WORLD TRADE
ORGANIZATIONG/AG/NG/W/127
15 February 2001
(01-0750)
Committee on Agriculture
Special SessionOriginal:  English
FIFTH SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
5-7 FEBRUARY 2001
Submission by Lithuania1
Lithuania is one of the co-sponsors of the negotiating proposals of the countries of transition
economies on market access (G/AG/NG/W/57) and dom estic support (G/AG/NG/W/56), presented at
the fourth Special Session of the Committee on Agri culture.  As far as domestic support and market
access are interrelated issues in the Lithuanian agricultural sector, this statement concerns both of
these proposals.
Lithuania being a transition economy has met the same challenges and problems as was
mentioned in the introductory parts of both negotiating proposals.  As with most of the other transition
economies, Lithuania did not escape the painful but necessary transformation of the agricultural
sector, switching from a planned economy to a market oriented model.  This process encompassed the
land reform, shift of agricultural production from large-scale farming to medium or small-size
business, radical change of domestic support forms and even reduction of it for agricultural sector.Problems in the Lithuanian agricultural sector are very acute and the possibility of manoeuvre is very
limited.  The maintenance of the sufficient level of domestic support and the sufficient level of market
opening is essential in seeking to continue reforms of the agricultural sector having the aim to
increase its effectiveness and competitiveness in inte rnational markets.  Such problematic similarities
of the countries of economies in transition and the necessity for the flexibility in the WTO
commitments are the reasons that led Lithuania to join these negotiating proposals.
The situation in the Lithuanian agricultural sector could be an illustrative example of the
situation of transition economy, but it also has some specificity.  Historically Lithuania was a net
exporting country of the agricultural products.  During the last decades the specialization of the
Lithuanian agricultural sector became the supply of the agricultural products to the specific regions of
the former Soviet Union.  Therefore, the production of the agricultural products was significantlyhigher than the consumption level in Lithuania.  Consequently, the respective infrastructure was
established and the considerable share of labour force engaged in agriculture and in the processing
industry.  Due to that specificity disruptions of trade relations with economic entities of our traditional
markets, distortion of prices and support measures, high inflation levels after the reestablishment of
Lithuania's independence caused more painful and longer processing of the reforms in the agriculturalsector, despite the fact that from the very beginning of economic reforms the Government of
Lithuania took measures to restructure the agricultural sector, having an aim to increase its efficiency
and competitiveness, including the measure related to the introduction of liberal trade.  Unfortunately,
it is impossible to complete economic reforms overnight in such a socially sensitive sector as
agriculture, increasing efficiency, competitiveness and solving the social problems at the same time.We now have a situation where 19.2 per cent of Lithuania's labour force is engaged in the agriculture
sector, while the share of agriculture in Lithuania's GDP is 7.9 per cent.  Therefore, we face a
production surplus that is more and more difficult to export, even to our traditional markets, while the
pressure to the domestic market is also increasing . Lithuania continues its agricultural reform being
                                                     
1 This submission was prepared as the Statement on  the Agenda item A (ii) of the Fifth Special Session
of the Committee on Agriculture (WTO/AIR/1471)G/AG/NG/W/127
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sure that these problems are temporary.  But it is necessary to maintain an appropriate trade policy
mechanism to ensure that the continuation of reforms is not allowed to destroy the sector.
We are afraid that even the negotiation results of Lithuania's accession to the WTO may
complicate the situation.  The negotiations on agriculture were the most complicated during the wholeprocess of the accession.  Lithuania has committed itself to reduce the import tariffs for the most
sensitive agricultural products, to reduce AMS by 20 per cent during the transitional period of 5 years
and to eliminate export subsidies.  The implem entation of these commitments is already creating
significant problems for Lithuania.  The elimination of export subsidies may cause the loss of the
traditional markets for Lithuanian agricultural products and the realization of the surplus will be
impossible.  Moreover, the implementation of reduction commitments on tariffs and domestic support
will increase the pressure on the Lithuanian market.
Lithuania accepts and recognises the benefits of the substantial progressive reductions in
support and protection in a long-term perspective.  However, the case of the Lithuanian agricultural
sector calls for special treatment due to the temporar y problems in the sector.  Seeking to adjust to the
international competition, the appropriate time and respective flexibility is necessary.  Otherwise,further support and protection reductions in agriculture will cause deeper distortion of the Lithuanian
agricultural sector, with this creating tremendous economic and social problems.
Therefore, due to the above-mentioned reasons, in the short-term perspective new
commitments to reduce import tariffs and/or domestic support for Lithuania are almost unacceptable.
The pressure to take new commitments in the new round of multilateral negotiations on
agriculture immediately after the accession's commitments made just few months ago is already a
politically sensitive issue for Lithuania.  Even not  using the issue of double commitments as the main
argument, the realities in Lithuania's agricultural sector are the real evidence that Lithuania needs theflexibility described in both the negotiating proposals on tariff issues (exemption of low tariffs from
further reduction commitments as well as selective reduction commitments) and on domestic support
issues.
Lithuania fully understands and supports the continuity of trade liberalization, but due to the
specific situation in our agricultural sector we call for respective flexibility in case we have to make
the commitments for the further reductions of tariffs and domestic support (for example, some tariffswill not be recognized as low), and the only possible way for us would be the respective flexibility in
the modes of the reduction.  For example on market access:
• the new commitments should not affect transitional periods of the implementation of the
commitments made during the accession negotiations (some of these transitional periods last
until 2007);
• the level of tariff reductions should be lower in other countries (except for developing countries);
• postponement periods for the implementation of the new commitments (i.e. some pause between
the term of expiration of the transitional period for accession's commitments and the beginning ofthe transitional period on the implementation of new reduction commitments).
Similar possibilities should also be granted in the negotiations on reduction commitments on
domestic support, including the transitional period for implementation of accession commitments, theflexibility in the level of AMS reduction and postponement of the implementation of the new
reduction commitments.
We hope that the negotiating partners will understand the specificity of agriculture of
transition economies and the situation of the agricultural sector in Lithuania as well.  Therefore, weG/AG/NG/W/127
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expect that the respective flexibility will be granted for countries of transition economies to cope with
existing problems during this particular transition period.
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