regulations;
Food control regulations
2000 Preparations of vegetables, fruit, nuts or other parts of plants Plant protection regulations;
Food control regulations
2100 Miscellaneous edible preparations Food control regulations
Veterinary regulations
2200 Beverages, spirits and vinegar Environment Health
regulations
2300 Residues and waste from the food industries; prepared
animal fodderVeterinary regulations;
Plant protection regulations
2401 Unmanufactured tobacco;  tobacco refuse Plant protection regulations
2402 Cigars, cheroots, cigarillos and cigarettes, of tobacco or of
tobacco substitutesEnvironment Health
regulations
2403 Other manufactured tobacco and manufactured tobacco
substitutes;  "homogenized" or "reconstituted" tobacco;tobacco extracts and essencesEnvironment Health
regulations
2703 Peat (including peat litter), whether or not agglomerated Plant protection regulations
3002 Human blood; animal blood prepared for therapeutic;
prophylactic or diagnostic usesVeterinary regulations
Environment Health
regulations
3101 Animal or vegetable fertilizers, whether or not mixed
together or chemically treated;  fertilizer produced by themixing or chemical treatment of animal or vegetableproductsPlant protection regulations
Veterinary regulations
3808 Insecticides, rodenticides, fungicides, herbicides,
anti-sprouting products and plant-growth regulators,disinfectants and similar products, put up in forms or
packing for retail salePlant protection regulations
4403 Wood in the ro ugh, whether or not stripped of bark or
sapwood, or ro ughly squaredPlant protection regulations
4407 Wood sawn or chipped lengthwise, sliced or peeled, whether
or not planed, sanded or finger jointed, of a thicknessexceeding 6 mmPlant protection regulations
4415 Packing cases, boxes, crates, drums and similar packing, of
wood, cable drums of wood; pallets, box pallets and otherload boards of woodPlant protection regulations
4501 Natural cork, raw or simply prepared; waste cork; crushed,
granulated or ground corkPlant protection regulations
4600 Manufactures of straw, of esparto or to other materials;
basketware and wickerworkPlant protection regulations
5001 Silk - worm cocoons suitable for reeling Plant protection regulations
5003 Silk waste (including cocoons unsuitable for reeling, yarn
waste and garnetted stock)Plant protection regulations
5101 Wool, not carded or combed Plant protection regulations
5103 Waste of wool or of fine or of coarse animal hair, including
yarn waste but excluding garnetted stockPlant protection regulationsWT/ACC/LVA/32
Page 27
HS tariff line Product description Measure
5201 Cotton, not carded or combed Plant protection regulations
5202 Cotton waste (including yarn waste and garnetted stock) Plant protection regulations
5301 Flax, raw or processed but not spun; flax tow and waste
(including yarn waste and garnetted stock)Plant protection regulations
5302 True hemp, raw or processed but not spun, tow and waste of
true hempPlant protection regulations
5303 Jute and other bast, raw or processed but not span, tow and
waste of these fibres Plant protection regulations
5304 Sisal and other textile fibres of the genus Agave, raw or
processed but not spunPlant protection regulations
5305 Coconut, abaca, ramie and other vegetable textile fibres, not
elsewhere specified or included, raw or processed but not
spunPlant protection regulations
86. Summarizing Latvia's efforts thus far to implement the Agreement on the Application of
Sanitary and Phytosanitary Measures, the representative of Latvia said that five laws - the Law on
Protection of Consumer Rights, the Law on Veterinary Medicine, the Law on Pharmaceutical
Activties, the Law on Supervision of Food Circulation and the Law on Plant Protection - had beenadopted since 1992.  These laws and their amendments constituted the basis for Latvia's compliance
with the SPS Agreement.  The new Law on Supervision of Food Circulation was prepared taking into
account recommendations made by a group of experts in relation to the FAO project on food quality
improvement in Latvia and a project on Latvia's food legislation sponsored by Denmark and was in
accordance with the requirements of the SPS Agreement.  Laws would be revised to clarify
authorities' areas of competence and responsibility in the elaboration and harmonization of regulations
and requirements as well as in market surveillance to avoid duplication and ensure more effectivefood control.  The veterinary and phytosanitary border control administration was reorganized at the
beginning of 1997 to improve coordination and meet international standards.  As a result of the
process to harmonize food legislation, in 1997 Latvia had adopted a new regulation "On Maximum
Residue Level of Veterinary Drugs in Food" and regulation "On Standing Order for Food Additives".
Both regulations were in full compliance with international rules.  Latvia observed the principle oftransparency as it required all adopted regulations related to sanitary and phytosanitary measures to be
published in the official newspaper of the Republic of Latvia "Latvijas Vèstnesis".  The authority to
adopt legislative acts for implementing the SPS Agreement rested with the Cabinet of Ministers.
Prior to their adoption, all draft regulations were discussed by the Advisory Board of the State
Veterinary Service and published in the media of the veterinary profession to encourage widediscussion.  Also prior to their adoption, legislative acts on food safety and quality were to be
reviewed by the Food Council (a consulting body composed of ministerial officials, representatives of
producers, traders, distributors and other involved institutions), which had recently begun acting as an
expert panel for drafting legislative acts and amendments.  The legislative acts on implementation of
particular sectors covered by the SPS Agreement were submitted to the Ministry of Economy, whichwas responsible for fulfilling of the notification requirement.  The Enquiry point, as provided for by
Article 10 of the TBT Agreement and Article 7 of the SPS Agreement, operated under auspices of the
Ministry of Economy.  Latvia had also developed a training system for veterinary inspectors in order
to improve the standards of control, inspection and approval procedures according to the SPS
Agreement.
87. The representative of Latvia stated that its sanitary and phytosanitary measures reflected
international standards, guidelines and recommendations. The SPS enforcement issues were being
solved through intensive training programmes and accumulation of practical skills.  Latvia's TBT and
SPS standards were currently in a process of rapid evolution to a new system reflecting international
requirements provided for in a specific governmental programme.  As a general point, theWT/ACC/LVA/32
Page 28
representative of Latvia noted that, each law pertaini ng to technical barriers to trade and sanitary and
phytosanitary measures included a general clause stating that the provisions of an international
agreement prevailed over national legislation in cases of contradiction.  The provisions of the TBT
and SPS Agreements would thus prevail over domestic law on Latvia's accession to the WTO in cases
of contradiction.  He also stated that all the laws and regulations pertaining to the application of
technical requirements and sanitary and phytosanitary measures to trade and any necessaryamendments to current legislation to bring them  into conformity with provisions of the WTO
Agreements on Technical Barriers to Trade and Sanitary and Phytosanitary Measures would enter into
force prior to Latvia's accession.
88. The representative of Latvia stated that Latvia would apply the Agreements on Sanitary and
Phytosanitary Measures and Technical Barriers to Trade from the date of accession without recourse
to any transition period.  The Working Party took note of this commitment.
Trade-Related Investment Measures (TRIMs)
89. Some members of the Working Party enquired about Latvia's intentions regarding notification
and elimination of measures not in conformity with the provisions of the WTO Agreement on Trade-
Related Investment Measures (TRIMs).
90. The representative of Latvia said that Latvia would not maintain any measures inconsistent
with the TRIMs Agreement and would apply the TRIMs Agreement from the date of accessionwithout recourse to any transitional period.  The Working Party took note of this commitment.
State trading entities
91. Noting that more than 500 State-owned enterp rises were involved in foreign trade in 1994,
some members of the Working Party asked Latvia to pr ovide a list of all firms wholly or partly owned
or managed by the State, specifying any exclusive or special rights accorded to these enterprises.Latvia was requested to complete the questionnaire on State-trading.  A member felt that the State
Cereal Bureau could meet the criteria of a State-trading enterprise under Article XVII of the
GATT 1994 and that the definition might also cover other enterprises engaged in agricultural
production and distribution,  including trade in sugar;  metals;  alcoholic beverages;  and the natural
monopolies managed by the State.  Latvia was also asked to provide details on the trading firmsInterlatvija and Latvijas Labiba.
92. The representative of Latvia provided a notification on State-trading to the Working Party in
document WT/ACC/LVA/12 (Annex 3) describing the f unctioning of the State Cereal Bureau.  The
State Cereal Bureau was an institution not engaged in regular grain trade;  on occasion, grain had been
bought to replenish reserves held for food security reasons.  Domestic grain was favoured inprocurement for the State reserve.  Institutions such as the State Alcohol Monopoly Board and the
Tobacco Department did not engage in trade, but i ssued business licences to other operators in their
respective areas.  Other State-owned enterprises only held the same rights to trade as the private
sector.  The trading companies Interlatvija and Latvijas Labiba were fully privatized in 1991 and the
Government had no role in their activities. The representative of Latvia stated that no enterprises,
other than the State Cereal Bureau, operated under special or exclusive rights in Latvia.  Latvia had
established an Excise Tax Board dealing with licensing and excise marking of alcohol, tobacco andlicensing of other goods subject to excise tax.  The State Alcohol Monopoly Board and the Tobacco
Department were incorporated into the Excise Tax Board and had ceased to exist as separate
institutions.
93. The representative of Latvia confirmed that his Government would apply its laws and
regulations governing the trading activities of State-owned enterprises and other enterprises withWT/ACC/LVA/32
Page 29
special or exclusive privileges and would act in full conformity with the provisions of the
WTO Agreement, in particular Article XVII of the GATT 1994 and the Understanding on that Article
and Article VIII of the GATS.  He further confirmed that Latvia would notify any enterprise falling
within the scope of Article XVII.  The Working Party took note of these commitments.
Free zones, special economic areas
94. The representative of Latvia said that four special economic regimes had been established in
Latvia by October  1997 according to the laws "On Riga Commercial Free Port" (passed on
6 November 1996), "On Ventspils Free Port" (19 December 1996), "On Liepaja Special Economic
Zone" (17 February 1997) and "On Rezeknes Special Economic Zone" (1 October 1997).  The free
zones in Riga Commercial Port and Ventspils Port were traditional free customs zones, established
according to special laws and in consistence with the new Customs Law.  The special economic zone
in Liepaja, a former Soviet Navy base area, had been established by special law to promote
development and recovery in a destroyed region.  The Rezeknes Special Economic Zone had beenestablished in order to promote development of the assisted region.  The policy of Latvia's
Government was not to extend the development of special economic zones and not to establish new
free economic zones in Latvia, but to gain experience from existing zones and develop more detailed
regulations regarding the functioning of these zones.  He added that there were neither export
performance, trade balancing nor domestic content requirements associated with establishment ofcompanies in the zone and purchases of goods produced in the zone by the rest of Latvia would bear
normal taxes and tariff requirements.  Further information on the free economic zones is provided in
Table 6.
Table 6 :  Free Economic Zones
Riga Commercial
Free PortLiepaja Special Economic
ZoneVentspils Free Port Rezeknes Special
Economic Zone
Territory Part of Riga port Liepaja Port, part of Liepaja
industrial port, military port(former military base andcampus)Ventspils Port Rezeknes industrial region
Area approx. 664 ha approx. 3,000 ha approx. 2,026 ha approx. 1,220 ha
Tax
exemptionsFree customs zone
regime in thewhole territoryPossibility to create free
customs zone regime(meeting the respective
conditions) in some parts of
zone.VAT - zero for investmentsinto infrastructure;Company income tax - 20
per cent of normal tax rate
(possible reduction, up tozero tax, upon decision ofthe municipality);Land and real estate tax - 20per cent of normal tax rate
(possible reduction, up to
zero tax, upon decision ofthe municipality)Social tax - max. 15 minimalwages.Several free zone
regimes establishedin different parts of
the area and
possibility to createothersPossibility to create free
customs zone regime insome parts of zone.
VAT - zero for
investments intoinfrastructure;Company income tax - 20
per cent of normal tax rate.
Land and real estate tax –
20 per cent of normal taxrate (possible reduction, up
to zero tax, upon decision
of the municipality).
LandpropertyPossible to lease Possible to buy if investment
exceeds 100,000 Lats per
1 haPossible to lease Possible to buyWT/ACC/LVA/32
Page 30
95. The representative of Latvia stated that the free ports and special economic zones authorized
by the legislation described in paragraph 94 were fully subject to the coverage of Latvia's
commitments in its Protocol of Accession to the WTO Agreement and that Latvia would ensure
enforcement of its WTO obligations in those zones.  In addition, goods produced in these areas under
tax and tariff provisions that exempt imports and imported inputs from tariffs and certain taxes will be
subject to normal customs formalities when entering the rest of Latvia, including the application oftariffs and taxes.  The Working Party took note of these commitments.
Government procurement
96. Some members of the Working Party asked about the status and content of Latvian legislation
on public procurement including clarification of the exceptions concerning the case of "exclusive
rights" and "urgent necessity" and Latvia's position regarding possible membership of the Plurilateral
Trade Agreement on Government Procurement.  In their view, Latvia should commit itself to a
specific date by which to join the Agreement on Government Procurement if the outcome of thenegotiations on an entity list was satisfactory to all.
97. The representative of Latvia said that Latvia had adopted a new law on Government and
Municipal Procurement based on the Agreement on Government Procurement and the UNCITRAL
Model Law on Procurement.  The Law allowed th e award of supply contracts without bid or
competition in cases associated with the creation of State reserves or national security and defence inaccordance with specific decisions by the Cabinet of Ministers, or in cases of procurement of less than
Lats 5,000.  Single tendering could take place when certain suppliers held exclusive rights on goods
and services;  in circumstances of urgent necessity;  when past purchases required the same source for
additional supplies;  and for the conclusion of research and development contracts.
98. The Law on Government and Municipal Procurement was passed by Parliament on
24 October 1996.  An English version of the Law was submitted to the WTO Secretariat.  The new
Law on Government and Municipal Procurement, entering into force on 1 January 1997, stated that
tendering with participation of foreign competitors was mandatory if the expected value of
construction works exceeded Lats 4 million (SDR 5 million) or the expected value of other works or
supplies exceeded Lats 104,000 (SDR 130,000).  National treatment applied in the field ofgovernment procurement.
99. The representative of Latvia recalled that Latvia was granted observer status in the Committee
on Government Procurement on 4 June 1996 (document GPA/W/16).  Latvia intended to commence
negotiations on accession to the Agreement on Government Procurement in the second half of 1998
and had begun preparation of the accession documents.  However, additional consultations would berequired with WTO experts before negotiations could start.
100. The representative of Latvia confirmed that Latvia will initiate negotiations for membership
in the Agreement on Government Procurement upon accession by tabling an entity offer at that time.
He also confirmed that, if the results of the negotiations are satisfactory to Latvia and the other
members of the Agreement, Latvia will complete negotiations for membership in the Agreement by
1 January 2000.  The Working Party took note of this commitment.
Transit
101. Some members of the Working Party asked Latvia to describe the regime relating to goods in
transit.  The representative of Latvia said that goods carried in transit were checked at the border.
Customs offices kept a copy of the cargo dispatch notes and collected information for statistical
purposes.  The same procedures were followed for all goods, including metals.  Latvia charged no
transit fee at present, however, a convoy fee - paid by the transporter - was levied on dangerousWT/ACC/LVA/32
Page 31
goods, tobacco, food products or perfume transpor ted through Latvia.  Certain non-dangerous goods
were subject to a security deposit equal to the amount of taxes due on importation of such goods in
Latvia.  The security deposit would be refunded within two months provided the transit regulations
were adhered to.
102. The representative of Latvia confirmed that his Government would apply its laws and
regulations governing transit operations and would act in full conformity with the provisions of theWTO Agreement, in particular Article V of the GATT 1994.  The Working Party took note of this
commitment.
4. Agricultural Policies
103. Some members of the Working Party asked Latvia to elaborate on its agriculture regime,
including tariff protection, budgetary support, concessional credits, export subsidies and the
procurement of grain.  Some members noted tariff increases on some products and new support
measures of recent date.  Some members observed that Latvia had recently introduced export subsidymeasures and sought a commitment that Latvia would eliminate export subsidies.
104. The representative of Latvia explained that the agricultural sector was going through a major
reform process that included land restitution, deco llectivisation and privatization of the food industry
in order to establish a market-based competitive economic environment.  He also noted that the
reform process was a balanced shift from various tax exemptions in the farming sector to moretransparent ways of direct support to agriculture. Over the last few years, the farming sector
experienced a deterioration of the quality of agricultural land because of lack of proper drainage and
other soil treatment as well as low level of investment  in machinery and equipment.  As a result, total
agricultural output and income declined significantly and expectations were that it might take several
years to fully recover.  The representative of Latv ia indicated that his Government was determined to
pursue vigorously the process of reform and viewed its accession to the WTO as an important element
in this regard.
105. Some members sought a commitment that Latvia would eliminate price controls on grain
products.  The representative of Latvia said that the Government had guaranteed the price of food
grain for the State reserve.  In 1995, the price guarantee covered 32,000 tons but only 5,700 tons wereactually purchased and the State Grain Reserve had imported 14,000 tons.  Domestic grain prices had
recently been lower than the world  market prices.  The representative of Latvia said that amendments
to the Law "On Latvia Grain Market and State Grain Reserves", which eliminated the system of
guaranteed grain prices, had come into effect on 1 July 1997.
106. Regarding domestic support, the representative of Latvia submitted detailed information in
document WT/ACC/SPEC/LVA/2 based on the clas sification suggested by WT/ACC/4 and the
methodology of the Agreement on Agriculture, whic h showed the average product specific support
during the base period 1994-1996 for cereals, cattle, sheep, sugar beet, seed materials and flax and
non-product specific support.  Information was also provided on a number of programmes regarding
the financing of agricultural research, pest and disease control, advisory services and infrastructure
which Latvia considered "green box" measures.
107. Regarding export subsidies, the representative of Latvia said that export subsidies had been
provided for milk powder, canned milk, cheese, butter and rye in 1994, 1995 and 1996.  He also made
clear that Latvia’s intention was increasingly to  direct its investment in agriculture towards
programmes designed to improve the efficiency and competitiveness of Latvian agriculture and
ensure its alignment with world market requirements.  In this context, Latvia would be prepared to
eliminate export subsidies as reflected in its schedule of commitments annexed to Latvia’s Protocol ofAccession.WT/ACC/LVA/32
Page 32
108. Latvia's commitments on agricultural tariffs, on domestic support and export subsidies for
agricultural products are in the schedule of concessions and commitments attached to Latvia’s
Protocol of Accession to the WTO.
109. The representative of Latvia said that during a transition period to expire on 1 January 2003,
Latvia would forego the 5 per cent de minimis  exemption for product-specific domestic support and
for non-product specific domestic support in calculating its Current Total AMS as provided for inparagraph 4 (a) of Article 6 of the Agreement on Agriculture, provided that the sum of product-specific and non-product-specific domestic support does not exceed SDR 24 million (representingapproximately 8 per cent of the average value of final agricultural production during the period 1994-1996) and that SDR 24 million instead constitutes Latvia’s  de minimis  exemption under Article 6.4 (a)
during each year of the said transition period.  Acco rdingly, during the trans ition period, Latvia would
not be required to include product-specific domestic support or non-product specific domestic supportin calculating its Current Total AMS pursuant to paragraph 4 (a) of Article 6 of the Agreement onAgriculture, and would not be required to reduce such domestic support in accordance with paragraph1 of Article 6 of the Agreement on Agriculture, where the sum of product-specific and non-productspecific support does not exceed SDR 24 million during the relevant year.  The Working Party tooknote of these commitments.
Trade in civil aircraft
110. The representative of Latvia said that Latvia would implement the Agreement on Trade in
Civil Aircraft without exceptions or transitional period at the time of accession.  The representative of
Latvia confirmed that Latvia would become a signatory to the Agreement on Trade in Civil Aircraft
upon accession to the WTO.  The Working Party took note of this commitment.
Trade-Related Intellectual Property Rights (TRIPS)
111. Some members of the Working Party asked Latv ia to compare its existing regime with the
WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  Specific
questions addressed the time schedule for the fu ll implementation of the TRIPS Agreement, the
enforcement of intellectual property rights, the protection of copyright and the acceptance of the
Berne Convention (1971) and the Rome Convention.
112. The representative of Latvia said that Latvia had been working to install a new legal system in
the area of intellectual property protection since 1991.  The number of national experts on the subject
was limited and Latvia also lacked experience with certain aspects of intellectual property such as
geographical indications, undisclosed information, and provisional and border measures.  He noted
that existing legislation was in conformity with the WTO Agreement on TRIPS with the exception of
the protection of geographical indications and Part III, section 4 of the TRIPS Agreement (bordermeasures).  The new legislation regarding the protection of geographical indications had been
accepted by the Government and submitted for adoption to the Saeima, and the new legislation
regarding border measures (Part III, section 4 of the TRIPS Agreement) had been subm itted to the
Government for approval in July 1998.  An overview of Latvia's intellectual property legislation and
an ongoing revision programme was provided to the Working Party, and is reproduced in Table 7.WT/ACC/LVA/32
Page 33
Table  7:  Status of Legislation On Intellectual Property in Latvia (August 1998)
TRIPS Agreement Laws and other legal provisions addressing and
covering the subject mattersEffective and draft legislation
relating to requirements of the
TRIPS Agreement
Part II, Section 1 - Copyright Law of 11 May 1993
- Law on Amendments of the Latvian
Criminal Code of 6 October 1955
- Cabinet of Ministers Regulation on
Distribution (Reproduction) and PublicPerformance of Cinematographic Works
(1996)Effective - full compliance with
WTO TRIPS requirementsensured
Part II, Section 2 Trademark Law of 9 March 1993 Effective - full compliance with
WTO TRIPS requirements
ensuredDraft Law on Trademarks andGeographical Indications adoptedby the Government in August
1998 and submitted to the Saeima
(adoption expected by October1998)
Part II, Section 3 Draft Law on Amendments to the
Law on Competition, Section VUnfair CompetitionA new draft Law on Trademarksand Geographical Indications
including provisions on protection
of geographical indicationsadopted by the Government inAugust 1998 and submitted to theSaeima (expected adoption by the
Saeima in October 1998)
Part II, Section 4 Law on  Industrial Design Protection of 4 May 1993 Effective - full compliance with
WTO TRIPS requirements
ensured
Part II, Section 5 Patent Law of 2 March 1993 as amended on
30 March 1995Effective - full compliance with
WTO TRIPS requirementsensured
Part II, Section 6 Law on Protection of Topographies of
Semiconductor Products of 31 March 1998Effective - full compliance with
WTO TRIPS requirementsensured
Part II, Section 7  Law on Competition (Section V ‘Unfair
Competition’, Art. 22) of 18 June 1997 (in effect as
of 1 January 1998)
Civil CodeDraft Commercial Law (approved
by the Government, expected
adoption in the Saeima by
November 1998)Draft Law on Publicity of Stateand Local Government'sInformation and draft Law on
Personal Data Protection
(approved by the Government,expected adoption in the Saeimaby October 1998)
Part II, Section 8 Provisions of the Patent Law, Trademark Law, Law
on Industrial Design ProtectionEffective - full compliance with
WTO TRIPS requirementsensuredWT/ACC/LVA/32
Page 34
TRIPS Agreement Laws and other legal provisions addressing and
covering the subject mattersEffective and draft legislation
relating to requirements of the
TRIPS Agreement
Part III, Section 3(provisional
measures)Law on Competition of 18 June 1997, Section V
‘Unfair Competition’, Art. 24;
Civil Procedural LawEffective - compliance with WTO
TRIPS requirements ensured
Part III, Section 4(special requirementsrelated to bordermeasures)Draft secondary legislation under
Section C, Customs Law (Code)of 11 June 1997 (submitted to theGovernment in July 1998,expected approval by theGovernment in October 1998)
Part III, Section 5(criminal procedures)Criminal Code Effective - full compliance with
WTO TRIPS requirementsensured
113. Regarding the status of intellectual property legislation in specific areas, the representative of
Latvia added that, on copyright and related rights, Latvia adopted a Copyright Law in May 1993
which included provisions on computer programmes a nd protection of databases.  However, the basic
principles regarding rental rights for computer programmes would be refined to ensure better
implementation.  In August 1998, a new draft law On Copyright and Neighbouring Rights had been
adopted by the Government, and by the end of 1998 it was to be accepted by the Saeima.  The
Criminal Code was amended in October 1995 in regard to violation of copyright and neighbouring
rights, and in July 1998 the new Criminal Code had been passed in the Saeima, incorporating and
refining provisions of criminal responsibility for infringement of copyright and illegal use of
copyrighted work and neighbouring rights.  Latvia had acceded to the Berne Convention in
August 1995 and a Law on the accession to the Rome Convention (1961) for the Protection of
Performers, Producers of Phonograms and Broadcasting Organizations had been adopted by theSaeima in 1997 and would come into effect on 1 January 1999.  On 8 April 1997, the Saeima had
adopted the Law on accession to the Geneva Convention (1971) for the Protection of Producers of
Phonograms against Unauthorized Duplication of their Phonograms.  Latvia would join the WIPO
Copyright Treaty and Performance and Phonograms Treaty before the end of 1998.  In August 1998, a
new draft Law on Trademarks and Geographical Indications had been adopted by the Governmentand submitted for adoption to the Saeima.  The draft refined some definitions of the current law and
included new provisions concerning international registration of marks and protection of geographical
indications.  Concerning the protection of layout-designs of integrated circuits (Part II, section 6 of the
TRIPS Agreement), he said that on 31 March 1998 Latvia had adopted the Law on Protection of
Topographies of Semiconductor Products, based on Council Directive (87/54/EEC) of the European
Communities on the legal protection of topographies of semiconductor products of
16 December 1986.  In August 1998, draft laws on accession to the Madrid Agreement Concerning
International Registration of Trademarks and the Protocol to the Madrid Agreement had been adopted
by the Government and submitted for consideration to the Saeima.  Protection of undisclosed
information in accordance with the requirements of Part II, section 7 of the TRIPS Agreement would
be covered in the following new draft laws on personal data protection, which had been elaborated in
order to ensure rights of any person to protect her rights and freedoms processing personal datamanually or electronically, and the draft law on publicity of State and local government's information.
Both laws had been approved by the Government and submitted for adoption to the Saeima.
Currently, the protection of undisclosed information was generally provided for by the Civil Code.
114. Referring to Part III of the TRIPS Agreement - Enforcement of Intellectual Property Rights  -
the representative of Latvia said that the new Law on Competition of 18 June 1997 includedprovisions on provisional measures (Part III,  section 3), and the new Customs Law (Code) ofWT/ACC/LVA/32
Page 35
11 June 1997 provided for adoption of secondary legislation relating to border measures (Part III,
section 4), which had been submitted for adoption to the Cabinet of Ministers in July 1998 and would
refine the provisions on provisional measures contained in the amended Latvian Civil Procedural
Code.  Provisions in existing legislation relating to enforcement of intellectual property rights
included:
- Part 4, Articles 54 to 57 of the Copyright Law which specified the notion of
infringement of copyright and related rights as well as civil procedures provided for
under this law and relating to enforcement of the said rights, and (Article 57)
administrative and civil liability and criminal responsibility in case of infringement of
copyright or related rights;
- Chapter 9 (Articles 40 and 41) of the Patent Law on patent infringement and
responsibility thereof, Chapter 10 (Articles 42 to 45) on protection of rights derivedfrom a patent, and Chapter 11 (Articles 46 to 49) on review of disputes in court;
- Articles 16, 18, 21 and 24 of the new Competition Law on responsibility for violation
of restrictions on monopolies and illegal competition;
- similar provisions provided for by the Trademark Law and the Law on Design
Protection;  and
- provisions in the said Laws referring to procedures and measures provided for by
civil or criminal law.  
In addition to amending the Latvian Civil Procedural Code in 1995 to provide for provisional
measures, Latvia had also amended the Criminal Code of 6 October 1955 and a new Criminal Code
had been passed in August 1998 to provide for more severe measures in case of infringement of
intellectual property rights and, in particular, copyright and neighbouring rights.  Amendments to the
Administrative Offences Code on illegal distribution of neighbouring rights to a work and the use ofcopyrighted work without licence had been submitted for adoption to the Saeima.  Latvia had begun
to reform its court system to strengthen its capab ility to enforce intellectual property rights.  The
former judiciary law, education and practice had given Latvia no experience in reviewing intellectual
property disputes and Latvia considered as one of its most important tasks to educate a new
generation of experts in the area of intellectual property protection and enforcement and to train itspractitioners (judges, advocates, patent attorneys and trademark agents).
115. As a general point, the representative of Latvia noted that each law pertaining to intellectual
property included a general clause stating that the provisions of an international agreement prevailed
over national legislation in cases of contradictio n.  The provisions of the TRIPS Agreement would
thus prevail over domestic law on Latvia's accession to the WTO.  Also as a general point, the
representative of Latvia stated that all the draft laws pertaining to intellectual property and necessary
amendments to current legislation to bring them into conformity with the TRIPS Agreement would
enter into force prior to Latvia's accession.
116. The representative of Latvia confirmed that his Government would fully apply the provisions
of the Agreement on Trade-Related Aspects of Intellec tual Property Rights (TRIPS) by the date of its
accession to the WTO without recourse to a transitional period.  The Working Party took note of this
commitment.WT/ACC/LVA/32
Page 36
Policies affecting trade in services
117. The representative of Latvia provided a description of Latvia's services regime in document
WT/L/63 (L/7526/Add.3).  Specific questions by members of the Working Party focused on
regulations in the financial sector and clarification of laws with important provisions regarding
investment in services sectors.
118. With regard to the financial sector, the representative of Latvia stated that licensing
requirements were the same for domestic and foreign entities.  However, procedurally, an application
from a foreign bank to establish a branch or representative office was considered by the Board of
Governors of the Bank of Latvia while other applic ations were considered by the Executive Board of
the Bank of Latvia.
119. The representative of Latvia said that Parliament had adopted a new Law "On Credit
Institutions" in October 1995.  Under the Law "On Insurance" foreign investors could perform
insurance activities in Latvia through the establishment of companies or partnerships with Latvians,i.e. joint-stock companies in which the participation of foreign investors was not restricted.  He
confirmed that licences were issued exclusively for one type of insurance activity;  insurers involved
in life insurance were prohibited from offering non-life insurance and vice versa.  An insurer could
not conduct life and non-life insurance operations simultaneously, without establishing a new
company.  However, this restriction did not refer to accident and health insurance operationsconcluded by an insurer with a licence to perform lif e insurance.  A direct life insurer was allowed to
reinsure life, accident and health insurance operations.  A direct non-life insurer was prohibited from
reinsuring life insurance operations.  He stated that the criteria for registration of credit institutions or
enrolment of broker companies were not inconsiste nt with Article XVI of the General Agreement on
Trade in Services.
120. The representative of Latvia said that on 7 October 1997, the Cabinet of Ministers had
adopted Regulations No. 348 "On Licensing of Certain Forms of Entrepreneurial Activities", which
would replace the former Regulations No. 434.  The main changes under the new regulations were
that the number of activities subject to regulation had been reduced from 118 to 67 and that
professional certification had been transferred to ac credited professional associations, municipalities
and the Bank of Latvia with respect to financial activities and supervision, as appropriate.  The new
regulations came into effect on 1 January 1998 and responsible governmental institutions such as
Ministry of Education and Science, Ministry of Welfare and Ministry of Transportation had been
required to submit the amendments to the legislation on regulated professions, standards of
professional qualifications and conformity assessment procedures.  Certification had been introducedin order to ensure a professional level of service and the protection of consumers. Foreigners were
granted national treatment in the issuance of certificates for supply of individual professional services.
He confirmed that Latvia had no legislation on safeguard measures related to trade in services and that
no restrictions were applied on domestic or international transfers and current payments for services.
121. The representative of Latvia said that the State enterprise "Latvijas Pasts" (Latvian Post) held
monopoly rights on postal services.  "Lattelekom", a joint venture between Tilts Communications
(British and Finnish ownership) and the Latvian Government, had been granted an exclusive right
until 1 January 2003 to provide telecommunication services.
122. Latvia's Schedule of Specific Commitments on Services is annexed to its draft Protocol of
Accession reproduced in the Appendix to this Report (see paragraph 132 below). This Schedule of
Specific Commitments on Services contains the legally binding market access commitments of Latvia
in respect of services.WT/ACC/LVA/32
Page 37
Transparency
Publication of Information on Trade
123. The representative of Latvia stated that, at the latest from the date of accession, all laws and
other normative acts related to trade would be published in the Official Journal promptly and no law,
rule, etc. related to international trade would become effective prior to such publication.  He furtherstated that Latvia would fully implement Article X of the GATT 1994 and the other transparency
requirements in WTO Agreements requiring notification and publication.
Notification
124. The representative of Latvia said that at the latest upon entry into force of the Protocol of
Accession, Latvia would submit all initial notifications required by any Agreement constituting part
of the WTO Agreement.  Any regulations subsequently enacted by Latvia which gave effect to the
laws enacted to implement any Agreement cons tituting part of the WTO Agreement would also
conform to the requirements of that Agreement.  The Working Party took note of this commitment.
Trade Agreements
125. Some members of the Working Party inquired about Latvia's preferential trade agreements.
Some members were concerned about the consistency with Article XXIV of the GATT 1994 of these
free trade agreements.
126. The representative of Latvia said that agreements for the avoidance of double taxation and
prevention of fiscal evasion had been signed (21 countries at present) and entered into force with
Belarus, the Czech Republic, China, Canada, Denmar k, Estonia, Finland, Iceland, Lithuania, the
Netherlands, Norway, Poland, Sweden, Ukraine and the United Kingdom.  Latvia had entered into
intergovernmental agreements on trade and economic cooperation, providing for MFN status, withArmenia, Australia, Azerbaijan, Belarus, Canada, Ch ina, Cuba, Cyprus, Hungary, India, Kazakhstan,
Kyrgyz Republic, Moldova, Romania, Russian Federation, Tadjikistan, Turkmenistan, the
United States of America and Uzbekistan.
127. Latvia had concluded free trade agreements with the European Communities, the EFTA
States, the Czech Republic, the Slovak Republic, Pola nd, Slovenia, Ukraine, Estonia and Lithuania in
order to develop an intra-regional trade.  These trading partners accounted for nearly 70 per cent of
Latvia's foreign trade in 1997.  The scope of these agreements covered HS Chapters 1 to 97.  Latvia's
Association (Europe) Agreement with the European  Communities, signed on 12 June 1995, entered
into force on 1  February 1998 and incorporated provisions of the free trade agreement between the
European Communities and Latvia.  The Free Trade Agreements with Norway and Switzerland werereplaced by the Free Trade Agreement between Latvia and the EFTA States which entered into force
on 1 June 1996.  The Free Trade Agreements with the Czech Republic and the Slovak Republic had
entered into force on 1 July 1996, with Slovenia - on 1 August 1996.  These agreements were notified
to the WTO under the procedures of Article XXIV of the GATT 1994.  The Free Trade Agreement
with Poland had entered into force on 1 April 1998.  A Trilateral Free Trade Agreement on trade in
industrial goods between Latvia, Estonia and Lithuania had entered into force on 1 April 1994, and a
Trilateral Free Trade Agreement on trade in agricultural goods between Latvia, Estonia and Lithuaniahad entered into force on 1 January 1997.  Finally, a Trilateral Agreement on Abolition of Non-tariff
Barriers to Trade between Latvia, Estonia and Lithuania had been signed on 20 November 1997 and
entered into force on 1 June 1998.  The agreement provided for elimination of all customs tariffs and
quantitative restrictions in trade between the Baltic States.WT/ACC/LVA/32
Page 38
128. The representative of Latvia said that the free trade agreement with the
European Communities had been notified to the WTO (document WT/REG7/N/1) and circulated in
July 1995 in document WT/REG7/1.  Latvia was committed to reduce tariffs on agricultural imports
from the European Communities in equal annual steps between 1995 and 2000.  Reductions were
granted through tariff quotas;  Annex XI of the Agreement enumerated the products concerned and
the respective quotas, while the tariff rates were listed in Annex X.  For processed agriculturalproducts the relevant parts of the Agreement were  Annexes 3 and 4 of Protocol 2.  Latvia had
established tariff quotas for meat and meat products, yoghurt, flowers, cabbage, cauliflower and
margarine while the tariff reductions applied for unlimited quantities of various fruit and fruit juices,
pet food, hair and some processed products.  The main Latvian products subject to concessions in the
European Communities were meat and meat products, dairy products, chocolate and sweets.  The
representative of Latvia confirmed that the Free Trade Agreement between Latvia and the
European Communities included clauses on further liberalization of trade.  The preferential tariff-ratequotas used in the Free Trade Agreements between Latvia and the European Communities, the EFTA
States, the Czech Republic, Poland, the Slovak Republic and Slovenia had been established to
facilitate further liberalization of trade in products for which the parties considered that some
transitional period was required to achieve free trade.  All importers were free to import goods at the
MFN tariff rate at any time, irrespective of whether any tariff-rate quotas had been exhausted or not.
129. The representative of Latvia noted that Latvia's free trade agreements had traditionally not
covered trade in services.  However, Latvia's Association (Europe) Agreement with the
European Communities included trade in services and establishment issues.  Latvia had signed
agreements on employment of foreign labour with Germany and Sweden.  He confirmed that Latvia
was not a party to any agreement concerning mutual recognition of professional qualifications.
130. The representative of Latvia stated that his Government would observe the provisions of the
WTO including Article XXIV of the GATT 1994 and Article V of the GATS in its trade agreements,
and would ensure that the provisions of these WTO Agreements for notification, consultation and
other requirements concerning free trade areas a nd customs unions of which Latvia was a member
were met from the date of accession.  The Working Party took note of these commitments.
Conclusions
131. The Working Party took note of the explanations and statements of Latvia concerning its
foreign trade regime, as reflected in this summar y.  The Working Party took note of the commitments
given by Latvia in relation to certain specific matters which are reproduced in paragraphs 18, 21, 30,
40, 48, 53, 59, 62, 66, 69, 77, 88, 90, 93, 95, 100, 102, 109, 110, 116, 124 and 130 of this Report.  TheWorking Party took note that these commitments had been incorporated in paragraph 2 of the Protocol
of Accession of Latvia to the WTO.
132. Having carried out the examination of the foreign trade regime of Latvia and in the light of
the explanations, commitments and concessions made by the representative of Latvia, the Working
Party reached the conclusion that Latvia be invited to accede to the Marrakesh Agreement
Establishing the WTO under the provisions of Article XII.  For this purpose, the Working Party has
prepared the draft Decision and Protocol of Accession reproduced in the Appendix to this Report, andtakes note of Latvia's Schedule of Specific Commitments on Services (document
WT/ACC/LVA/32/Add.2) and its Schedule of Conc essions and Commitments on Goods (document
WT/ACC/LVA/32/Add.1) that are annexed to the Protocol .  It is proposed that these texts be adopted
by the General Council when it adopts the Report.  When the Decision is adopted, the Protocol of
Accession would be open for acceptance by Latvia which would become a Member thirty days after itaccepts the said Protocol.  The Working Party agreed, therefore, that it had completed its work
concerning the negotiations for the accession of Latvia to the Marrakesh Agreement Establishing the
WTO.WT/ACC/LVA/32
Page 39
ANNEX 1
Rates of Excise Tax
HS code Description Tax rate
 2207 Rectified ethyl alcohol of 100-proof
alcoholLVL 4.10 per litre
 2204, 2205, 2206 Champagne and all other types of wine
(up to 14 degrees)LVL 0.25 per litre
Other alcoholic beverages, and  beer
over 7 degreesLVL 4.10 per litre pure alcohol
 2203, Beer 5.5 - 7 degrees per hectolitre LVL 4.00 per hectolitre
 2402 20 Cigarettes, with filter LVL 0.004 per piece
 2402 20 Cigarettes, without filter LVL 0.05 per piece
 2402 10 Cigars and cigarillos LVL 0.01 per piece
 2403 Other tobacco products for retail sale 100 per cent
 2709, 2710, Unleaded petrol, from
 3811, 3814 - 1 January 1997 LVL 0.12 per litre
- 1 January 1998 LVL 0.14 per litre
- 1 January 1999 LVL 0.16 per litre
- 1 January 2000 LVL 0.18 per litre
- 1 January 2001 LVL 0.20 per litre
 2710, 3811 Leaded petrol, from
- 1 January 1997 LVL 0.13  per litre
- 1 January 1998 LVL 0.16 per litre
- 1 January 1999 LVL 0.19 per litre
- 1 January 2000 LVL 0.21 per litre
- 1 January 2001 LVL 0.23 per litre
 2710 Gasoline, from
- 1 January 1997 LVL 0.08 per litre
- 1 January 1998 LVL 0.10 per litre
- 1 January 1999 LVL 0.13 per litre
- 1 January 2000 LVL 0.16 per litre
- 1 January 2001 LVL 0.17 per litre
  2710 Heavy oil, from
- 1 January 1998 LVL 2.00 per 1,000kg
- 1 January 1999 LVL 4.00 per 1,000kg
- 1 January 2000 LVL 8.00 per 1,000kg
- 1 January 2001 LVL 10.00 per 1,000kg
 2710 Kerosene, from
- 1 July 1997 LVL 0.08 per litre
- 1 January 1998 LVL 0.10 per litre
- 1 January 1999 LVL 0.13 per litre
- 1 January 2000 LVL 0.16 per litreWT/ACC/LVA/32
Page 40
HS code Description Tax rate
- 1 January 2001 LVL 0.17 per litre
  2710 Fuel oil , from
- 1 January 1998 LVL 2.00 per 1,000kg
- 1 January 1999 LVL 130.00 per 1,000 kg
- 1 January 2000 LVL 160.00 per 1,000 kg
- 1 January 2001 LVL  170.00 per 1,000 kg
 2711 Oil gases, from
- 1 January 1998 LVL 10.00 per 1,000 kg
- 1 January 1999 LVL 30.00 per 1,000 kg
- 1 January 2000 LVL 50.00 per 1,000 kg
- 1 January 2001 LVL 70.00 per 1,000 kg
 8703 Motor cars 10 per cent
 Chapter 71,
 excluding No. 7117Goods made from gold and other
precious metals, jewellery includingdiamonds, precious or semi-precious
stones30 per centWT/ACC/LVA/32
Page 41
ANNEX 2
Goods and Services Exempt from VAT or Zero-Rated
Exemptions (Article 6).
1. The tax shall not be levied on the following supplies of goods and services:
(i) services performed by old people’s homes or dwe llings, social care and rehabilitation centres, specialised
care centres or houses fully or partially financed from the State budget or municipal budgets;
(ii) the payment for staying of children in pre-school;
(iii) catering services financed from the state budget in penitentiaries and imprisonment places;
(iv) tuition at State and municipal educational establis hments, as well as private educational establishments
accredited by the State;
(v) tuition for unemployed persons’ professional training or re-qualification organised by the State Employment
Service;
(vi) services of public libraries;
(vii) visits to theatres, movies, circus shows, concert activities, events in cultural  establishments, visits to
museums, exhibitions, zoological and botanical garden s, events for children and charity events, events of
amateur art and of sports;
(viii) medical services, supplies of medicine and medical goods in accordance with the list adopted by the Ministry
of Welfare and approved by the Ministry of Finance;
(ix) supplies of gold, and bank notes to the Bank of Latvia;
(x) betting, lotteries and other types of gambling;
(xi) burial services, and religious, ritual and other services provided by religious organisations registered in the
Republic of Latvia provided they have no purpose of systematic gaining of profit;
(xii) Insurance services supplied by insurance companies in accordance with the Law "On Insurance";
(xiii) payments of individuals on apartment rent contracts signed (except payments for rent of hotels, motels and
similar establishments), on heating, on supply of hot and cold water, on sanitation, on work of scavenger;
(xiv) specialised baby-food in accordance with the list adopted by the Ministry of Welfare and approved by the
Ministry of Finance;
(xv) scientific research financed by public foundations, or by funding from the State and local government budget,
or international institutions;
(xvi) financial transactions:
(a) granting and control of credits, as well as the services connected with credit guarantees or other
bail guarantees and their monitoring, also debt recovery if it is performed by the creditor himself;
(b) services provided by credit institutions connected with deposit, current account operations,
payments, transfers, debts, checks and other means of payment, except encashment services and
lease of safes;
(c) means of payment and services connected with the purchase and selling of the means of payment in
circulation, except items (money, coins) supplied for collection, or that contain precious metals;
(d) securities and capital investments, as well as services supplied at purchase and sale of securities
and capital investments. Exemption shall not be applied to cases of property investments whenimporting or acquiring items of property investments, if not provided otherwise by the present
Law;
(e) special purpose subsidies for promoting public transport and special purpose subsidies for inland
conveyers  to transport handicapped and politically oppressed persons.
(xvii) mass media in accordance with the procedure established by the Cabinet of Ministers;
(xviii) consular services;
(xix) school books and scientific literature, first publications of works of original literature in Latvian and
publications for children published in Latvia in accordance with lists adopted by the Ministry of Educationand Science as well as services of printing-houses provided for publishing (developing) of above mentioned
literature and publications;
 (xx) feature, documentary and animation films (except video films of VHS format) if they are supplied or
distributed by a film distributor or producer officially registered in the Republic of Latvia;
(xxi) services provided by companies for joint processing and sale of agricultural and fishery products, as well as
companies for joint usage and maintenance of agricultural equipment, machinery and other tools (hereinafter- agricultural co-operatives) to the members of co-operatives, as well as to private farms that are not taxable
persons;
(xxii) sale of real estate, also sale of land, except first sale of unused real estate;
(xxiii) fire-fighting services provided by  the Fire-fighting and Rescue Service department of the Ministry of the
Interior, fire-fighting services of institutions, enterprises (entrepreneurial companies) and organisations,
voluntary fire-fighters’ unions and formations of fire-fighting volunteers.WT/ACC/LVA/32
Page 42
Exemptions (Article 6).
(xxiv) post-office services supplied by the non-profit organisation state stock company "Latvijas pasts" and on
which it has monopoly in accordance with the "Post-Office Law"
2. The following import of goods shall not be levied with the tax:
(i) import of goods referred to in Part 1 of the present Article;
(ii) foreign non-refundable shipments of technical aid, in accordance with the procedure established by the
Cabinet of Ministers;
(iii) fixed assets brought in to ensure the technologi cal process of the production of the taxable person, in
accordance with the procedure established by the Cabinet of Ministers;
(iv) works of art brought in to supplement museum reserves;
(v) import of the goods not levied with the customs duty in accordance with Parts 6 and 9 of the Law "On
Customs Duty (Tariffs)", except the supplies of the goods for which 0% rate of the customs duty is applied;
(3) On the State border import of goods shall not be levied with a tax, if one of the following customs procedures
referred to in the "Customs Law" is carried out:
(i) temporary import;
(ii) import for processing;
(iii) import for processing under customs control;
(iv) import to a tax-free shop;
(v) import to a customs warehouse;
(vi) transit.
4. If goods brought in the Republic of Latvia, not paying tax in accordance with Part 2 of the present Article,
(except the goods referred to in Paragraph 1, Part 2), are sold or leased, the value of the goods shall betaxable in accordance with the procedure established by the present Law;
5. In order the fixed assets referred to in Paragraph 3, Part 2 of the present Article do not cause competition
distortions in the country, the Ministry of Economics confirms the list of the goods whose analogues areproduced in the Republic of Latvia or which are brought in by the official representatives of the
manufacturers of these goods in Latvia. The importation of the fixed assets and their analogues included in
the list shall not be exempt from VAT.
 Application of 0% Tax Rate (Article 7).
1. 0% tax rate shall be applied to:
(i) supplies of goods whose pl ace of supply in accordance with Article 4 of the present Law is not a domestic
territory;
(ii) services connected with export of goods and transit transport (including services of transport, dispatch, goods
storage, loading, unloading, examination and sorting);
(iii) services whose location of performance in accordance with Article 4 of the present Law is not a domestic
territory;
(iv) supplies of goods and services connected with the provision and maintenance of international transport:
(a) supply, rebuilding, repairs, maintenance, hiring and leasing of vehicles and to supplies and services
connected with these activities.
(b) supplies of goods connected with the provision of vehicles,
(c) agent services of vehicles and services connected with cargo services;
(v) services connected with tourism (travels) in accordance with Article 13 of the present Law;
(vi)  on the basis of the parity principle - supplies of goods and services supplied to foreign diplomatic and
consular establishments in the Republic of Latvia, their diplomatic and consular agents, administratively
technical staff, as well as family members of the said persons - in accordance with the procedure establishedby the Cabinet of Ministers;
(vii) supplies of goods and services performed for the resources of non-refundable technical aid - in accordance
with the procedure established by the Cabinet of Ministers.
2. If an agent representing a natural or legal person of Latvia provides supplies of goods outside the borders of
the Republic of Latvia, 0% tax rate shall apply to the agent on supplies of goods in accordance with the
procedure established by the Cabinet of Ministers.
3. The tax amount paid by natural persons for goods (if their value ex ceeds LVL 100) exported from the
domestic territory shall be refunded in accordance with the procedure established by the Cabinet of Ministers.
4. If a taxable person that has supplied goods or services in accordance with Part 1 of this Article cannot
produce documents certifying the export, it shall be subject to the tax.WT/ACC/LVA/32
Page 43ANNEX 3
Export Duty Tariffs
Basic Rate
(%)Most favoured nation
(%)Free trade regime
(%)
CN code Description Supple-
mentary
unitSince
1 July
19971998 1999Since
1 July
19971998 1999Since
1 July
19971998 1999
1 2 3 5 6 7 8 9 10 11 12 13
Chapter 44 WOOD AND ARTICLES OF WOOD; WOOD
CHARCOAL
4403 Wood in the ro ugh, whether or not stripped of bark or
sapwood, or ro ughly squared:
4403 20 -   Other, coniferous:
4403 20 100 -  - Spruce of the kind "Picea abies Karst." or silver fir
(Abies alba Mill.)
4403 20 101 ---  round timber with the length over 2 metres and the
diameter 14 to 24 centimetresbl m33.0 3.0 0 3.0 3.0 0 3.0 3.0 0
4403 20 102 ---  round timber with the length over 2 metres and the
diameter 26 centimetres or morebl m34.0 4.0 0 4.0 4.0 0 4.0 4.0 0
4403 20 109 ---  Other m300 00  0 0 0 0 0
4403 20 300 -  - Pine of the kind "Pinus sylvestris L."
4403 20 301 ---  round timber with the length over 2 metres and the
diameter 14 to 24 centimetresbl m33.0 3.0 0  3.0 3.0 0 3.0 3.0 0
4403 20 302 ---  round timber with the length over 2 metres and the
diameter 26 centimetres or more bl m34.0 4.0 0 4.0 4.0 0 4.0 4.0 0
4403 20 309 ---  Other m30 0 0000 0 0 0
4403 20 900 -- Other:
4403 20 901 ---  round timber with the length over 2 metres and the
diameter 14 to 24 centimetresbl m33.0 3.0 0 3.0 3.0 0 3.0 3.0 0
4403 20 902 ---  round timber with the length over 2 metres and the
diameter 26 centimetres or morebl m34.0 4.0 0  4.0 4.0 0 4.0 4.0 0
4403 20 909 ---  Other m300 00 0  00 0 0
4403 91 000 -  -  Of oak (Quercus spp.)
4403 91 001 ---  oak-tree round timber with the length over 1 metre
and the diameter over 14 centimetresbl m325.0 25.0 0 25.0 25.0 0 25.0 25.0 0
4403 91 009 ---  Other m300 00 0 0 0 0 0
4403 92 000 -  -  Of beech (Fagus spp.)
4403 92 001 ---  beech round timber with the length over 1 metre and
the diameter over 14 centimetresbl m330.0 30.0 0 30.0 30.0 0 30.0 30.0 0WT/ACC/LVA/32
Page 44Basic Rate
(%)Most favoured nation
(%)Free trade regime
(%)
CN code Description Supple-
mentary
unitSince
1 July
19971998 1999Since
1 July
19971998 1999Since
1 July
19971998 1999
4403 92 009 ---  Other m300 00 0 0 0 0 0
4403 99 -- Other:
4403 99 500 -  -  -  Of birch
4403 99 501 ----  round timber with the length over 1.6 metres and
the diameter 16 to 24  centimetres (veneer blocks.
match blocks and A-rate sawn logs)bl m38.0 8.0 0 8.0 8.0 0 8.0 8.0 0
4403 99 502 ----  round timber with the length over 1.6 metres and
the diameter 26  centimetres or more (veneer blocks.match blocks and A-rate sawn logs)bl m
310.0 10.0 0 10.0 10.0 0 10.0 10.0 0
4403 99 503 ----  round timber with the length over 1.6 metres and
the diameter 16 to 24  centimetres (except veneerblocks, match blocks and A-rate sawn logs)bl m
32.0 2.0 0 2.0 2.0 0 2.0 2.0 0
4403 99 504 ----  round timber with the length over 1.6 metres and
the diameter 26  centimetres or more (except veneer
blocks, match blocks and A-rate sawn logs)bl m33.0 3.0 0 3.0 3.0 0 3.0 3.0 0
4403 99 509 ----  Other m300 00 0 0 0 0 0
4403 99 990 ---  Other:
4403 99 991 ----  of  other deciduous trees (soft):
4403 99 992 -----  round timber with the length over 1.6 metres and
the diameter 16 to 24  centimetres (veneer blocks,
match blocks and A-rate sawn logs)bl m38.0 8.0 0 8.0 8.0 0 8.0 8.0 0
4403 99 993 -----  round timber with the length over 1.6 metres and
the diameter 26  centimetres or more (veneer blocks,match blocks and A-rate sawn logs)bl m
310.0 10.0 0 10.0 10.0 0 10.0 10.0 0
4403 99 994 -----  round timber with the length over 1.6 metres and
the diameter 16 to 24  centimetres (except veneerblocks, match blocks and A-rate sawn logs)bl m
3  2.0 2.0 0 2.0 2.0 0 2.0 2.0 0
4403 99 995 -----  round timber with the length over 1.6 metres and
the diameter 26  centimetres or more (except veneerblocks, match blocks and A-rate sawn logs)bl m
33.0 3.0 0 3.0 3.0 0 3.0  3.0 0
4403 99 996 -----  Other m300 00 0 0 0 0 0
4403 99 998 ----  ash-tree, elm, hornbeam, maple and other Latvia
origin hard deciduous tree round timber with the length
over 1 metre and the diameter over 14 centimetresbl m325.0 25.0 0 25.0 25.0 0 25.0 25.0 0
4403 99 999 ----  Other m300 00 0 0 0 0 0WT/ACC/LVA/32
Page 45Basic Rate
(%)Most favoured nation
(%)Free trade regime
(%)
CN code Description Supple-
mentary
unitSince
1 July
19971998 1999Since
1 July
19971998 1999Since
1 July
19971998 1999
Chapter 49 PRINTED BOOKS. NEWSPAPERS. PICTURES AND
OTHER PRODUCTS OF THE PRINTINGINDUSTRY; MANUSCRIPTS. TYPESCRIPTS ANDPLANS
4901 Printed books. brochures. leaflets and similar printed
matter. whether or not in single sheets:
4901 10 000 -   In single sheets. whether or not folded
4901 10 001 --  not older  than 50 years - 0 0 0 0 0 0 0 0 0
4901 10 002 --  published 50 to 100 years ago - 50 50 50 50 50 50 0 0 0
4901 10 003 --  older than 100 years - 100 100 100 100 100 100 0  0 0
-  Other:
4901 91 000 -   Dictionaries and encyclopaedias, and serial
instalments thereof
4901 91 001 --  not older than 50 years - 0 0 0 0 0 0 0 0 0
4901 91 002 --  published 50 to 100 years ago - 50 50 50 50 50 50 0 0 0
4901 91 003 --  older than 100 years - 100 100 100 100 100 100 0 0 0
4901 99 000 --  Other:
4901 99 001 - 0 0 0 0 0 0 0 0 0
4901 99 002 ---  not older than 50 years - 50 50 50 50 50 50 0 0 0
4901 99 003 ---  older than 100 years - 100 100 100 100 100 100 0 0 0
Chapter 72 IRON AND STEEL 0 0 0 0 0 0 0  0 0
7204 Ferrous waste and scrap; remelting scrap ingots of iron
or steel:- 100 100 0 100 100 0 100 100 0WT/ACC/LVA/32
Page 46The Applicable  Code Description and Customs Tariffs after 1 July 1997
CN
codeDescription Supplement
ary unitBasic
Rate
(%)Most
favoured
nation (%)Free trade
regime (%)
12 3 5 6 7
Chapter 97 WORKS OF ART, COLLECTORS' PIECES AND ANTIQUES
9701 Paintings, drawings and pastels, executed entirely by hand, other than
drawings of heading No 4906 and other than hand-painted or hand-decorated
manufactured articles; collages and similar decorative plaques:
9701 10 000 -  Paintings, drawings and pastels
9701 10 001 --  made in Latvia  and  older than 50 years -  20 20 0
9701 10 002 --  made in abroad and older than  100 years - 10 10 0
9701 10 009 --  other - 0 0 0
9701 90 000 -  Other:
9701 90 001 --  made in Latvia  and  older than 50 years - 20 20  0
9701 90 002 --  made in abroad and older than  100 years - 10 10 0
9701 90 009 --  other - 0 0 0
9702 00 000 Original engravings, prints and lithographs
9702 00 001 --  made in Latvia  and  older than 50 years - 20 20 0
9702 00 002 --  made in abroad and older than  100 years - 10 10 0
9702 00 009 --  other - 0 0 0
9703 00 000 Original sculptures and statuary, in any material
9703 00 001 --  made in Latvia  and  older than 50 years - 20 20 0
9703 00 002 --  made in abroad and older than  100 years - 10 10 0
9703 00 009 --  other - 0 0 0
9706 00 000 Antiques of an age exceeding one hundred years -
9706 00 001 -  made in Latvia - 20 20 0
9706 00 002 -  made in abroad - 10 10 0
Chapters
01- 98Goods and other articles not complyin g with the above mentioned codes 0 0 0WT/ACC/LVA/32
Page 47
APPENDIX
ACCESSION OF LATVIA
Draft Decision
The General Council,
Having regard to the results of the negotiati ons directed towards the establishment of the
terms of accession of the Republic of Latvia to the Marrakesh Agreement Establishing the World
Trade Organization and having prepared a Protocol for the Accession of Latvia,
Decides, in accordance with Article XII of the Marrakesh Agreement Establishing the World
Trade Organization, that the Republic of Latvia may accede to the Marrakesh Agreement Establishing
the World Trade Organization on the terms set out in the said Protocol.WT/ACC/LVA/32
Page 48
PROTOCOL OF ACCESSION OF LATVIA
TO THE MARRAKESH AGREEMENT ESTABLISHING
THE WORLD TRADE ORGANIZATION
Draft
The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the
approval of the General Council of the WTO accorded under Article XII of the Marrakesh Agreement
Establishing the World Trade Organization (hereinafter referred to as "WTO Agreement"), and the
Republic of Latvia (hereinafter referred to as "Latvia"),
Taking note of the Report of the Working Party on the Accession of Latvia to the WTO in
document WT/ACC/LVA/32 (hereinafter referred to as the "Working Party Report"),
Having regard to the results of the negotiations on the accession of Latvia to the WTO,
Agree as follows:
Part I - General
1. Upon entry into force of this Protocol, Latvia accedes to the WTO Agreement pursuant to
Article XII of that Agreement and thereby becomes a Member of the WTO.
2. The WTO Agreement to which Latvia accedes shall be the WTO Agreement as rectified,
amended or otherwise modified by such legal instru ments as may have entered into force before the
date of entry into force of this Protocol.  This Protocol, which shall include the commitments referred
to in paragraph 131 of the Working Party Report, shall be an integral part of the WTO Agreement.
3. Except as otherwise provided for in the para graphs referred to in paragraph 131 of the
Working Party Report, those obligations in the Mu ltilateral Trade Agreements annexed to the WTO
Agreement that are to be implemented over a period of time starting with the entry into force of that
Agreement shall be implemented by Latvia as if it had accepted that Agreement on the date of its
entry into force.
4. Latvia may maintain a measure inconsistent with paragraph 1 of Article II of the GATS
provided that such a measure is recorded in the list of Article II Exemptions annexed to this Protocol
and meets the conditions of the Annex to the GATS on Article II Exemptions.
Part II - Schedules
5. The Schedules annexed to this Protocol shall become the schedule of Concessions and
Commitments annexed to the General Agreement on Tariffs and Trade 1994 (hereinafter referred toas the "GATT 1994") and the Schedule of Specific Commitments annexed to the General Agreement
on Trade in Services (hereinafter referred to as "GATS") relating to Latvia.  The staging of
concessions and commitments listed in the Schedules shall be implemented as specified in the
relevant parts of the respective Schedules.
6. For the purpose of the reference in paragraph 6(a) of Article II of the GATT 1994 to the date
of that Agreement, the applicable date in respect of the Schedules of Concessions and Commitments
annexed to this Protocol shall be the date of entry into force of this Protocol.WT/ACC/LVA/32
Page 49
Part III - Final Provisions
7. This Protocol shall be open for acceptance, by signature or otherwise, by Latvia until
1 May 1999.
8. This Protocol shall enter into force on the thirtieth day following the day of its acceptance.
9. This Protocol shall be deposited with the Director-General of the WTO.  The Director-
General of the WTO shall promptly furnish a certified copy of this Protocol and a notification ofacceptance thereto pursuant to paragraph 7 to each Member of the WTO and Latvia.
10. This Protocol shall be registered in accordance with the provisions of Article 102 of the
Charter of the United Nations.
11. Done at Geneva this ... day of  .... one thousand nine hundred and ninety eight, in a single
copy in the English, French and Spanish languages each text being authentic, except that a Schedule
annexed hereto may specify that it is authentic in only one or more of these languages.WT/ACC/LVA/32
Page 50
ANNEX
SCHEDULE CXLIII - REPUBLIC OF LATVIA
Part I - Goods
[Circulated in documen t WT/ACC/LVA /32/Add.1]
Part II - Services
[Circulated in documen t WT/ACC/LVA /32/Add.2]
__________