WORLD TRADE
ORGANIZATIONWT/MIN(98)/ST/84
20 May 1998
(98-2216)
MINISTERIAL CONFERENCE
Second Session
Geneva, 18 and 20 May 1998Original:  English
LITHUANIA
Statement Circulated by Mr. A. Rimkünas,
Vice-Minister of Foreign Affairs
(As an Observer)
The Delegation of Lithuania values very much  this opportunity to participate at the
Ministerial Conference in Geneva.  It coincides with the 50th Anniversary celebration of the
multilateral trading system at the WTO.  We are convinced that the Conference will greatly contribute
for further liberalization of global trade and furt her remove barriers between nations and between
people.  Lithuania, as an observer of the WTO, is  willing to join the process together with the
international community as soon as possible.  We are also convinced that the Conference will result inbetter understanding of problems arising not only between the Members of the Organization but also
between the Members and the acceding countries.
The Government of Lithuania considers the WTO membership as a major step forward in
globalization of the Lithuanian economy and extremely valuable input in achievement of its economic
policy objectives.  Not least is the fact through the multilateral trading system Lithuania, whichregained its independence only eight years ago, could get a solid access to a global political system
with better security guarantees.
Lithuania has started joining the GATT/WTO in 1994.  The accession goes in parallel with
the implementation of the significant economic reforms in the country and contributes to it.
Membership in the WTO for Lithuania is the fact of a great importance.  It is important for our trade
partners due to providing them a solid legal bases for trade operations in the Lithuanian market, as
well as for our producers because it gives them the possibility to enter world market and to integrateinto the world economy on the basis of internationally recognized rules.  Membership, we are
convinced, will ensure further smooth implementation of economic reforms with our main objective
to create an efficient market economy.  The accession of Lithuania to the WTO in this context is
considered as a matter of the highest priority.
Lithuania's success in stabilizing its economy is the result of the implementation of
comprehensive economic reforms since 1991.  There were several urgent tasks such as to halt the
decline of output, reduce inflation, begin structural changes needed for the transition to a market
economy.  The Lithuanian Government has established a legal framework providing good conditions
for private ownership, entrepreneurial activity, open competition, protection of consumers etc.  Trade
liberalization has been one of the main issues of economic stabilization and reform along with price
liberalization, monetary and fiscal control.  Lithuania's trade regime is open, transparent and
non-discriminatory in its treatment of foreign goods and services and can be considered as being
among the most liberal in the region (the weighted average of the applied customs tariff rates for
industrial products is about 3 per cent, for agricultural products - 12 per cent).WT/MIN(98)/ST/84
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In the process of accession to the WTO, Lithuania is passing the process of legislative
adjustment of trade policy according to the rules and agreements of the Uruguay Round.
In the course of market access negotiations Lithuania made a series of commitments leading
to further liberalization of the country's market.  Lithuania committed itself to implement all
multilateral agreements of the WTO without transition periods, also joined to the Information
Technology Agreement, the Agreement on Trade in Civil Aircraft and a number of the sectorialinitiatives.  The Lithuanian Government applied for the Observer status to the Committee on
Government Procurement.  Upon accession it will start negotiations for the membership in the
Agreement on Government Procurement.
Thus, Lithuania has entered the final stage of the accession negotiations, which we hope
would be successfully completed in the course of this year.
Lithuania practically finalized negotiations on tariff bindings for industrial products and
commitments on trade in services.  The biggest anxiety is given to the agriculture sector which is the
most sensitive area in the country for political, economic and social reasons.  The concern involves
the commitments on subsidies as well as level of bindings.
Lithuania's agricultural sector is still in the process of transition and restructuring.  Lithuanian
land-based industries have gone through an unprecedented social, political and economic upheaval in
the past few years.  With the dissolution of the Soviet Union and the breakdown of all previouslyestablished production and trading practices, Lithuania has had to confront the demands of
transformation to a market-based economy.  For continuing development of market institutions and
more flexible response by the agricultural sector to changes in both domestic product supply and price
levels on the world market, Lithuania does still need to make improvements in a number of policy
orientations.
As with the economy as a whole, Lithuania's food and agriculture sector is facing a difficult
adjustment to the new market-oriented conditions.  Agriculture is still in the process of recovery and
productivity of the sector including food industry has not reached its potential level.  This is due to
inflation, distortion in production and prices, and a disruption in relations, and resulting competition
with its main trading partners in  the former Soviet Union.  Growth and development within the sector
is restrained by the insecurity of farm and land user rights, poor infrastructure, and lack of proper
channelling of inputs and outputs.  In addition to fragmented farms and insufficient competition,
farmers' incomes are squeezed by a negative trade balance and a lack of access to credit.  Landreform, in particular the process of restitution, privatization and the development of clear-cut
ownership rights has not proceeded as quickly as was hoped.
However, within the context of a focused national agenda, the integration into the world
market structures has an immense bearing on the country's outward looking policy successful
implementation and the national trade balance improvement along the continuation of its economicdevelopment.  This is because there is a sizeable rural economy share in the country's balance of
payments.  The food and agriculture sector is the second largest of the Lithuanian economy.  The
sector accounts for 20 per cent of GDP, 23 per cent of employment and 20 per cent of all exports.
However, there is a huge structural overcapacity of an amount equivalent to the exports to the former
Soviet Union whilst recently emerging new trade patterns have not been put on rational economic andmarketing grounds yet.  Having in mind high tariff protection and internal support for agriculture in
Western countries, Lithuanian products are not able to enter and compete in Western markets.  Export
subsidies currently are the only way to dispose of rapidly increasing production and becoming a
surplus as internal demand is still sluggish becau se of low incomes.  Request to eliminate export
subsidies for Lithuania is not reasonable taking into consideration the fact that WTO Membersthemselves apply such measures and that the Agreement on Agriculture does not preclude from the
use of such kind of measures in agriculture.WT/MIN(98)/ST/84
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However, we noticed, that some Members - key players - have demonstrated great interest in
using WTO accession negotiations as a means of reducing applicant countries' levels of agricultural
subsidization or tariff level, even when they themselves maintained such measures.  Moreover,
agricultural disputes have long been at the centre of commercial tensions between the some Members
and the European Union.  Negotiators of those countries bearing Lithuania's future EU membership in
mind when they negotiate over the country's accession to the WTO.
Audiovisual services is another sensitive area in Lithuania's accession negotiations.  It is
complicated due to pending disputes between the United States and its European trading partners.
One of the major disputes in the Uruguay Round centred on transatlantic differences over the
audiovisual sector, including such topics as "screen quotas" for European films and television
programmes.  This dispute remains unresolved, therefore creates problems in accession process.
Members have welcomed and encouraged the recent wave of accessions by developing
countries and economies in transition, but also emerged as the principal "excessive demand" in thenegotiations.  The scope of some accession negotiations has gone beyond the provisions of the WTO
Agreements.  Members view these talks both as means to deal with more specific issues of bilateral
concern, and to advance their broader aspirations for the world trading regime.  Members have
become more demanding in the value of the "entry fee" that prospective contracting parties must pay,
particularly with respect to the pursuit of "new issues".  As a result, some accession negotiations haveencountered undue delay.
Accession is a process in which there are considerable costs to be paid early in the process, in
exchange for benefits that are much more long-term in nature.  The acceding country is generally
required to bring its economy into conformity with the obligations that WTO members have
established for themselves in a half-century of negotiations.  The bargaining is entirely one-sided:  theacceding country is required to make concessions on issues ranging from its tariff barriers to its
intellectual property laws, and in exchange can demand nothing from the current member countries
other than its rights as a WTO Member.
The cost and benefits of acceding to the WTO can be properly understood only if one views
the advantages of membership in their larger cont ext.  It can be somewhat misleading the common
terminology of trade negotiators, in which the co mmitments that countries make are deemed to be
"concessions" and hence imply that the country is surrendering something of value.  These terms are
unfortunate, as they seem to cast trade relations in a zero-sum framework, in which any one country's
gain can come only at another country's loss.  The level of trade liberalization which is required by
some Members have gone beyond the limit of present development stage of many acceding countriesand have a detrimental effect on the economic development of these countries.  It is also important to
bear in mind throughout the process that the ultimate objective is to enhance a country's
competitiveness within a global economy that offers  opportunities for mutually-beneficial trade and
investment.
Since WTO is a universal negotiating forum set up to regulate multilateral world trade,
nowadays it should be adapted to solving the problems of the economies in transition as well.  Here
we expect our trade partners to fully understand the notion of an "economy in transition" withconcrete economic meaning.  Members should be aware that each country needs specific economic
and social adjustment when integrating into the international trading system.  Each acceding country
should be evaluated on an individual basis specific to the level of its economic and social
development.  This is an appeal to understanding of our objective situation.  We simply need equal
conditions of access to world markets, according to common rules of the World Trade Organization,without discrimination or restrictions.WT/MIN(98)/ST/84
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The Government of Lithuania is going to stro ngly commit itself for effective implementation
of the undertaken commitments.  Therefore our approach to accession is pragmatic - not to take on
more than is possible to implement.  Only this co uld be the basis for confidence-building in the WTO.
We are ready to carry on the negotiations on the protocol and market access with Members on
the basis of the Uruguay Round agreements and in consistency with Lithuania's own economic
development level and the principle of achieving balance between rights and obligations.  We hopethe positive attitude will be given over into actions in resolving specific issues in the negotiations.  On
the other hand, after becoming the WTO Member, we will be open for participation in new
multilateral negotiations aimed at broader liberalization and to solve remaining problematic issues.
On our part, we shall take a flexible and forward-looking attitude and stay in a hope that other
Members will do likewise.  We are willing to work together to accelerate the process of negotiations
and bring it to a successful conclusion as soon as possible.
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