RESTRICTED
WORLD TRADE WT/ACC/SPEC/LTU/7/Rev.1/Add.1
8January 1998
ORGANIZATION(98-0034)
Original: English Working Party onthe
Accession ofLithuania
ACCESSION OFLITHUANIA
Commitments onDomestic Support andExport Subsidies
Addendum
ThePermanent Mission ofLithuania hassubmitted thefollowing information concerning its
revised offer oncommitments ondomestic support andexport subsidies.
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Explanatory notes tothedocument WT/ACC/SPEC/LTU/7/Rev.1
TheLithuanian economy hasbeenintransition from acentrally planned system toamarket
economy sinceLithuania re-established itsindependence in1990. During theearlyperiod oftransition,
theGovernment decided toprovide some subsidies toitsagriculture sector which faced particularly
difficult adjustment. Asquickly aspossible, Lithuania alsobegan integration intoworld economic
institutions, including WTO accession negotiations. Other Members oftheWTO maynothavefaced
thissituation ofnegotiating membership atthesame timethattheireconomy isevolving.
Supporting Table DS:1-"Green box"
FinancingoftheagriculturalsectorisbeingcarriedoutaccordingtotheLawonStateRegulation
ofEconomic Relations inAgriculture (22December 1994). Acertain amount offunds intheState
budgetisallocatedfortheimplementationoftheNationalAgriculturalDevelopmentProgramme(NADP)
every year.
According toGovernment Resolution No.213of12March 1997 itwasdecided toestablish
theRural Support Fund while liquidating theAgricultural Support Fund oftheRepublic ofLithuania,
theFarmer ’sSupport Fund andtemporary Agricultural Support Fund (composed ofthefunds received
afterselling thegrain from theUnited States).
Therural Support Fund isformed every yearfrom thefollowing sources:
- Lithuanian State budget funds, allocated forthefinancing ofNADP;
- returned softloans, taken from thetemporary Agricultural Support Fund forthesoldgrain,
received from theUnited States; Farmer ’sSupport Fund andAgricultural Support Fund of
theRepublic ofLithuania; 2percentinterest forthese loans andallother resources which
areinthese funds;WT/ACC/SPEC/LTU/7/Rev.1/Add.1
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- support funds fordomestic andforeign legal andnatural persons, charity resources forthe
support ofLithuanian farmers anda5percentdeduction from theAgrarian Reform Fund;
- other sources, provided bytheGovernment.
TheGovernment hasconfirmed theorder ofusage oftheRural Support Fund resources and
instructed theMinistry ofAgriculture andForestry toprepare formation andoperational statutes of
theRural Support Fund.
(a) General services
1. Agricultural education
Funds areallocated fromtheStatebudget assigned forthemaintenance ofagricultural education
establishments.
2. Financing construction ofagricultural schools andcolleges
Funds areallocated from theState budget forthebuilding andreconstruction ofeducational
production classrooms, production workshops andcleaning equipment.
3. Financing offacilities foreducation andtraining andresearch institutions
According toGovernment Resolution No.459of16April 1996, thissector isfinanced from
theNADP funds. Thefunds areallocated forthestrengthening ofthematerial basis ofagricultural
educational andscientific institutions according totheorder, confirmed bytheMinistry ofAgriculture
andForestry. During theyearof1997 thisscheme wasnotfinanced atall.
4. Research, training services, extension andadvisory services
Applied scientific research isfinanced fromtheNADP allocating funds forscientific research
institutes. Thetraining andconsulting offarmers, agricultural partnerships andtheemployees ofother
agricultural enterprises aswellasofficials oftheState andlocalmunicipalities isalsofinanced from
theNADP. TheAgricultural Consulting centre gives consultations andtraining aswellasproviding
withinformative publications toeveryone whoisworking inagricultural sector (farmers, agricultural
partnerships andother specialists, whoproduce andprocess agricultural products andrender services).
5. Trade agency andmarket information
According toGovernment Resolution No.241of13February 1996 thisscheme isfinanced
from theNADP funds under which theLithuanian Agricultural International Trade Agency was
established.
Themain trends ofactivity ofthisAgency:
- tocollect,analyzeandcirculateinformationabouttradeconditionsandpossibilitiesinLithuanian
andforeign market;
- toorganize participation ofLithuanian exporters ininternational exhibitions, trade fairsand
travel missions;
- toconsultLithuanianagriculturalenterprisesandorganisecoursesonimprovingtheiremployees’
professional skills;
- tocarry outmarket conjuncture research andconsumers ’opinion polls;WT/ACC/SPEC/LTU/7/Rev.1/Add.1
Page3
- tocooperate withforeign agricultural andfoodtrade agencies;
- topublish andcirculate advertising bulletins, journals andcatalogues;
- toestablish trade missions andcreate network oftrade agents.
6. Farmers ’market facilities andcooperation inagricultural sector
According toGovernment Resolution No.459of16April 1996, thesearesoftloans allocated
from NADP funds andtheAgricultural Support Fund. Theloans were allocated bytheAgency of
Agricultural Production Purchasing Regulation andCo-ordination. Theloans areusedforbuilding
ofmarketplaces foragricultural producers. In1997 thisscheme wasnotfinanced.
7. Infrastructure services fornewly established private farms
During theperiod ofimplementing landreform andprivatizing theassets offormer collective
andState farms, newfamily farms havebeenemerging. Themajority ofthefarmers getbackthe
landwithout buildings, electricity supply linesandproper service roads.
Farmers, whoaresettling in,needalotofresources. Therefore according toGovernment
Resolution No.508of22June1994, Farmers ’Support Fund wasestablished. OnepartofthisFund
wasallocated forthecreation offarmers ’production infrastructure. From theresources ofthisFund
thebuilding ofcommon usage objects forsettling infarms werefinanced (such asprovision ofelectricity
tohomesteads, creation ofcommunications system, repair ofroads construction, gasandartesian wells
installation andcompensation of15percentofthevalue ofanewharvester ortractor bought bya
farmer).
In1997 theRural Support Fund allocated resources tofinance:
- projection andinstallation ofcommunications andengineering equipment forcommon usage;
- (partial) purchasing ofagricultural machinery;
- young families working inagriculture;
- building andreconstruction ofsome production buildings.
(c) Domestic foodaid
Baby foodproduction -subsidies forproduction ofchildren 'smilkmixtures
TheState budget allocated subsidies inorder toreduce theprice ofchildren foodproducts.
Inthebeginning ofthereform thissupport enabled young families topurchase cheaper products for
feeding babies.
(f) Payments forrelief from natural disasters
Compensation fornatural disasters andfires
According toGovernment Resolution No.459of16April 1996, thefunds forthose whohave
suffered from fireandother disasters (upto60percentofthevolume ofthedamage), areallocated
from theNADP. Thefunds forfarmers areallocated following Government Resolution No.508of
22June1994. Since 1997 thefunds areallocated from theRural Support Fund.WT/ACC/SPEC/LTU/7/Rev.1/Add.1
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(i) Structural adjustment assistance provided through investment aids
1. Structural adjustment ofhorticulture
Thissupport scheme isbased onGovernment Resolution No.459of16April 1996 "On
Formation andOperation oftheAgricultural Support Fund fortheyear1996".
Under theorder oftheMinistry ofAgriculture andForestry thepurchasing ofpesticides and
mineral fertilisers needed forthecareoftheorchards according tothechosen business plansissubsidized
by50percent. Apartoftheresources istobegiven forlaying outneworchards andiscompensated
from theRural Support Fund.
2. Livestock andcropbreeding programmes
TheimprovementofanimalbreedsandtheirproductivityqualitiesisamatterofStateimportance.
Inorder tostrengthen thelivestock sector, putting aparticular emphasis onbreeding, theGovernment,
bytheResolution No.346of13May1992, adopted theState Programme onBreeding Animals up
totheyear2000. Thestatutes ofthisprogramme areapplied fortheperiod oflandreform, during
which breeding oflivestock istobesupported fromtheresources ofthebudget. On8February 1994
theLawonBreeding Livestock wasadopted. Itregulates thefollowing issues:
- preservation ofthegenetic fundoflivestock;
- improvement ofbreeding andproductivity qualities;
- activities ofanimal supervision agencies; legalsituation oftheirstructures;
- mandatory supervision ofanimal breeding sector.
Animal productivity control andevaluation ofcattle according tothebreeding, feeding and
meatqualities oftheoffspring iscarried outfromthese resources. Seventy-three percentofthetotal
number ofheifers andcows inLithuania areinseminated, thegenetic fundofbreeds which areonthe
verge ofextinction ispreserved, amodern laboratory ofmilkcomposition research hasbeenestablished;
inorder tomake thefulluseofthegenetic fundofthebestbreeds intheworld, alarge amount of
thoroughbred animals andpoultry havebeenimported from foreign countries (Germany, Denmark,
Holland, etc.).
3. Payments tofarmers forthepurchase ofpedigree livestock andseeds
According tothedecree oftheMinistry ofAgriculture andForestry of17March 1997 "On
theSubsidisingRulesofPedigreeAnimalsandBirdsPurchasedin1997",farmers,agriculturalcompanies
andother lands users areinduced tokeepproductive animal orbirds, increase theirproductivity and
tomaintain andimprove theirpedigree semen forfurther insemination. Forthisreason itisforeseen
toassign subsidies forpurchased pedigree animals, birds andsemen. Subsidies areallocated to
customers, whopurchased pedigree animals andbirds raised inLithuania, covering 80percentof
pedigree value addition (bonus). Imported highproductivity pedigree animals andbirdsofforeign origin
aresubsidised 50percentoftheirpurchase price. Pedigree semen issubsidised onlyitthequality
isinlinewiththeconditions oftheabove mentioned document. According tothesortofsemen,
subsidies willvaryfrom 30-50 percentofthepurchase price.
4. Reconstruction ofgreenhouses
According toGovernment Resolution No.543of9May 1996 implementing theLawon
Participation oftheRepublic ofLithuania inAuction oftheBankrupt Enterprise "Vilniaus Ðiltnamiai"
of2April 1996, thisscheme wasfinanced from theNADP funds. In1997 theRural Support FundWT/ACC/SPEC/LTU/7/Rev.1/Add.1
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resources wereassigned fortheinstallation ofautonomous heating systems inmodern greenhouses.
Thesupport wasgiven bycompensating 25percentoftheresources, usedforthispurpose.
5. Land improvement: land-reclamation andliming
InLithuania about 3million hectares oflandarealready drained. Outofthisnumber 2.6million
hectares weredrained bymeans ofclaypipes drainage. 63,000 kmofcanals, 1,600,000 kmofclay
drain-pipes and70,000 unitsofhydraulic engineering equipment wereestablished inthereclamation
systems ofthedrained land. Allthemechanisms werefinanced bytheState, which yearly assigned
only100-130 million Litas (4Litas =US$1) forthispurpose.
6. Compensation forState purchased land
According tothelawsontherestitution ofimmovable property including landof18June1991
and1July1997, persons, whodon’twanttomake restitution ofthelandcanreceive money asthe
form ofcompensation.
(j) Environment programmes
Organic farming
Target-orientedprogramme"ConcerningtheProtectionofUndergroundWaterAgainstPollution
andtheDevelopment ofEcological Farming inKarst Regions" wasapproved byGovernment Resolution
No.719of17September 1993. Theprime target ofthisprogramme istostopspotted anddispersed
pollution inkarstregions. Inthiswaytheproblems ofprotection ofenvironmental andhealth aswell
asquestions ofmarket andsocial (unemployment) sector arebeing resolved.
Thelegalbasisforecological farming isalready prepared (LawonStateRegulation ofEconomic
Relations inAgriculture of22December 1994, Articles 2,4,8,9,14,etc.).
(k) Regional assistance programmes
Payments through localauthorities fortheimprovement oflandinmarginal areas
Themainaimofthissupport scheme istohelpfarmers andagricultural companies toreorganise
theiragricultural activities inlow-productivity landareas insuchaway, astosecure andcreate new
work places andensure income forproducing competitive production andrendering services.
In1997upto25percentofthecostsofoneinvestment project (butnomorethan50,000 Litas)
wascovered from theRural Support Fund.
Lowproductivity landareas areagricultural farming lands ofwhich theeconomical evaluation
score is25percentlower thanaverage score inthecountry. Lowproductivity landareas inLithuania
make 9-10percentofthewhole farming lands. Subsidies aredivided inproportion totheareaof
inefficient landmaking astress onsoilquality.
Supporting Table DS:4-Total AMS
Table DS:4"Calculation oftheTotal Aggregate Measurement ofSupport". Table DS:4is
thesummary oftheTables DS:5,DS:6,DS:7andDS:9withtheProduct-Specific AMS and
Non-Product-Specific AMS. Product-Specific AMS arecalculated intheTables DS:5andDS:7.
So,thesamefigures tothecolumn 2oftheTable DS:4aremoved according totheyears respectively.WT/ACC/SPEC/LTU/7/Rev.1/Add.1
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IntheTable DS:9theNon-Product-Specific AMS iscalculated. Thuswhyonlyacombined calculated
figure isincluded intosummary Table DS:4anditshows combined Non-Product-Specific AMS in
respective years.
Supporting Table DS:5-Product specific AMS: market price support
Theindexforthereportingyear(1995-1996)wascalculatedonthebasis"ReviewofAgricultural
Policies. Lithuania", OECD 1996.
Supporting Table DS:6-Product specific AMS: non-exempt direct payments
Thetotal value ofproduction fortheproducts listed intable DS:6in1995 was
US$1,113.03 million andUS$1,230.36 million in1996.
Supporting Table DS:7-Product specific AMS: other product specific andtotalproduct specific AMS
Table DS:7isasummary oftheTable DS:5andTable DS:6.Theindex wascalculated
onthebasis "Review ofAgricultural Policies. Lithuania", OECD 1996.
Supporting Table DS:9-Non-Product-Specific AMS
1. Exemption from profit taxofagricultural enterprises
Alllegal persons inLithuania have topay29percentprofit tax. Until 1January 1997
agricultural enterprises wereexempt frompaying profit taxaslegalpersons andsince 1January 1997
profit taxof10percentwasestablished foragricultural enterprises. These exceptions aremade only
fortheagricultural sector.
Anagricultural company isconsidered asacompany, registered according totheLithuanian
legislation andproducing agricultural commodity goods. Annual income fromagricultural commodity
production andproduction services toagricultural sector should make more than50percentofall
income.
2. 9percenttax-concession onrateofVATcharged topublic forpurchases ofagriculture produce
Allproducers inLithuania pay18percentvalue added tax,while producers ofagricultural
products until1January 1997 paid9percentVAT. Taking intoaccount small purchasing capacity
inLithuania andinorder toavoid thereduction ofconsumption volume, aspecial preferential VAT
tariffwasestablished forlocalagricultural production andfoodproducts made fromit.Ifthesetemporal
privileges havenotbeenapplied during thetransition period, thevolume ofagricultural production
would havedropped evenmore.
9percenttax-concession onrateofVAT wasabolished from 1January 1997.
3. Exemption from landtaxforagricultural producers
According totheamendment ofParliament Decree No.I-954 of20June 1995 "Onthe
Enforcement ofLand TaxLaw", farmers starttopaylandtaxforthelandreceived according tothe
LawonFamily Farms afterthreeyearperiod. Farmers starttopaylandtaxesforpurchased orrestored
landforestablishment ordevelopment ofafarmafterthree years havepassed fromlegalregistration
oftheprivate landexcluding farmers whowererestored totheirlanduntil31December 1994. These
persons usetheprivileges concerning theusage oflandplotissued bytown (regional) municipalities.WT/ACC/SPEC/LTU/7/Rev.1/Add.1
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4. Exemption from landrenttaxforagricultural producers
According toGovernment Resolution No.602of3August 1993 "OnRentTaxes forState
Land andState Water Resources, Rented forTrade orAmateurish Fishing", during theperiod of
1993-1997 apreferential 1.5percentlandrenttaxtariff wasestablished. Thistariff isapplied for
natural persons forthelandplotsrented forfarming aswellasplotsforwhich permission toestablish
afarmwasgiven.
5. Exemption from taxonnatural persons
Allnatural persons inLithuania including producers havetopayincome taxapplied fornatural
persons excluding farmers whobeing producers ofagricultural production areexempted frompaying
thistax.
6. Concession forelectricity applied toagricultural producers
Electricity tariffs were established byGovernment Resolution No.573of21April 1995.
Preferential tariffforruralareaswas14ct/kw, where otherconsumers hadtopay20ct/kw. ByDecision
No.12oftheCommission ofEnergy Resources ’Prices andEnergy Activity, newelectricity energy
tariffs wereadopted: present preferential tariff applied onlyforresidents ofruralareas is19ct/kw;
forother consumers ofenergy -22ct/kw.
7. Concession fornatural gasapplied togreenhouses
ByGovernment Resolution No.684of12May1995"OnPrices ofNatural Gas"discount tariffs
forgas,usedingreenhouses, wereestablished. Thepreferential gastariffis360Litasper1000 cubic
metres while other gasconsumers pay600Litasper1000cubic metres. Thisprivilege provides costs
reduction forgasapplied togreenhouses.
8. Interest ratecompensation paidtofarmer forthepurchasing ofinputs
According toGovernment Resolution No.113of20January 1996, allcommercial banks in
Lithuania wereadvised toallocate credits foragricultural subjects (irrespective ofvarious ownership
forms) (according tothelistsconfirmed bytheMinistry ofAgriculture andForestry) which purchase
grain, rape, sugar beets, potatoes, vegetables, vegetable seedandflaxstraws oftheyields oftheyear
1996. These credits were necessary for:
- settling accounts withproducers ofagricultural production;
- forming reserves forregulation ofdomestic market forlivestock products;
- implementation ofagro-service programme.
Credits were alsoprovided forenterprises importing grain from theyields oftheseason
1995-1996. In1996 foragricultural entities, (determined bytheNADP) whoreceived commercial
banks ’credits, 10percentofinterest ratewere covered. In1997 thisscheme wasapplied onlyfor
purchasing foodgrain.
9. Softcredits allocated toprimary producers forthepurchase ofequipment andmachinery and
toprocessors forthepurchase ofagricultural production
From theresources ofNADP softloans areissued forenterprises, producing andprocessing
agricultural products, natural andlegalpersons forcentralised buying ofmaterial resources andselling
them onfavourable terms totheproducers ofagricultural production andco-operative agro-trade.WT/ACC/SPEC/LTU/7/Rev.1/Add.1
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From theresources oftheabove-mentioned Fund, softloans areissued fortheproducers ofagricultural
products -agro-service enterprises which develop co-operation andagro-service; legal andnatural
persons whohavemade agreements withfarmers concerning theservices, provided byagro-service;
and,finally, forco-operatives which produce, process andsellagricultural products andprovide services
inagricultural sector.
In1997 thisscheme wasnotfinanced.
10. Tocover operational costs forgreenhouses
Thefunds areallocated togreenhouse enterprises forpurchasing modern technologies, mineral
fertilizers, chemicals andother materials. Thepartofoperational costs wasprovided forrebuilding
ofgreenhouses. In1997 thisscheme wasnotfinanced.
11. Utilization ofsubsidized assets
Before restoring Independence agriculture wasstrongly subsidized, especially intheinvestment
field. Themain measure, applied atpresent, issubsidizing ofmain capital. Therefore thesums of
thesubsidies include thesubsidised value (part) ofthemaincapital amortization. Averyhighdegree,
upto50percent,ofinvestment assets wassubsidized before 1991. Calculation ofdepreciation here
wasdoneformuch higher level.
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