RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/SPEC/LVA/3/Rev.21
22 April 1998
(98-1638)
Working Party on the
Accession of LatviaOriginal:  English
DRAFT REPORT OF THE WORKING PARTY ON
THE ACCESSION OF LATVIA
TO THE WORLD TRADE ORGANIZATION
Revision
Introduction
1. The Government of Latvia's request for accession to the General Agreement on Tariffs and
Trade (GATT 1947) was circulated to Contracting Parties in November 1993.  At its meeting on17 December 1993, the GATT 1947 Council of Representatives established a Working Party toexamine 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 theirwish to serve on it.  In pursuance of the Ministerial Decision of 14 April 1994 on Acceptance of andAccession to the Marrakesh Agreement Establishing the World Trade Organization (WTO) and to theDecision of 31 May 1994 of the Preparatory Committee for the WTO, the Working Party examinedthe 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 ofthe Decision adopted by the WTO General Council on 31 January 1995, the existing GATT 1947Accession Working Party was transformed into a WTO Accession Working Party.  The terms ofreference and the membership of the Working Party are reproduced in documentWT/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 ........... 1998 under the Chairmanship ofMr. F. Theilgaard9 (Denmark).
                                                     
1 In order to facilitate the identification of changes to the earlier version of the Report additions to the
text are shaded and deletions are struck out.WT/ACC/SPEC/LVA/3/Rev.2
Page 2
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 /ACC/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:
- the Law on Customs Duty with Annexes I (Im port duty tariffs) and II (Export duty tariffs);
- Latvia's National Tariff Schedule;
- Law on the Bank of Latvia;
- Law on Credit Institutions;
- Law on Competition and Restriction of Monopoly;
- Law on Trademarks;- Law on Industrial Design Protection;
- Patent Law;
- Resolution and Law on Bookkeeping;
- 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;- Resolution and Law of the Republic of Latvia on Entrepreneurial Activity;- Regulation of the Government of Latvia N o. 434 of 19 November 1996 On Licensing of
Separate Forms of Entrepreneurial Activity;
- 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;
 - 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";WT/ACC/SPEC/LVA/3/Rev.2
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- Regulations of the Cabinet of Ministers No. 37 of 25 January 1994 On State Monopoly of
Alcohol and Alcoholic Beverages;
- Regulations of the Cabinet of Ministers N o. 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;
- Customs Law of 11 June 1997;
- Draft Customs Code;
- 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;
- 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 Veterinary Medicine of 6 March 1995;
- Law on Foodstuff Circulation Procedures and Supervision of 29 June 1 995;
- 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);
- Regulation No. 463 of 24 December 1996 On th e Authorization of Testing and Calibration
Laboratories, Certification and Inspection Bodies in the Mandatory Area;
- Regulation of the Cabinet of Ministers No. 106 of 25 March 1997 On Regulations of Quotas
of Customs Tariffs;
- Law on Agriculture;- Conception on Use of Agricultural Subsidies and the Program Rationales for 1998-2002;
- 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 ofindependence 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 andWT/ACC/SPEC/LVA/3/Rev.2
Page 4
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 geographicalposition 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 tradeagreements with the European Communities and other countries in Europe.  However, bilateral andregional 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 WTOprinciples of national and MFN treatment had been incorporated in national legislation with particularattention 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 basicaverage 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 theimposition 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 ofspirits, 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 WTOmembership 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 supportthe 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 therepresentative of Latvia.  They also said that they looked forward to a detailed examination of Latvia'spolicies and of the reasons for the adoption of certain measures, e.g. licensing requirements.  Somemembers of the Working Party noted that Latvia had raised tariffs and introduced new traderestrictions 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 toimplement any measures during accession negotiations that could be considered inconsistent with theWTO or that alter the basis for negotiations.  Latvia was accordingly requested to remove thesemeasures and notify the Working Party of proposed new restrictions and to supply all new relevantlaws 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 
132 122.WT/ACC/SPEC/LVA/3/Rev.2
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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 MonetaryFund (IMF) since 1992.  The national currency - the Lat - was freely convertible, backed by thecurrency reserves of the Bank of Latvia.  Foreign exchange and local currency could be brought intoor taken out of Latvia in unlimited amounts.  Foreign entrepreneurs were free to repatriate profits inany currency having paid the applicable taxes.  Corporate income tax amounted to 25 per cent,incomes of physical persons were taxed at 25 or 35 per cent and a 10 per cent withholding tax waslevied on dividend payments to non-residents.  Some members welcomed the fact that the Lat wasfreely 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 ofAgreement 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 wouldobviate 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 measuresaffecting 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 30
to 40 32 ).  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 issuespertinent to foreign investment - registration, investment protection, taxation, repatriation, disputesettlement, restrictions on investment, safeguards and the applicability of international treaties - wereregulated through the Law "On Foreign Investment in the Republic of Latvia".WT/ACC/SPEC/LVA/3/Rev.2
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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 nationallaws. The Law on Foreign Investment contained no rest rictions 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 all restrictions on foreign investment.  On4 September 1996, Parliament had approved this amendment and requested the Government toprepare adjustments to certain other laws to bring them in line with the new Law on ForeignInvestment.  As a result of this review, the limit on foreign ownership in radio and televisioncompanies 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 andprotection agreements (25 countries at present). Legal or private persons from other countries couldown land if at least 51 per cent of the shares in the company registered in Latvia belonged to Latviancitizens 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 RuralRegions and on 8 May 1997 amendments to the Law on Land Reform in the Republic of Latvia Citieswhich 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 landunder State or municipal ownership in cities without restriction even when more than half their sharecapital 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 andthat 75 per cent of State-owned enterprises 
were would be  privatized by 1996.  Latvia was also asked
to enumerate sectors or enterprises where State ownership would be retained for a long period orpermanently.  Questions were also raised concerning the participation of foreign investors.  Somemembers 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 theProtocol of Accession.WT/ACC/SPEC/LVA/3/Rev.2
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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 thecreation 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 medicalcare, social welfare services, medicine wholesale and certain agricultural sub-sectors would beprivatized over a longer time period.  The Government had also decided that a sell-off ofinfrastructure (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 ofagriculture.  In July 1996, from a total of 613 agricultural statutory associations created at the firststage of privatization of former collective and State farms by allocating shares according to initialcontributions of capital and labour, 207 had been fully privatized and excluded from the EnterpriseRegister, 275 had chosen the voluntary decision for self liquidation and 131 were still operating.Privatization of farms used for training and research would be considered on an individual basis.Foreign firms could participate in privatization;  La tvia had held four international tenders.  Foreign
natural and legal persons could buy privatization certificates only after having won the tender for acompany undergoing privatization.  This restriction did not apply to joint ventures or branches offoreign 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 September 1997 as at 1 January 1997 ,
843 824  State enterprises (asset units) had been assigned for privatization, 75 68  State enterprises
assigned for liquidation, State-owned equity holdings of 148 144  enterprises assigned for
privatization, and 36 37  real estates and 89 9  plots of land assigned for sale by the Cabinet of
Ministers.  The Privatization Agency was involved in valuation of 322 224  restitution cases of
property.  Privatization regulations had been approved for 791 720  State enterprises (asset units) or
their parts, 91 State-owned equity holdings, and 26 23  real estates.  Sales agreements had been
concluded for 715 511  State enterprises (asset units) or their parts, 49 31  State-owned equity
holdings, 30 23  enterprises to be liquidated and for 19 15  real estates.  The privatization process
would generally be 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 privatizationwould be completed by mid-1998.  Completion of privatization implied mass privatization, i.e.involving all inhabitants of Latvia and including 95 per cent of all State-owned enterprises.WT/ACC/SPEC/LVA/3/Rev.2
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15. The representative of Latvia added that priv atization of four large State owned companies
- the State joint stock companies " Latvenergo " (Latvian Energy), "Ventspils nafta " (Ventspils
Oil), " Latvijas  Kugniecîba " (Latvian Shipping Company) and the limited liability company
"Lattelekom "  - would be completed by mid-1998.  " Latvenergo " was involved in energy
generation, and the company held a monopoly on energy transmission and distribution. These
three operations would be separated  through  a reorganization of the company.  The Latvian
Privatization Agency intended to sell a minority share of " Latvenergo " to strategic investors by
the end of 1997, and the remaining State share would be  sold to the general public in the first part
of 1998.  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 vouchers,
and in 1998 the share portfolio would be placed on the international capital market.  The State
Joint stock company " Latvijas  kugniecîba " (Latvian Shipping Company) ranked among the
world’s thirty largest shipping companies in terms of number of vesse ls owned, and 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, a major stake - tentatively 25 to 35 per cent,
mostly  new  shares issued by the company - would be  offered to strategic investors.  The
proceeds of this share issue would be retained by  the company to cover its financial needs and for
other appropriate purposes. A closed  list of registered strategic and financial investors existed (14
in total), and the first round of negotiations with each investor had been completed.  The limited
liability company " Lattelekom ",  part -owned (51 per cent) by the State, provided local and long
distance public telecommunication services for which it would hold monopoly status until 2003.
The management of the State shares had been transferred to the Latvian Privatization Agency to
prepare the company for privatization.  The company would be transformed into joint stock
company  and up to 25 per cent of the capital would be  sold to the general public against vouchers
or cash in 1998.
16. 15.  According to Article 4 of the Law on th e Privatization of State and Municipal
Property, any person or legal entity eligible to pur chase liquid and/or fixed assets in Latvia could
be a privatization subject.  The term "privatiza tion subject" was defined according to the Law on
Privatization of State and Municipal Asset Units as any specific person or legal entity eligible toobtain State or municipal property during the privatization process.  The Latvian State or amunicipality, a State or municipal enterprise, a State or municipal company, or a company in
which private funds did not exceed 25 per cent of the equity capital, could not be privatizationsubjects.  The representative of Latvia confirmed that national treatment applied for theWT/ACC/SPEC/LVA/3/Rev.2
Page 9
participation of foreigners in privatization programmes.  There were no restrictions on the
acquisition of privatized State and municipal property.
17. 16. As of 1 September January  1997, 1,145 1,126  State enterprises had been assigned for
privatization ( 95.4 93.8  per cent of all State enterprises),  among them 302 in 1992-1994, 238 in 1994,
215 in 1995, 376 in 1996 , and 14 in 1997.  In total all , some 65 per cent of all Latvian employees
were working in the private sector at the beginning of 1997.   In total, 1,147 units had been sold and
53 units placed for liquidation.      In order to attract foreign investments, the Privatization Agency
had organized four international tenders, offering 153 medium and large enterprises. A special PublicOffering Programme had been created to encour age participation of Latvia's population. During
several rounds of the Public Offering Programme 
56 51  large enterprises had been offered to the
public as at 1 September 1997.  The representative of Latvia provided further up-dated information on
progress in privatization in Table 1.
Table 1:  Information on the Progress of the Privatization Process of State Enterprises;
1 May 1994 to 1 September 1997 by 5 June 1997
Activity Total Small objects
(less than 50
employees)Medium-sized
objects
(50-500 empl).Large
objects
(More than
500 empl.)
Enterprises transferred for privatization 843 839 571 567 237 35
Enterprises transferred for liquidation 75 75 0 0
Repeated privatization 10 9 1 0
Privatization objects after split ofenterprises 15541512 1240 1205 279 272 35
Privatization cancelled or enterprisesmerged with other companies 179 157 173151 51
Privatization temporarily stopped 8 13 6 10 2 3 0
Restitution process initiated 83 68 67 61 16 7 0
Liquidation or insolvency procedureinitiated 
177166 134 128 3934 4
Privatization Regulations approved 791 741 593573 178 149 20 19
Transactions concluded:
- purchase agreements signed 708 635 518 487 176 136 1412
- invested into private companies 3 1 2 0
- privatized without majority owner 4 0 2 2
Proceeds of sale in LVL million:
- cash 46.2
- privatization vouchers 60.6WT/ACC/SPEC/LVA/3/Rev.2
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18. 17. 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 itsprogress in the reform of its transforming economic and trade regime.  He stated that his Governmentwould provide annual reports to WTO Members on developments in its programme of privatization aslong as the privatization programme would be in existence [
along the lines of that provided to the
Working Party]   [, and on other issues related to its economic reforms as relevant to its obligations
under the WTO] .  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 this  commitment s.
Pricing Policies
19. 18. 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, includingminimum and maximum prices, particularly for sectors not considered natural monopolies.  Latviawas asked to list the imported products subject to price controls by Harmonized System (HS) tariffline.  A member noted that Latvia exercised price controls in a number of sectors, including somewhich were not traditionally considered natural monopolies, but intended to reduce its price controlsto 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 orotherwise 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 and would be published in the officialjournal and that Latvia would take account of the interests of exporting WTO Members as providedfor in Article III.9 of the GATT 1994.
20. 19. 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 ofstumpage);  publishing of school books financed  from the State budget;  pharmaceuticals;  postal
services;  port services;  airport services;  archives;  and housing rents, power-supply and residentialservices.  Minimum and maximum prices were stipulated for the following domestic and importedservices:  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 ofpassengers and luggage by motor transport;  transportation of passengers and luggage by motortransport in international lines;  international transportation of cargo and passengers by railwaytransport according to international agreements;  transportation of cargo and passengers by domesticrailway;  ship services in ports;  and rents (maximum level).  The State did not control the prices ofWT/ACC/SPEC/LVA/3/Rev.2
Page 11
imported goods.  However, the profit margin was regulated with respect to pharmaceutical products .; t
The final sales price could not exceed the import or production price  - by more than 20 per cent - the
ex-factory sales price for domestic goods and, in respect of imports, the duty paid and tax-inclusive
value of goods at the time of importation.  The goods and services subject to State price controls in
Latvia are listed in Table 2.  The representative of Latvia stated that the prices of goods and servicesin every sector of Latvia were determined freely by market forces with the exception of those noted inTable 2 and that price control and regulation was carried out according to particular laws, all of whichwere published in the official journal of the Republic of Latvia "Latvijas Vèstnesis".  Price controlswere carried out in accordance with separate laws passed by Latvia's Parliament (Saeima) and pricelevels were determined by the respective bodies authorized by law.  Further price controls could beintroduced 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;
74540Port 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/SPEC/LVA/3/Rev.2
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21. 20. 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 theinterests of exporting WTO Members as provided for in Article III.9 of the GATT 1994.  Latviawould 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. 21. Some members of the Working Party noted that Latvia intended to harmonize its
legislation on competition with that of the European Communities over a four-year period.  Latviawas asked to provide information on the present status of draft legislation, outline existing provisionsregarding mergers and to provide a list of sectors considered "natural monopolies".
23. 22. The representative of Latvia replied that the Law "On Competition and Restriction of
Monopoly" of 1991 would be revised.  In June 1997, the Saeima (Parliament) had adopted a newCompetition Law which would enter into effect on 1 January 1998.  The new Law prohibitedrestrictive arrangements and abuse of dominant position and contained provisions on merger controland prohibition of unfair competiti on.  The Law provided for the Cabinet of Ministers to establish a
Competition Council to supervise implementation of the Law.  The Competition Council would beempowered  to ascertain violations of the Competition Law and enterprises would be bound by itsdecisions.  The Council would also be 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 orthe formation of a partnership would need to notify the Institution for the Control of Monopoly Actionand 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 participantsheld a dominant position in the relevant market prior to the merger.  Natural monopolies existed inenergy, communication services, transport, water supply and sewerage.  Monopoly enterprisesincluded the State stock companies "Latvijas gâze" (Latvian Gas), "Latvenergo" and "Latvijasdzelzcels" (Latvian Railways);  "Lattelekom"  - a limited liability company;  suppliers of heating; andself-government enterprises in water-supply and sewerage.  However, competition (including foreignparticipation) was present in the supply of natural gas and in energy and telecommunication sub-sectors.WT/ACC/SPEC/LVA/3/Rev.2
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FRAMEWORK FOR MAKING AND ENFORCING POLICIES
24. 23. 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 policiesaffecting international trade.
25. 24. 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 theSatversme (Constitution).  The regulation of internal proceedings of the Saeima was contained in theRules of Procedure. The Satversme stated that the Saeima was the highest legislative body and itpossessed the discretionary power. The Saeima was the highest body of State power, and, accordingto section 5 of the Satversme, it possessed the right to adopt laws and statements with the highest legalforce after the Satversme. This prerogative included adoption of laws related to trade and monopoliesand guidelines for the trade policy of the Republic of Latvia. In this field, the powers of the Saeimawere not limited to the extent that they were compatible with the Satversme.
26. 25. 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.  TheCabinet would discuss all draft laws drawn up by Ministries and all questions concerning thecompetence of various Ministries, the number and th e functions of which were stated according to
special rules.  The functioning of the Cabinet of Ministers was regulated by the Law "On theComposition of the Cabinet of Ministers" of 15 July 1993 (as amended on 23 May 1996), RegulationNo. 5 of the Cabinet of Ministers and by special by-laws or governing regulations of each Ministry,always approved by a relevant Regulation of the Ca binet 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, thePrime Minister and the Ministers had to receive a vote of confidence by the Saeima. The Saeimaexpressed a vote of confidence by means of special resolution after the report of the Prime Minister onthe composition and the planned activities of the Cabinet in case of approval. The important point wasthat, according to Regulation No. 160 "On the Inte rnal Order and the Functioning of the Cabinet of
Ministers" of 1 June 1996, every draft regulation or statement submitted to the State Chancellery forapproval by the Cabinet of Ministers would receive legal opinions from interested Ministries andother institutions to ensure that draft legislation would be compatible with the laws in force andinternational treaties and conventions signed and ratified by the Republic of Latvia.  The task of theState Chancellery was to verify whether a draft was compatible with the Declaration of the relevantCabinet of Ministers where the principal guidelines of its activities were mentioned. The Declarationwas binding on the Cabinet.WT/ACC/SPEC/LVA/3/Rev.2
Page 14
27. 26. Cabinet decisions were presented in the form of regulations, instructions, orders or
recommendations. The Cabinet could issue regulations when:  (i) a law specifically authorized theCabinet 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) inaccordance with the Article 81 of the Satversme, if there was an urgent necessity between sessions ofthe Saeima, the Cabinet was entitled to issue regulations having the force of law. However, Article 81stated that such regulations could not modify laws concerning the procedure and the judicial issuesand the Constitution, the budget, laws already passed by the Saeima in power, taxes, customs,issuance of Treasury notes, etc.
28. 27. 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 Civil Code and by special laws on various judicialinstitutions "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 hadthe right to settle disputes arising from questions of international trade and monopoly in accordancewith the laws and regulations in force in the Republic of Latvia. The system of Courts of Justice hadthree levels. The first instance was the District Cour t or City Court, the instance of appeal was the
Regional Court, and the instance for causation was the Supreme Court. The very important point wasthat, specially concerning questions of international commercial relations, settlement of disputes couldbe reached by means of the arbitral court.
29. 28. The Ministry of Economy was the competent institution for the administration of
trade policies according to Article 4.3 of Regulation No. 47 of the Cabinet of Ministers "TheGoverning Regulations of the Ministry of Economy" (of 7 March 1995).  The Ministry of Economyformulated and implemented the general principles of the domestic and foreign trade policy of theState.  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 ofactivity 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 dutieswhich could be determined by local governments, and the Law "On Entrepreneurial Activity" andRegulation No. 434 of 19 November 1996 stipulated that local and municipal governments issuedactivity licences for pre-school educational institutions, shooting galleries, cremation activities andlocal transportation of passengers.WT/ACC/SPEC/LVA/3/Rev.2
Page 15
30. 29. 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 ongoods and services in Latvia independent of the central authorities and that application of thesemeasures are exclusively the responsibilities of the executive and legislative branches of the centralgovernment.  Central authorities will eliminate or nullify measures taken by sub-central authorities inLatvia that conflict with WTO provisions from the date of accession.  The Working Party took note ofthis commitment.
POLICIES AFFECTING TRADE IN GOODS
Trading Rights
(The content of this section has been redrafted )
31. 30 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 discriminate 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). They not ed that issues relating to the rights of foreign
individuals and enterprises to trade were also dealt with in the draft schedule of Specific
Commitments on Services.
A member asked Latvia to confirm the abolition of the State-tradin g monopoly and that no restrictions
existed on the right of foreign and domestic individuals and enterprises to import and export goods
and services within Latvia's customs territory, ex cept as provided for in WTO Agreements.  Latvia
should also confirm that individuals and firms were not restricted in their ability to import or export
based on their registered scope of business and that the criteria for the registration of companies in
Latvia were generally applicable and published in the official journal.
32. 31. The representative of Latvia replied that in accordance with the Law "On
Entrepreneurship", enterprises and entrepreneurships should be registered in Enterprise Register of theRepublic of Latvia.  The requirement to register concerned entrepreneurial associations andenterprises, including branches and representation offices performing entrepreneurial activity on theterritory of the Republic of Latvia.  All registered entrepreneurs, i.e. enterprises and entrepreneurialassociations, carried out their activities under equal rights.  Any activity of unregisteredWT/ACC/SPEC/LVA/3/Rev.2
Page 16
entrepreneurial associations and enterprises was prohibited.  The registration procedure and the
information to be submitted was regulated by the Law "On Enterprise Register".  Foreigners couldalso carry out entrepreneurship in accordance with the Law "On Foreign Investment in Republic ofLatvia". In accordance with the Law "On Entrepreneurship" and the Rules of the Cabinet of Ministers"On restriction of entrepreneurship", only State enterprises had the right to produce and presssecurities, banknotes, coins, stamps and cards of gambling games. For other kinds of entrepreneurshiprestrictions 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. 48. Some members of the Working Party asked Latvia to specify the business activities
subject to licensing.  49.  The representative of Latvia said that certain forms of entrepreneurial
activity required a special permit (licence).  Lim itations on entrepreneurial activity applied when such
limitations were set 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 interestsof society, i.e. the protection of public morals, human, animal and plant life, and health or publicsecurity.  The following restrictions on entrepreneurial activity had been determined in accordancewith Article 32 of the Law "On Entrepreneurial Activity":
(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 and testing of it, asdetermined 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 Stateinstitutions subordinate to and supervised by Ministries in accordance with statutory Acts;  theauthorized representative of the Strategic Im portance Export and Import Control Board; localWT/ACC/SPEC/LVA/3/Rev.2
Page 17
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 fiveyears, the minimum validity one year.  The special permit (licence) could also be issued for anindividual 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 bythe issuing authority in accordance with rules laid down by the Cabinet of Ministers.  The Statereserved the right to make certain types of entrepreneurial activity connected with security of the Stateand its citizens subject to State monopoly.
34. 50. 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) orcancellations, would be settled by a higher institution or a Court of Justice.  A decision to reject anapplication to perform an entrepreneurial activity would need to be issued within 30 days upon receiptby the responsible authority;  this time limit would be reduced to 10 days as from September 1997.An issuing authority was entitled to cancel a special permit (licence) issued on the basis of falseinformation, or if the recipient  violated any normative acts or conditions specified in the specialpermit (licence).  The recipient of a special permit (licence) was responsible for its proper use and wasnot entitled to assign it to any other person.
35. 51. The representative of Latvia said that the scope of the licensing system had been
reduced gradually;  in 1996 it had covered 47 business activities.  Latvia continued to reduce thenumber of business activities licensed according to Regulations "On Licensing of Separate Forms ofEntrepreneurial Activity".  The Government was reviewing the licensing system and intended toelaborate special regulations on import licensing in accordance with the WTO Agreement on ImportLicensing Procedures.  The new regulations would be  adopted by September 1997.  These regulations
would provide for automatic licensing with no lim itation on the number of licences granted.  Import
licences would not be used to restrict trade and requirements would be applied in a non-discriminatorymanner.  An import licence should be issued within 10 days, application forms should be as simple aspossible, and the licence fee would constitute the cost of services rendered.WT/ACC/SPEC/LVA/3/Rev.2
Page 18
36.  54. 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 tobegin regular publication of the list.  The number of licensed importers and traders was not controlledor limited by any other administrative means.  The licensing system was maintained for reasons ofhealth and social policy (to reduce illegal production and importation);  these objectives could not beattained 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 aQuestionnaire on Import Licensing of Alcoholic Beverages and Tobacco (documentWT/ACC/LVA/27).
37. 55. 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 theuse of licensing to assure collection of excise taxes was an unnecessary border aberration.  Therepresentative of Latvia replied that the import
 licensing served statistical purposes only;  the
collection of excise taxes on tobacco products and other items was regulated by the Law "On theExcise Tax".  Entrepreneurial activity related to tobacco goods was licensed to protect the legaldomestic market against illegal production and protect consumers' interests against low-quality ordangerous products.  He added that licensing of entrepreneurial activities was not a mechanism fordirect market control, but that the legal domestic market required regulation to ensure that uniformconditions 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 thedistribution of imported tobacco products was not re stricted.  As per December 1995, 76 enterprises
had been licensed for wholesale trade, 11 enterprises for importing and 2 enterprises for theproduction of tobacco products.
38. 56. The representative of Latvia said that procedures governing production, manufacture
and distribution of pharmaceutical products contained in the Drugs Register or Veterinary DrugsRegister of the Republic of Latvia, including licensing provisions for specific pharmaceuticalactivities, were outlined in the Law "On Pharmaceutical Activities".  The Law requiredentrepreneurial activity licences to operate a pharmacy, a pharmaceutical or veterinary wholesalecompany, or to manufacture medical and veterinary  medical products.  The requirements for obtaining
these licences were based on criteria to ensure consumer protection and product quality.WT/ACC/SPEC/LVA/3/Rev.2
Page 19
39. 32. [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 toimport and export goods into Latvia's customs territory, except as provided in WTO Agreements.  Heconfirmed that individuals and firms were not restricted in their ability to import or export based ontheir registered scope of business and the criteria for enrolment in the Register of Enterprises in Latviawere generally applicable and published in the official journal of the Republic of Latvia "LatvijasVèstnesis".
] The Working Party took note of these commitments.
40. The representative of Latvia confirmed that 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 were 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 a nd regulations in full conformity with these
obligations.  The Working Party took note of this commitment.
1. Import Regulation
Customs Tariff
41. 33. A member of the Working Party noted that the collection of customs duties appeared
to have been inefficient in Latvia and wondered what plans Latvia might have for improving itscustoms system as part of the accession to the WTO.  The representative of Latvia replied thatorganizational improvements had been discussed with the World Customs Organization and includedthe revision of legislation, the review of the structure and functions of the customs administration,further training of customs staff and additional technical equipment.  The organizationalimprovements of the customs system had been would be
 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.  34. 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 resultingfrom these negotiations are included in its Schedule of Concessions and Commitments on Goodsannexed to the draft Protocol of Accession of Latvia which is reproduced in the Appendix to thisReport (see paragraph 
134 128  below).  [The Working Party noted that this schedule also contains
commitments concessions  on "other duties and charges".]WT/ACC/SPEC/LVA/3/Rev.2
Page 20
Customs Duties
43.  35. The representative of Latvia said that the Law "On Customs Duties (Tariffs)" had
been in force since 1 December 1994.
[Other Duties and Charges
44.  36. A member of the Working Party asked Latvia to clarify the situation concerning any
other duties and charges related to importation.
45.  37. 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 accessionwould be in accordance with WTO provisions.  He further confirmed that Latvia would not list anyother charges in its Goods Market Accession Sc hedule under Article II:1(b) of the GATT 1994,
binding such charges at "zero".  The Working Party took note of this commitment.]
Tariff Rate Quotas, Tariff Exemptions
46.  38. 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 requestedfurther details.  A member urged Latvia to bring this system into conformity with WTO provisionsand to consider using tariff protection only and allow market forces to determine trade.
47.  39. 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 seedsin April 1995 and 1996 due to a shortage of domestic supply.  The State Cereals Bureau could opentariff quotas with an in-quota tariff of 0.5 per cent when its annual forecasts indicated a shortfall inLatvian 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 offeed grain could be imported at 0.5 per cent tariff until 1 June 1997.  The tariff quotas had beendistributed by public tender organized by the State Cereals Bureau with import licences issued by the
Ministry of Agriculture.WT/ACC/SPEC/LVA/3/Rev.2
Page 21
48.  40. 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 conformitywith the Agreement on Import Licensing Procedures.  Regulations Nos. 208 and 24 had been revoked
and replaced by Regulation No. 106 "On Customs Tariff Quotas", issued in accordance with the Law"On International Agreements of the Republic of Latvia", effective 25 March 1997.  Therepresentative of Latvia said that in June 1997 the Saeima (Parliament) had adopted amendments tothe Law "On Latvia's Grain Market and State Grain Reserves" according to which quantitativerestrictions 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 tariffquotas, established in accordance with international treaties, on the territory of the Republic of Latviaas well as the procedure for issuing special permits (licences) ensuring the administration of tariffquotas.  Tariff quotas established in accordance with international treaties provided for limitedamounts 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 arrangements  would not be counted against
MFN tariff rate quotas.
Fees and Charges for Services Rendered
49.  41. 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.
50. 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.WT/ACC/SPEC/LVA/3/Rev.2
Page 22
42. The representative of Latvia said that any fees or charges levied in the future on or in
connection with imports would be imposed in conformity with Article VIII of the GATT 1994.  The
Working Party took note of this commitment.
Application of Internal Taxes
51.  43. 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 thecomponents of the taxable base.
52.  44. 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 thesales price in domestic currency, taxes on imports were levied on a tariff-inclusive basis.  Onlytobacco products 
and alcohol carrying tax labels could be sold in Latvia.  The rates of excise tax were
the following:
(The table "Rates of Excise Tax" has been moved to Annex 1 )
Enterprises licensed to import or manufacture tobacco products for sale ordered labels from the State
Revenue Service.  The requested quantity of labels would be supplied within 14 days against paymentof excise tax and VAT.  The labels themselves were not subject to any separate charge as the cost ofissuing tax labels was included in the rate of excise tax.  Exports, re-exports and goods in transit wereexempt from excise tax in accordance with Article 4 of the Law "On Excise Tax".  Exemptions fromexcise taxes had also been established for a number of products, enumerated in Table 
3 4.
Table 3 4:  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.WT/ACC/SPEC/LVA/3/Rev.2
Page 23
Tobacco dust and tobacco products used for production of insecticides;
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),working volume 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 for consumption 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 theirimport shall be reimbursed from the State budget.
53. 45. Noting that a Value Added Tax (VAT) had replaced would replace  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 hadreplaced the turnover tax on 1 May 1995.  VAT was levied at the rate of 18 per cent.  VAT was leviedon a tariff-inclusive basis and excise taxes were added to the tax base of imported and domesticproducts.  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 nineservices related to exporting and international transport were zero-rated (Annex 
2 1).  The latest
amendments to the Law "On Value Added Tax" had entered into force on 1 January 1998.
54. 46. 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.  He added that the Ministry of Finance
was drafting amendments to the Law "On the Value Added Tax" that would provide equal regulations
and thus equal treatment for domestic and imported mass media.   The representative of Latvia stated
that the VAT exemptions offered on publications and mass media goods had been revoked would be
revoked from 1 January 1998 , and that national treatment had been applied would be applied  both for
domestic and foreign publications and mass media goods since 1 January 1998.WT/ACC/SPEC/LVA/3/Rev.2
Page 24
55. 47. The representative of Latvia stated that, from the date of accession, Latvia will apply
its domestic taxes, including those on products listed in paragraphs 52 to 54 and Table 4  Tables 3 and
Annex 1 in strict compliance with Article III of the GATT 1994, in a non-discriminatory manner toimports regardless of country of origin and to domestically-produced goods.  The Working Party tooknote of this commitment.
Quantitative Import Restrictions, including Prohibitions, Quotas and Licensing Systems
(Paragraphs relating to business activity licensing have been moved to the section "Trading Rights". )
56. 48. 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 productssubject 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 underWTO provisions.  Further questions addressed specific issues such as quantitative restrictions onimports 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 itslicensing system  - which restricted imports of certain goods - worked and sought a clear commitmentfrom Latvia that all measures applied to enforce quantitative restrictions would be eliminated as of thedate of accession.
57. 52.  In Table 5 t  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 prohibitiondid not apply to raw sugar.  Import licences were issued on a non-discriminatory basis regarding thecountry of origin;  sugar had been imported from Denmark, Estonia, German y, Lithuania, Ukraine
and the United Kingdom.  He stated that import restrictions on sugar had been maintained to protectlocal manufacturers while the industry was restructured.  He agreed that the existing regime did notcorrespond to the WTO Agriculture Agreement and Latvia was ready to prepare adoption of thenecessary legal amendments to bring the sugar regi me in line with WTO requirements.  Latvia was
ready to eliminate the import ban on white sugar and the restrictive import licensing on other sugarproducts by the time of its accession to the WTO.WT/ACC/SPEC/LVA/3/Rev.2
Page 25
Table 4:  Business Activity Licensi ng on Importation of Certain Products
Table 5  Products Subject to Non-Tariff Measures (Import Licensing )
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",  and
Regulation No.61
Chapter 22 Alcoholic beverages, spirits and
vinegarLaw "On Entrepreneurial Activity" and
Regulation No. 37 of 25 January 1994
Chapter 23
except 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) and Regulation No. 86 of 14
April 1994
58. 53. 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 abolishedby amendments to the Law "On Sugar" (adopted by the Saeima in November 1996) and RegulationsNo. 61, adopted by the Cabinet of Ministers in March 1997.  Licensing for all products would beautomatic according to the WTO Agreement on Import Licensing.
59. 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 forgrains and the ban on sugar imports, as of the date of accession and commit not to introduce, re-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 theprovisions of the WTO Agreements on Technical Barriers to Trade, Sanitary and PhytosanitaryMeasures, Import Licensing Procedures and Agriculture.  Additionally, Latvia was asked to confirmthat import licensing on other commodities, especially wheat flour, cereal flour, cereal groats, cerealgrains 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 1994and the Agreement on Import Licensing Procedures.WT/ACC/SPEC/LVA/3/Rev.2
Page 26
60. 58.  The representative of Latvia confirmed that as from 1 July 1997 Latvia maintained no
quantitative import restrictions on any products.
61. 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 othernon-tariff measures such as licensing, quotas, bans, permits, prior authorization requirements,licensing requirements and other restrictions having equivalent effect that cannot be justified underthe provisions of the WTO Agreement.  This will include the current licensing restrictions on certainproducts in Chapters 10, 11 and 12 and the import ban on sugar products in section 1701 of Latvia'stariff schedule.  He added that the special import permits required for the importation of alcoholicbeverages 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.  Hefurther confirmed that the legal authority of the Government of Latvia to suspend imports and exportsor 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 theWTO, in particular Articles XI, 
XII, XIII, XVIII, XIX, XX and XXI of the GATT 1994, and the
Multilateral Trade Agreements on Agriculture, Sanitary and Phytosanitary Measures, ImportLicensing Procedures, Safeguards and Technical Barr iers to Trade.  The Working Party took note of
these commitments.
Customs Valuation
62. 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 "approximatevaluation" and valuation "according to the goods of the same type" had no counterpart in the WTOAgreement 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 ValuationAgreement and the Agreement authorized no delay in the implementation of this provision.  Amember sought Latvia's commitment to apply fully the WTO provisions concerning customsvaluation from the date of accession, including, in addition to the Agreement on the Implementationof Article VII of the GATT 1994, the provisions for the Valuation of Carrier Media Bearing Softwarefor Data Processing Equipment and the provisions on the Treatment of Interest Charges in CustomsValue of Imported Goods.WT/ACC/SPEC/LVA/3/Rev.2
Page 27
63. 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 Relatingto Imported 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 onImplementation of Article VII.  Amendments to existing rules had accordingly been drafted andsubmitted for ratification by Parliament.  Amendments to the Law "On Customs Duty (Tariffs)" hadentered 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) hadbeen adopted by Parliament and entered into force on 1 July 1997.  The valuation methods in the newlaw were based on transaction value;  the value of identical goods;  the value of similar goods;  theunit price method and the computed value method.  A copy of the draft
 law was provided to the
Working Party.  Secondary legislation to implement the Customs Law came into effect on
1 January 1998 had been submitted to the Cabinet of Ministers for approval .  The Customs Law
provided the methods for determining customs va lue in accordance with the requirements of
Article VII of the GATT 1994 and the Agreemen t on Implementation of Article VII of the
GATT 1994.  He confirmed that the use of reference prices for the determination of customs valuehad been eliminated by the introduction of the new legislation.
64. 62.  The representative of Latvia said that Latvia would undertake to introduce,
implement and enforce customs valuation legislation in accordance with the requirements ofArticle VII of the GATT 1994 and the Agreement on the Implementation of Article VII of the
GATT 1994 by 1 July 1997.  He confirmed that Latvia would fully apply the WTO provisionsconcerning 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 itsprovisions on methods of appraisement and Annex I (Interpretative Notes) and Article 13 of theAgreement, 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
65. 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 submitted to theGovernment.  Norms laid down in the Kyoto Convention had been taken into account in thedevelopment of the new Customs Law.WT/ACC/SPEC/LVA/3/Rev.2
Page 28
Anti-Dumping, Countervailing Duties and Safeguard Regimes
66. 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)" andrequested information on Latvia's intentions concerning the establishment of new, broader legislationin this area.  The representative of Latvia said that at present no draft legislation existed related to thisissue.  Latvia was at the stage of examining possibilities for the introduction of anti-dumping andcountervailing duty legislation, taking into account its specific situation as a small country and theresources available in the State budget for the purpos e of eventual investigat ions.  According to the
existing timetable, draft legislation on countervailing duties would be presented to the Cabinet ofMinisters by 1998 and a study on the introduction of anti-dumping legislation would be completed inthe beginning of 1998.
67. 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 safeguardsregime 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 recenteconomic 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 bereplaced by new legislation.  Currently, Latvia had no timetable for drafting and introducing newsafeguard legislation.
68. 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 andCountervailing 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 onthe Implementation of Article VI, the Agreement on Subsidies and Countervailing Measures and theAgreement on Safeguards.  After such legislation was implemented, Latvia would 
only also  apply any
anti-dumping duties, countervailing duties and safeguard measures in full conformity with therelevant WTO provisions.  The Working Party took note of these commitments.WT/ACC/SPEC/LVA/3/Rev.2
Page 29
2. Export Regulation
Customs Tariffs, Fees and Charges for Services Rendered, Application of Internal Taxes to Exports
69. 67. Some members of the Working Party requested details on export tax rates and plans
to phase out such taxes.
70. 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 certainmineral products falling within HS Chapter 25 were eliminated with effect from 17 July 1996.  Latviawould 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 exporttariffs on items falling within HS Chapters  44 and 72.  The list of products subject to export taxes, byHS tariff line, and the respective tariff rates are reproduced in Annex 
3 2.
71. 69.  The representative of Latvia confirmed that present export tariff rates related only to
the goods listed in Annex 3 2 Export Duty Tariffs.  All customs tariff changes were published in the
official journal of the Republic of Latvia - the newspaper "Latvijas Vèstnesis".  Latvia would abolishall export duties 
listed in Annex 3 by 1 January 2000 with the exception of the duty on antiques.  The
timetable for elimination of export duties would be similar for regional trade agreement partners andpartners to which MFN treatment was applied 
as indicated in Annex 3.  [The Working Party took note
of this commitment.]
Export Restrictions
72. 70. Some members of the Working Party requested details on the licensing regime on
exports, notably with regard to trade in metals a nd pyrotechnical materials.  The representative of
Latvia replied that business licences were issued to registered enterprises for domestic purchasing andexports of metal scrap in accordance with the Law "On Entrepreneurial Activity".  Licensing of tradein strategic goods, products, services and technologies had been established for reasons of internalsecurity 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 statisticalpurposes only and that the number of export licences issued was not limited.WT/ACC/SPEC/LVA/3/Rev.2
Page 30
Export Subsidies
73. 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 ofgoods for processing, improvement, repair or replacement due to spoilage and re-exports inaccordance 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 marketand to indicate the foregone amount of import taxes and VAT. 
 The rebate of import charges in the
duty drawback 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 dutydrawback scheme.
74. 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.  Thiscompany had been established on 20 January 1995 according to Order No.519-r of the Cabinet ofMinisters of the Republic of Latvia "On the State Joint Stock Company 'Latvian Export Credit'".  Themain aim of the company was to promote exports of manufactured goods, services and technologyoffered by Latvian entrepreneurs to other countries and to enable Latvian entrepreneurs to manageexport and import transactions, providing them with the corresponding insurance and guaranteesystem.  Latvian Export Credit (LEC) offered export guarantees - export payment guarantees, exportfinance 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 theexporter directly to buyers of goods and services abroad, but rather made short-term credits availableto 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 commercialprinciples and on conditions similar to those offered by commercial banks.  He stated that these creditservices did not distort competition as the State did not subsidize export crediting activities and LECoperated 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
Officially Supported Export Credits.WT/ACC/SPEC/LVA/3/Rev.2
Page 31
Internal Policies Affecting Foreign Trade in Goods
Industrial Policy, including Subsidies
75. 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's exporting sectors.  He requested that industrial support programmes be notified in accordancewith the Agreement on Subsidies and Countervailing Measures.  The representative of Latvia repliedthat the Government aimed at improving infrastructure generally and would not target any particularindustry or enterprise.
76. 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 NationalProgramme of Small and Medium Enterprise Development" which discussed issues such asinvestment 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 establishedto facilitate management training and business networks.  Higher education institutions also offeredspecial training courses for entrepreneurs.  The Government had also elaborated a regionaldevelopment policy under which grants and loans would be provided for the establishment andexpansion 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 ofState enterprises with emphasis on the participation of foreign investors.
77. 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 conservation
and 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 banks
during  a period of heavy economic transition; and loan guarantee programs. Small and medium sized
enterprises benefited from reduced rate of corporate income tax.WT/ACC/SPEC/LVA/3/Rev.2
Page 32
78. 75. 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 Counte rvailing Measures and that it did not intend to
introduce such prohibited subsidies in the future.
79. The representative of Latvia confirmed that any subsidy programmes would be administeredin line with the Agreement on Subsidies and Countervailing Measures and that all necessaryinformation on programmes to be notified, if such exist, would be provided to the Committee onSubsidies and Countervailing Measures in accordance with Article 25 of the Agreement upon entryinto force of Latvia's Protocol of Accession.  The Working Party took note of this commitment.
Technical Barriers to Trade, Sanitary and Phytosanitary Measures
80. 76. 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 implement the Code of Good Practice
(Annex 3 of the WTO Agreement on Technical Barriers to Trade), the acceptance of certificatesissued by foreign bodies and accreditation of private certification bodies.
81. 77. The representative of Latvia provided information on technical barriers to trade in
document WT/ACC/LVA/4, Annex 5.  He added that in order to fulfil the obligations laid down bythe Agreement on Technical Barriers to Trade (the TBT Agreement), notably its Article 2 "TechnicalRegulations and Standards", Latvia had developed a National Standardization System approved by theCabinet of Ministers on 8 August 1995.  The La tvian 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 acorresponding member of the ISO.  The Centre applied ISO Guide 21 which outlined the principlesregarding adoption of international standards.  In all, 21 technical committees had been establishedunder the auspices of the Centre and their main tasks were to implement and harmonize the Latvianstandardization system with international sta ndards.  Membership in the technical committees
reflected all interested parties concerned, i.e. representatives of relevant Ministries, producers andother 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 Latvianstandards were implemented only in very narrow  areas of purely national interest.  In view of
Article 4 of the TBT Agreement, Latvia was prep aring to adopt and implement the Code of Good
Practice for the Preparation, Adoption and Application of Standards.  The Latvian National Centre ofStandardization and Metrology would be the resp onsible body for implementing the Code of Good
Practice.WT/ACC/SPEC/LVA/3/Rev.2
Page 33
82. 78. Concerning Article 5 of the TBT Agreement, Parliament had adopted laws "On
Conformity Assessments", "On the Safety of Products, Services and Liability of Producer, ServicesSupplier" during 1996 and a Law "On Uniformity of Measurements" in 1997.  Latvia had adopted asnational standards EN 45000, ISO 9000 and ISO Guides 21, 22, 25 and 58 to ensure harmonizedconformity 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 andcertification and inspection bodies authorized by the Cabinet of Ministers.  The competence of testingand calibration laboratories and certification and inspection bodies was assured by means ofaccreditation or equivalent procedures in accordance with ISO/IEC Guides 25 and 58.  Latviaoperated a unified accreditation system in accordance with international principles and relevant ISOprovisions.  Accreditation was accorded by the Latvian National Accreditation Office (LATAK), an
independent body under the supervision of the Ministry of Economy.  LATAK assured thedetermination of competence of the conformity assessment bodies.
83. 79.  The representative of Latvia said that conformity assessment of goods was prescribed
in the Law "On the Protection of Consumer Rights ", "On the Safety of Products, Services and
Liability of Producer, Service Supplier", "On Co nformity Assessment" and the Law "On Uniformity
of Measurements".  Three third-party certification centres had so far been nominated by the Cabinetof Ministers:  the Latvian National Certification Centre for Food, Cosmetics and Toys;  the LatvianNational Standardisation Centre for Household Electric Equipment;  and the Baltic MachineryExperimental Station for Agricultural and Wood Equipment.  These Centres were under accreditationprocedures.  Conformity assessment in the mandatory area, i.e. related to the protection of humanhealth, safety and the environment, was carried out by competent testing and calibration laboratoriesand certification and inspection bodies authorized by the Cabinet of Ministers.  The NationalAccreditation Office intended to join ISO CASCO.  Certificates issued by foreign institutions wererecognized in accordance with bilateral agreements and corresponding regulations on unilateralrecognition.  Safety standards and requirements were identical for imported and domestic products.Draft standards were disseminated among all interested parties and were available for any discussionand comments.
84. 80. Referring to Article 10 of the TBT Agreement,  the representative of Latvia said that
Latvia would ensure the existence of an enquiry point to handle all reasonable enquiries from or toother WTO Member States and interested parties.  The enquiry point would also be responsible forproviding relevant documents regarding technical regulations, standards and conformity assessmentprocedures in Latvia.WT/ACC/SPEC/LVA/3/Rev.2
Page 34
85. 81. 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.
86. 82. The representative of Latvia said Latvia participated in the activities of the Codex
Alimentarius Commission, the IOE (Office International des Epizooties) and the European andMediterranean Plant Protection Convention and hope d to join the International Plant Protection
Organization in 1997.  Latvia based its sanitary and phytosanitary measures on recommendations ofthese organizations and on regulations in force in the Nordic countries.  Latvia reported monthly tointernational organizations (FAO, WHO and IOE) on progress in implementing international norms.A completed questionnaire on sanitary and phytosanitary measures was provided to the WorkingParty (WT/ACC/LVA/12, Annex 2).
87. 83. 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".  Latvia was in theprocess of establishing adequate approval, control and inspection procedures as required by the WTOAgreement.  Imported products were accompanied by certificates issued by the veterinary authoritiesof the exporting country in accordance with Latvian quality requirements.  Latvia would acceptexporters' certificates for processed food products conforming to Latvia's regulations.  The official listof quarantinable pests (plant) and diseases (animals) was provided to the Working Party.  The sanitaryand phytosanitary measures applied by Latvia and the corresponding product coverage is presented inTable 
5 6.
Table 5 6:  Products Subject to Sanitary and Phytosanitary Measures
HS tariff
lineProduct 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 Health
regulationsWT/ACC/SPEC/LVA/3/Rev.2
Page 35
HS tariff
lineProduct description Measure
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, dries, 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 vegetablewaxesVeterinary 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 regulations
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 regulationsWT/ACC/SPEC/LVA/3/Rev.2
Page 36
HS tariff
lineProduct description Measure
2000 Preparations of vegetables, fruit, nuts or other parts of
plantsPlant 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 the
mixing or chemical treatment of animal or vegetable
productsPlant 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 rough, whether or not stripped of bark or
sapwood, or roughly squaredPlant protection regulations
4407 Wood sawn or chipped lengthwise, sliced or peeled,
whether or not planed, sanded or finger jointed, of a
thickness exceeding 6 mmPlant protection regulations
4415 Packing cases, boxes, crates, drums and similar packing,
of wood, cable drums of wood; pallets, box pallets and
other load 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 regulations
5201 Cotton, not carded or combed Plant protection regulations
5202 Cotton waste (including yarn waste and garnetted stock) Plant protection regulationsWT/ACC/SPEC/LVA/3/Rev.2
Page 37
HS tariff
lineProduct description Measure
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 fibresPlant 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 processedbut not spunPlant protection regulations
88. 84. Summarizing Latvia's efforts thus far to implement the Agreement on the
Application of Sanitary and Phytosanitary Measures, the representative of Latvia said that fivelaws - the Law on Protection of Consumer Righ ts, the Law on Veterinary Medicine, the Law on
Pharmaceuticals, the Law on Food and the Law on Plant Protection - had been adopted since
1992.  These laws and their amendments constitute d the basis for Latvia's compliance with the
SPS Agreement.  Latvia was preparing amendments to the Law on Food to meet the requirementsof the SPS Agreement taking into account recommendations made by a group of experts inrelation to the FAO project on food quality improveme nt in Latvia and a project on Latvia's food
legislation sponsored by Denmark.  Laws woul d be revised to clarify authorities' areas of
competence and responsibility in the elabor ation and harmonization of regulations and
requirements as well as in market surveillance to avoid duplication and ensure more effective
food control.  The veterinary and phytosanitary  border control administ ration was reorganized at
the beginning of 1997 to improve coordination and meet international standards.  As a result ofthe process to harmonize food legislation, La tvia had recently adopted a new regulation on
maximum residue level of veterinary drugs in food and a regulation on  a "positive list of foodadditives" was in preparation.  Both regulations were in full compliance with international rules.
Latvia observed the principle of transparency as it required all adopted regulations related to
sanitary and phytosanitary measures to be publis hed in the official newspaper of the Republic of
Latvia "Latvijas Vèstnesis".  
Legislative acts for implementing the SPS Agreement were to be
adopted by the Cabinet of Ministers.  Prior to their adoption all draft re gulations were discussed
by the Advisory Board of the State Veterinary Service and published in the media of theveterinary profession to en courage wide discussion.  
Legislative acts on food safety and quality
prior to their adoption were to be reviewed by  the Food Council (a consulting body composed of
ministerial officials, representatives of produ cers, traders, distributors and other involved
institutions), which The Food Council  had recently begun acting as activities as Latvia's  expert
panel for drafting legislative acts and amendments.  The members of the Council wereWT/ACC/SPEC/LVA/3/Rev.2
Page 38
responsible officials and representatives of producers ,traders, consumers and other involved
institutions.   The legislative acts on implementation of particular sectors covered by the SPS
Agreement were submitted to the Ministry of Economy, which was 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 would operate under the auspices of the Ministry
of Economy .  Latvia had also developed a training sy stem for veterinary inspectors in order to
improve the standards of control, inspection and approval procedures according to the SPS
Agreement.
89. 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.
90. 85.  Agreements on Sanitary and Phytosanitary Measures and Technical Barriers to Trade
from the date of accession without recourse to an y transition period.  The Working Party took note of
this commitment.
Trade-Related Investment Measures (TRIMs)
91. 86.  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 WTOAgreement on Trade-Related Investment Measures (TRIMs).
92. 87.  The representative of Latvia said that Latvia would did  not maintain any measures
inconsistent with the TRIMs Agreement and would apply the TRIMs Agreement from the date ofaccession 
without recourse to any transitional period.   [ The Working Party took note of this
commitment.]WT/ACC/SPEC/LVA/3/Rev.2
Page 39
State-Trading Entities
93. 88.  Noting that more than 500 State-owned ente rprises were involved in foreign trade in
1994, some members of the Working Party asked Latvia to provide a list of all firms wholly or partly
owned or managed by the State, specifying any exclusive or special rights accorded to theseenterprises.  Latvia was requested to complete the questionnaire on State-trading.  A member felt thatthe State Cereal Bureau could meet the criteria of a State-trading enterprise under Article XVII of theGATT 1994 and that the definition might also cover other enterprises engaged in agriculturalproduction and distribution,  including trade in sugar;  metals;  alcoholic beverages;  and the naturalmonopolies managed by the State.  Latvia was also asked to provide details on the trading firmsInterlatvija and Latvijas Labiba.
94. 89. The representative of Latvia provided a notification on State-trading to the Working
Party in document WT/ACC/LVA/12 (Annex 3) desc ribing the functioning of the State Cereal
Bureau.  The State Cereal Bureau was an instituti on not engaged in regular grain trade;  on occasion,
grain had been bought to replenish reserves held for food security reasons.  Domestic grain wasfavoured in procurement for the State reserve.  Institutions such as the State Alcohol Monopoly Boardand the Tobacco Department did not engage in trade, but issued business licences to other operators intheir respective areas.  Other State-owned enterprises only held the same rights to trade as the privatesector.  The trading companies Interlatvija and Latvijas Labiba were fully privatized in 1991 and theGovernment 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 hadestablished 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 TobaccoDepartment were incorporated into the Excise Tax Board and had ceased to exist as separateinstitutions.
95. 90. 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 withspecial or exclusive privileges and would act in full conformity with the provisions of theWTO Agreement, in particular Article XVII of the GATT 1994 and the Understanding on that Articleand Article VIII of the GATS.  He further confirmed that Latvia would notify any enterprise fallingwithin the scope of Article XVII.  The Working Party took note of these commitments.WT/ACC/SPEC/LVA/3/Rev.2
Page 40
Free Zones, Special Economic Areas
96. 91.  The representative of Latvia said that four three  special economic regimes had been
established in Latvia by October August  1997 according to the laws "On Riga Commercial Free Port"
(passed on 6 November 1996), "On Ventsplis  Special Economic Zone" (19 December 1996), "On
Liepajas  Free Port" (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 cons istence with the new Customs Law.  The special
economic zone in Liepaja, a former Soviet Navy base area, had been established by special law topromote development and recovery in a destroyed region.  
The Rezeknes  Special Economic Zone had
been established in order to promote development of the assisted region.  A draft Law "On Rezeknes
Special Economic Zone" had been passed in second reading in Parliament.   The policy of Latvia's
Government was not to extend the development of special economic zones and not to establish newfree economic zones in Latvia, but to gain experience from existing zones and develop more detailedregulations regarding the functioning of these zones.  He added that there were 
neither no  export
performance , or trade balancing nor domestic content requirements associated with establishment of
companies in the zone and purchases of goods produced in the zone by the rest of Latvia would bearnormal taxes and tariff requirements.  Further information on the free economic zones is provided inTable 
6 7
Table 6 7:  Free Economic Zones
Riga Free
Trade PortLiepaja Special Economic
ZoneVentspils Free
PortRezekne Special
Economic Zone
Territory Part of Riga
portLiepaja Port, part of Liepaja
industrial port, military port
(former military base and
campus)Ventspils Port Rezeknes industrial
region
Area approx. 200
haapprox. 2,000 ha approx. 1,300 ha approx. 500 ha
Tax
exemptionsFree customs
zone regime
in the total
territoryPossibility to create free
customs zone regime
(meeting the respective
conditions) in some parts ofzone. VAT - 0 for
investments into
infrastructure; Company
income tax - 5%, Land and
real estate tax - 0%, Socialtax - max. 15 minimal
wages.Several free zone
regimes
established in
different parts of
the area and
possibility to
create others Free
customs regime in
the total areaPossibility to create
free customs zone
regime in some parts
of zone. Companyincome tax - 10%.
Land and real estate
tax - 0%.
land
propertyPossible to
leasePossible to buy if
investment exceeds 100,000
Lats per 1 haPossible to lease Possible to buyWT/ACC/SPEC/LVA/3/Rev.2
Page 41
97.  92. The representative of Latvia stated that the free zones and special economic zones
authorized by the legislation described in paragraph 96  91  are fully subject to the coverage of Latvia's
commitments in its Protocol of Accession to the WTO Agreement and that Latvia would ensureenforcement of its WTO obligations in those zones.  In addition, goods produced in these areas undertax and tariff provisions that exempt imports and imported inputs from tariffs and certain taxes will besubject 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
98. 93. 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 thePlurilateral Trade Agreement on Government Procurement.  In their view, Latvia should commit itselfto a specific date by which to join the Agreemen t on Government Procurement if the outcome of the
negotiations on an entity list was satisfactory to all.
99. 94. 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 theUNCITRAL Model Law on Procurement.  The Law allowed the award of supply contracts withoutbid or competition in cases associated with the creation of State reserves or national security anddefence in accordance with specific decisions by the Cabinet of Ministers, or in cases of procurementof less than LVL 5,000.  Single tendering could take place when certain suppliers held exclusiverights on goods and services;  in circumstances of urgent necessity;  when past purchases required thesame source for additional supplies;  and for the conclusion of research and development contracts.
100. 95  . The Law on Public Procurement was passed by Parliament on 24 October 1996.  An
English version of the Law would be prepared and submitted to the WTO Secretariat.  The new Lawon Public Procurement, entering into force on 1 Ja nuary 1997, stated that tendering with participation
of foreign competitors was mandatory if the expected value of construction works exceededLVL 4 million (SDR 5 million) or the expected value of other works or supplies exceededLVL 104,000 (SDR 130,000).  National treatment appl ied in the field of government procurement.WT/ACC/SPEC/LVA/3/Rev.2
Page 42
101. 96. 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 secondhalf of 1997 and had begun preparation of the accession documents.  However, additionalconsultations would be required with WTO experts before negotiations could start.
102. 97. The representative of Latvia confirmed that Latvia will initiate negotiations for
membership in the Agreement on Government Procurement upon accession during the second half of
1997  by tabling an entity offer at that time no later than 31December 1997 .  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 30 June 
1999 1998 .  The
Working Party took note of this commitment.
Transit
103. 98. 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 forstatistical purposes.  The same procedures were followed for all goods, including metals.  Latviacharged no transit fee at present, however, a convoy fee - paid by the transporter - was levied ondangerous goods, tobacco, food products or perfume transported through Latvia.  Certain non-dangerous goods were subject to a security deposit equal to the amount of taxes due on importation ofsuch goods in Latvia.  The security deposit would be refunded within two months provided the transit
regulations were adhered to.
104. 99. 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 the
WTO Agreement, in particular Article V of the GATT 1994.  The Working Party took note of this
commitment.
Agricultural Policies
105. 100. 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 supportWT/ACC/SPEC/LVA/3/Rev.2
Page 43
measures of recent date.  Some members observed that Latvia had recently introduced export subsidy
measures and sought a commitment that Latvia would eliminate export subsidies.  A member sought a
commitment that Latvia would eliminate export subsidies and price controls on grain products.
(Previous information in this section has been replaced by new text )
106. The representative of Latvia explained that the agricultural sector was going through a major
reform process that included land restitution, decollectivisation  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 more
transparent 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.
107. 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 were
actually purchased and the State Grain Reserve ha d 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.
108. 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 [1995-1997] 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.WT/ACC/SPEC/LVA/3/Rev.2
Page 44
109. 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
[and 1997].  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 of Accession.
[110. Latvia's commitments on agricultural tariffs, on domestic support and export subsidies for
agricultural products, except as provided in paragraph 109, are in the schedule of concessions and
commitments attached to Latvia’s Protocol of Accession to the WTO.
111. During the transitional period expiring on January 1, 2003, Latvia would ensure that the level
of Total AMS actually provided during any year of the transitional period, excluding support as set
out in Annex 2, and Article 6.5. of the Agreement on Agriculture, would not exceed SDR 24 million.
The Working Party took note of this commitment.]
Trade in Civil Aircraft
112. 106. 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.  Therepresentative of Latvia confirmed that Latvia would become a signatory to the Agreement on Tradein Civil Aircraft upon accession to the WTO.  The Working Party took note of this commitment.
Trade-Related Intellectual Property Rights (TRIPS)
113. 107. Some members of the Working Party asked Latvia 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 full implementation of the TRIPS Agreement,the enforcement of intellectual property rights, the protection of copyright and the acceptance of theBerne Convention (1971) and the Rome Convention.
114. 108. 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 onthe subject was limited and Latvia also lacked experience with certain aspects of intellectual propertysuch as geographical indications, undisclosed information, and provisional and border measures.  HeWT/ACC/SPEC/LVA/3/Rev.2
Page 45
noted that, as stated in document WT/ACC/LVA/8 (pp. 39-40), existing legislation was in conformity
with the WTO Agreement on TRIPS with the exception of the protection of geographical indicationsand layout-designs (topographies) of integrated circuits - which Latvia had been committed toimplement by the end of 1995 under a bilateral agreement - and Part III, sections 3 and 4 of the TRIPSAgreement (provisional and border measures).  An overview of Latvia's intellectual propertylegislation and an ongoing revision programme was provided to the Working Party, and is reproducedin Table 
7 8.
Table  7 8:  Status of Legislation On Intellectual Property in Latvia ( October April  1997)
TRIPS Agreement Laws and other legal provisions addressing and
covering the subject mattersDraft legislation relating to
requirements of the TRIPS
Agreement not fully met by
existing legislation
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 Public
Performance of Cinematographic
Works (1996)
Part II, Section 2 Trademark Law of 9 March 1993
Part II, Section 3 Law on Competition and monopoly Restriction
of 3 December 1991 including provisions on
unfair competitionDraft Law on Amendments to
the Law on Competition,
Section on Unfair Competition
(submitted to Saeima  for
adoption)
Draft Law on Unfair
Competition or new (amended)
Trademark Law including
provisions on Protection of
Geographical Indications
Part II, Section 4 Law on  Industrial Design Protection of
4 May 1993
Part II, Section 5 Patent Law of 2 March 1993 as amended on
30 March 1995
Part II, Section 6 Draft Law on Protection of
Topographies of Integrated
Circuits (to be adopted by
Saeima  in 1998)
Part II, Section 7 Law on Competition and Monopoly Restriction
of 3 December 1991 including provisions on
protection of undisclosed information
Civil CodeDraft Commercial Law
Draft Law on Protection of
InformationDraft Law on Unfair
Competition including
provisions on protection of
unclosed informationWT/ACC/SPEC/LVA/3/Rev.2
Page 46
TRIPS Agreement Laws and other legal provisions addressing and
covering the subject mattersDraft legislation relating to
requirements of the TRIPS
Agreement not fully met by
existing legislation
Part II, Section 8 Provisions of the Patent Law, Trademark Law,
Law on Industrial Design Protection and draft
Law on Unfair Competition
Part III, Section 3
(provisional
measures)Law on Competition of 18 June 1997 (in effect
as from 1 January 1998), Section on Unfair
Competition;
Civil Procedural LawDraft Law on Unfair
Competition
Part III, Section 4(special
requirements
related to border
measures)Customs Law (Code) of 11 June 1997 Draft secondary legislation
under Section C, Customs Law
(Code) of 11 June 1997
Draft Law on Unfair
Competition
Part III, Section 5(criminal
procedures)New Draft Criminal Code
Law on Amendment of the
Latvian Criminal Code with
regard to protection of
topographies
115.  109. 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 and protection of
databases.  However, the basic principles regard ing rental rights for computer programmes would
be refined to ensure better implementation.  Th e Criminal Code was amended in October 1995 in
regard to violation of copyright and neighbourin g rights.  Latvia had acceded to the Berne
Convention in August 1995 , and the draft Law on accession to the Rome Convention (1961) for
the Protection of Performers, Producers of Phonog rams and Broadcasting Organizations had been
submitted for adoption to Saeima .  On 8 April 1997, Saeima  had adopted the Law on accession to
the Geneva Convention (1971) for the Prot ection of Producers of Phonograms against
Unauthorized Duplication of their Phonograms a nd the Government of Latvia had started the
necessary procedures for Latvia's accession to the Rome Convention.   Legislation on the
protection of geographical indications (Part II,  section 3 of the TRIPS Agreement) had been
delayed because the competent Latvian authoritie s had decided, after preliminary consideration of
draft legislation, not to introduce a Law on Protect ion of Geographical Indications, but to include
the relevant provisions in a new Law on Unfair  Competition , Section on Unfair Competition,
which had been adopted on 18 June 1997 and as of 1 January 1998 substituted the Law on
Competition and Monopoly Restriction of 3 December 1997 or to amend the Trademark Law
accordingly.  Alternative draft legislation would be completed to allow a final decision on the
preferred option to take place by the end of May 1997.   Concerning the protection of layout-WT/ACC/SPEC/LVA/3/Rev.2
Page 47
designs of integrated circuits (Part II, section 6 of the TRIPS Agreement), he said that Latvia had
drafted was drafting  a Law on Protection of Topographies of Integrated  Circuits based on Council
Directive (87/54/EEC) of the European Communities on the legal protection of topographies of
semiconductor products of 16 December 1986.  The law had been submitted to the Saeima and wasexpected to be adopted 
in 1998 by 1 July 1997 .  Protection of undisclosed information in accordance
with the requirements of Part II, section 7 of the TRIPS Agreement would be covered in the new Lawon 
Protection of Information.  Currently, the protection of undisclosed information was generally
provided for by the Civil Code, but the new La w on Protection of Information would refine the
provisions related to the protection of undisclosed information on Unfair Competition, which Latvia
expected to submit for approval by Parliament by October 1997.  Provisions already existed in the
Law on Competition and Monopoly Restriction of  3 December 1991, but the new Law would refine
the provisions related to the protection of undisclosed information .
116. 110. Referring to Part III of the TRIPS Agreement - Enforcement of Intellectual Property
Rights  - the representative of Latvia said that the new Law on Unfair  Competition of 18 June 1997
included would include  provisions on provisional measures (Part III, section 3) , and the new Customs
Law (Code) of 11 June 1997 included and  special requirements related to border measures (Part III,
section 4), which refined would refine  the provisions on provisional measures contained in the
amended Latvian Civil Procedural Code.  Latvia would also include provisions amend its Criminal
Code  with regard to the enforcement of protection of topographies of integrated circuits in conformity
with Part III, section 5 of the TRIPS Agreement on criminal procedures in its new draft Criminal
Code to be adopted by Saeima  by mid-1998.  The new Law on Unfair Competition was modelled on
legislation of the European Communities, notably Council Regulation (EC) No. 3295/94 of
22 December 1994 laying down measures to prohibit for release for free circulation, export, re-export
or entry for a suspensive procedure of counterfeit and pirated goods, and Council Regulation
No. 1367/95 of 16 June 1995.   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 andrelating to enforcement of the said rights, and (Article 57) administrative and civil liabilityand criminal responsibility in case of infringement of copyright or related rights;WT/ACC/SPEC/LVA/3/Rev.2
Page 48
- 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 derived from a patent, andChapter 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;
- Chapter 3 (Articles 9 and 10) of the Law on Competition and Restriction of
Monopolies on protection of competition and Chapter 4 (Articles 11 to 13);
- similar provisions provided for by the Trademark Law and the Law on Design
Protection;  and
- provisions in the said Laws referring to pr ocedures and measures provided for by civil
or criminal law.  
In addition to amending the Latvian Civil Pro cedural Code in 1995 to provide for provisional
measures, Latvia had also amended the Criminal Code of 6 October 1955 to provide for moresevere measures in case of infringement of in tellectual property righ ts and, in particular,
copyright and neighbouring rights.  Latvia had begun a  reform of the court system tostrengthen its capability to enforce intellectual property rights.  The former judiciary law,education and practice had given Latvia no ex perience 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 proper ty protection and enforcement and to train its
practitioners (judges, advocates, pate nt attorneys and trademark agents).
117. 111. [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 contradiction.  The provisions of the
TRIPS Agreement would thus prevail over domestic law on Latvia's accession to the WTO. ]
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.
118. 112. The representative of Latvia confirmed that his Government would fully apply
the provisions of the Agreement on Trade-Rela ted Aspects of Intellectual Property RightsWT/ACC/SPEC/LVA/3/Rev.2
Page 49
(TRIPS) by the date of its accession to the WTO without recourse to  a transitional period.
The Working Party took note of this commitment.
Policies Affecting Trade in  Services
119. 113. The representative of Latvia provided a description of Latvia's services regime in
document WT/L/63 (L/7526/Add.3).  Specific questi ons by members of the Working Party focused on
regulations in the financial sector and clarification of laws with important provisions regardinginvestment in services sectors.
120. 114. 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 ofGovernors of the Bank of Latvia while other applic ations were considered by the Executive Board of
the Bank of Latvia.  Applications could be dismissed if the documents submitted for registration did
not meet the legal requirements or if the foundation of a bank was considered not to be in the interest
of Latvia.
121. 115. 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 performinsurance 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.  Heconfirmed 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 couldnot conduct life and non-life insurance operations simultaneously, without establishing a newcompany.  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 fromreinsuring life insurance operations.  He stated that the criteria for registration of credit institutions orenrolment of broker companies were not inconsiste nt with Article XVI of the General Agreement on
Trade in Services.WT/ACC/SPEC/LVA/3/Rev.2
Page 50
122. 116. 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 66 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 introduced
in 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.
The representative of Latvia said that many service activities were subject to licensing.  Regulation
No. 321 of 31 October 1995 "On Limitation of Entrepreneurial Activity" had been annulled and
replaced by Regulation of the Cabinet of Ministers "On Licensing of Separate Forms of
Entrepreneurial Activity" in November 1996.  Certification had been introduced to ensure a
professional level of service and the protection of consumers.  Foreigners were granted national
treatment in the issuance of certificates to supply individual professional services.  However, the Law
"On Entrepreneurial Activity" allowed licences for sworn auditors, swor n land surveyors, sworn
estimate practice, inspector activities, legal adviser practice, notary practice, coach, sports instructor
and specialist practice, pharmaceutical practice, insurance mediation services and other
entrepreneurship mentioned in part 4 of its Article 32 to be issued only to physical persons.   H e
confirmed that Latvia had no legislation on safeguard measures related to trade in services and that norestrictions were applied on domestic or international transfers and current payments for services.
123. 117. The representative of Latvia said that the State enterprise "Latvijas Pasts" (Latvian
Post) held monopoly rights on postal services.  "Lattelekom", a joint venture between TiltsCommunications (British and Finnish ownership) and the Latvian Government, had been granted anexclusive right 
until 1 January 2003 for 20 years  to provide telecommunication services.
[124. 118. Latvia's Schedule of concessions and commitments on services is annexed to its draft
Protocol of Accession reproduced in the Appendix to this Report (see paragraph 134 below.]WT/ACC/SPEC/LVA/3/Rev.2
Page 51
[to be completed]
Transparency
Publication of Information on Trade
[125. 119. 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.He further stated that
 and no law, rule, etc.  related to international trade would become effective prior
to such publication.  He further stated that Latvia would fully implement Article X of the GATT 1994
and the other transparency requirements in WTO Agreements requiring notification and publication.The Working Party took note of this commitment.]
Notification
126. 120. The representative of Latvia said that at the latest upon entry into force of the
Protocol of Accession, Latvia would submit all notifications (other than those required to be made onan ad hoc  basis) required by any Agreement constituting part of the WTO Agreement.  Any
regulations subsequently enacted by Latvia which ga ve effect to the laws enacted to implement any
Agreement constituting part of the WTO Agreement would also conform to the requirements of thatAgreement.  The Working Party took note of this commitment.
Trade Agreements
127. 121. Some members of the Working Party inquired about Latvia's preferential trade
agreements.  Some members were concerned about the consistency with Article XXIV of theGATT 1994 of these free trade agreements, [noting that the matter was being examined in theappropriate body][which excluded trade in agricultural products].
128. 122. The representative of Latvia said that agreements for the avoidance of double taxation
and prevention of fiscal evasion had entered into force with Canada, the Czech Republic, Denmark,Estonia, Finland, Iceland, Lithuania, the Netherlands, Norway, Poland and Sweden.  Latvia hadentered into intergovernmental agreements on trade and economic cooperation, providing for MFNWT/ACC/SPEC/LVA/3/Rev.2
Page 52
status, with Armenia, Australia, Azerbaijan, Cz ech Republic, Hungary, India, Moldova, Poland,
Russian Federation, Tadjikistan, Turkmenistan, Uk raine, United States and Uzbekistan.  Free
trade agreements had been concluded wi th the European Communities, EFTA, the
Czech Republic, the Slovak Republic, Slovenia, and  Estonia and Lithuania.  These tradingpartners accounted for nearly 60 per cent of Latvia's foreign trade in 1996.
129. 123. Latvia had concluded a set of free trade agreements with the
European Communities, the EFTA  States, the Czech Republic, the Slovak Republic, Slovenia,
Estonia and Lithuania in order to develop intra -regional trade.  The scope of these agreements
covered HS Chapters 1 to 97.  A Europe Agr eement between the European Communities and
Latvia was signed on 12 June 1995.  The Free Tr ade Agreements with Norway and Switzerland
were replaced by a Free Trade Agreement between Latvia and EFTA which entered into force on1 June 1996.  The Free Trade Agreements with the Czech Republic and the Slovak Republic hadentered into force on 1 July 1996, and with Slov enia on 1 August 1996.  These agreements were
notified to the WTO under the procedures of Article XXIV of the GATT 1994.  A Trilateral FreeTrade Agreement on trade in agricultural goods be tween Latvia, Estonia and Lithuania  entered
into force on 1 January 1997.  The agreement provided for elimination of all customs tariffs andquantitative restrictions between the Baltic States.
130. 124. The representative of Latvia said that the free trade agreement with the
European Communities had been notified to th e WTO (document WT/REG7/N/1) and circulated
in July 1995 in document WT/REG7/1.  Latvia was committed to reduce tariffs on agriculturalimports 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 th e tariff rates were list ed in Annex X.  For
processed agricultural products the relevant pa rts of the Agreement were Annexes 3 and 4 of
Protocol 2.  Latvia had estab lished tariff quotas for meat and meat products, yoghurt, flowers,
cabbage, cauliflower and margarine while the tariff reductions applied for unlimited quantities ofvarious fruit and fruit juices, pet food, hair a nd some processed products.  The main Latvian
products subject to concessions in the Europ ean Communities were meat and meat products,
dairy products, chocolate and sweets.  The represen tative of Latvia confirmed that the Free Trade
Agreement between Latvia and the Europe an Communities included clauses on further
liberalization of trade.  The preferential tari ff-rate quotas used in the Free Trade Agreements
between Latvia and the European Communities, the EFTA States, the Czech Republic, the Slovak
Republic and Slovenia had been established to facilitate further liberalization of trade in productsWT/ACC/SPEC/LVA/3/Rev.2
Page 53
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 whetherany tariff-rate quotas had been exhausted or not.
131. 125. The representative of Latvia noted that Latvia's free trade agreements had
traditionally not covered trade in services.  Ho wever, Latvia's Association (Europe) Agreement
with the European Communities included trade in services and establishment issues.  Latvia hadsigned agreements on employment of foreign la bour with Germany and Sweden.  He confirmed
that Latvia was not a party to any agreement concerning mutual recognition of professionalqualifications.
132. 126. The representative of Latvia stated th at his Government would observe the
provisions of the WTO including Article XXIV of the GATT 1994 and Article V of the GATS inits trade agreements, and would ensure that the provisions of these WTO Agreements fornotification, consultation and other requirements concerning free trade areas and customs unions
of which Latvia was a member were met from the date of accession.  The Working Party took
note of these commitments.
Conclusions
133. 127. The Working Party took note of the explanations and statements of Latvia
concerning its foreign trade regime, as reflecte d in this summary.  The Working Party took note
of the commitments  given by Latvia in relation to certain specific matters which are reproducedin paragraphs 
18, 21, 30, 40, [42], [45], 50, 55, 61, 64, 68, [71], 79, 90, [92], 95, [97], 102, 104,
[111], 112, 118, 126, 132 [17, 20, 29, 32, [37,] 42, 47, 59, 62, 66, [69,] 75, 85, [87,] 90, 92, 97,
99, 106, 112, 119, 120 and 126]  of this Report.  The Working Party took note that these
commitments had been incorporated in paragraph 2 of the Protocol of Accession of Latvia to the
WTO.
134. 128. 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 provisi ons of Article XII.  For this purpose, the
Working Party has prepared the draft Decision and Protocol of Accession reproduced in theWT/ACC/SPEC/LVA/3/Rev.2
Page 54
Appendix to this Report, and takes note of Latvia's Schedule of Specific Commitments on
Services (document .......) and its Schedule of Concessions and Commitments on Goods
(document .......) 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
it accepts 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 theWTO.
[ To be completed ]WT/ACC/SPEC/LVA/3/Rev.2
Page 55
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 1000kg
" 1 January 1999 LVL 4.00 per 1000kg
" 1 January 2000 LVL 8.00 per 1000kg
" 1 January 2001 LVL 10.00 per 1000kg
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 litre
" 1 January 2001 LVL 0.17 per litreWT/ACC/SPEC/LVA/3/Rev.2
Page 56
HS code Description Tax rate
2710 Fuel oil , from 1January 1998 LVL 2,00 per 1000kg
" 1 January 1999  LVL 130,00 per 1000 kg
" 1 January 2000  LVL 160,00 per 1000 kg
" 1 January 2001 LVL  170,00 per 1000 kg
2711 Oil gases, from 1 January 1998 LVL 10,00 per 1000 kg
" 1 January 1999 LVL 30.00 per 1000 kg
" 1 January 2000 LVL 50.00 per 1000 kg
" 1 January 2001 LVL 70,00 per 1000 kg
8703 Motor cars 10 per cent
Chapter71,
excluding No.
7117Goods made from gold and other
precious metals, jewellery including
diamonds, precious or semi-precious
stones30 per centWT/ACC/SPEC/LVA/3/Rev.2
Page 57
ANNEX 2 1
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 dwellings, social care and rehabilitation
centres, specialised care centres or houses fully or partially financed from the State budget
or municipal budgets   services of nursing homes ;
(ii) the payment for staying of children in pre-school establishments services of day-care
centres and kindergartens ;
(iii) catering services financed from the state budget in penitentiaries and imprisonment places;
(iv) tuition at State and municipal educational establishments, as well as private educational
establishments accredited by the State  services of eductaional establishments directly
connected with the process of education, including tuition at State and local government
art and music schools ;
(v) tuition for unemployed persons’ professional training or re-qualification organised by the
State Employment Service  services of training farms in catering for students at
agricultural educational establishments ;
(vi) services of public libraries;
(vii) tuition at private educational establishments accredited by the State ;
(viii) visits to theatres, movies (except video) , circus shows, concert activities, events in cultural
establishments, visits to museums, exhibitions, zoologigical and botanical gardens, events
for children and charity events, events of amateur art and of sports;
(ix) medical services, supplies of medicine a nd medical goods in accordance with the list
adopted by the Ministry of Welfare and approved by the Ministry of Finance;
(x) supplies of gold, and bank notes to the Bank of Latvia;
(xi) betting, lotteries and other types of gambling;
(xii) 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;
(xiii) Insurance services supplied by insura nce companies in accordance with the Law "On
Insurance";
(xiv) 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 and services provided by public bath-houses ;
(xv) specialised baby-food in accordance with the list adopted by the Ministry of Welfare and
approved by the Ministry of Finance;
(xvi) scientific research financed by public foundations, or by funding from the State and local
government budget, or international institutions;
(xvii) financial transactions the following goods and financial services :
(a) granting and control of credits, as well as the services connected with credit
guarantees or other  bail guarantees extension of loans  and their monitoring , also
debt recovery if it is performed by the creditor himself except debt collection ;WT/ACC/SPEC/LVA/3/Rev.2
Page 58
(b) services provided by credit of loan  institutions connected with deposit, current
account operations, payments, transfers, debts, checks and other means of payment,
except encashment services and lease of safes negotiable instruments  ;
(c) means of payment negotiable instruments  and services connected with the purchase
and selling of the means of payment negotiable instruments  in cirulation, 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 when importing 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.
(xviii) mass media in accordance with the procedure established by the Cabinet of Ministers
humanitarian aid in accordance with the Cabinet regulations, but if said goods are sold, the
tax shall be paid in accordance with law ;
(ixx) consular services;
(xx) 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 Education and Science as well as services of printing-houses provided
for publishing (developing) of above mentioned literature and publications;
(xxii) feature, documentary and animation films (except video films of VHS format) if they are
supplied or distributed by a film distributor or producer mass media registered in the
Republic of Latvia as well as movies, documentaries and cartoon films,  making and
distribution of them if that is carried out by the distributor officially registered in the
Republic of Latvia  officially registered in the Republic of Latvia;
(xxii) 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 ofco-operatives, as well as to private farms that are not taxable persons;
(xxiii) sale of real estate, also sale of land, except first sale of unused real estate to its owner after
completion of construction ;
(xxiv) supplies of imported goods not subject to customs duties in accordance with Chapters 6
and 7 of the Law on Customs Duty (Tariffs) under a procedure set by the Cabinet, except
supplies of goods to which the 0% rate of cutsoms duty is applied* ;
(xxv) fire-fighting services provided by the Fire-fighting and Rescue Service department of the
Ministry of the Interior, fire-fighting services of institutions, enterprises (entrepreneurialcompanies) and organisations, voluntary fire-fighters’ unions and formations of
fire-fighting volunteers.
(xxvi) post-office  services supplied by the non-profit organisation state stock company " Latvijas
pasts" and on which it has monopoly in accor dance with the "Post-Office Law" postal
services provided by the State enterprise "Latvian Post" in accordance with the Law "On
Post" .
(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;WT/ACC/SPEC/LVA/3/Rev.2
Page 59
(iii) fixed assets brought in to ensure the technolog ical 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;
2. A person supplying said services (goods) may subject them to the tax by registerain at the
State Revenue Services;
(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 .
(3) Fixed assets imported in the Republic of Latvia by a taxable person, shall not be subject to
the tax on the border. In case imported fixed assets do not create distortions of competition
in the country, for example, due to production of analogous fixed assets in Latvia, the tax
shall be written off. Otherwise the cancelled tax shall be collected from a person who has
imported the fixed assets. The procedure for tax write-off and collection shall be
determined by the Cabinet regulations. If a taxable person supplies goods and services not
subject to the tax in accordance with Part 1 of this Article, the tax may be written off only
for the portion of the tax that corresponds to the ratio established by Part 5 of Article 10.
(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 be taxable 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 are produced 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) to Exports and International Transport .
(1) 0% tax rate shall be applied to:
(i) supplies of goods whose place of supply in accordance with Article 4 of the present Law is
not a domestic territory outside the Republic of Latvia ;
(ii) services connected with export of goods and transit transport (including services of
transport, dispatch, goods storage, loading, unloading, examination and sorting) related to
supplies of goods referred to in Paragraph 1 of this part ;
(iii) services whose location of performance in accordance with Article 4 of the present Law is
not a domestic territory supplies of services outside the 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.WT/ACC/SPEC/LVA/3/Rev.2
Page 60
(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 established by 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.
(v) delivery, reconstruction, repairs, maintenance, chartering and lease of vessels referred to in
Paragraph 4 of this Part, and supplies and services in this regard;
(vi) delivery, reconstruction, repairs, maintenance, chartering and lease of aircraft operating on
international routes, and supplies and services in this regard;
(vii) agent services and services for cargo handling of transportation vehicles listed in
Paragraphs 1-6 of this Part;
(viii) on the basis of parity, goods and services supplied to diplomatic and consular
establishments in the Republic of Latvia, their diplomatic and consular agents and their
underage family members residing with them, in accordance with the procedure set by the
Cabinet.
(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) To receive input tax refund, a VAT taxable person registered at the State Revenue Service
shall submit documentary evidence substantiating that the supply of goods or services
referred to in Part 1 of this Article has occurred.
(4) The tax VAT  amount paid by natural persons for goods (if their value exceeds LVL 100)
exported from the domestic territory shall be refunded in accordance with the procedure
established by the Cabinet of Ministers the Cabinet regulations .
(5) 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/SPEC/LVA/3/Rev.2
Page 61ANNEX 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 rough, whether or not stripped of
bark or sapwood, or roughly squared:
4403 200 - 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 m3 3,0 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 m3 4,0  4,0 0 4,0 4,0 0 4,0 4,0 0
4403 20 109 ---  Other m3 0 0 0 0 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 m3 3,0 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 morebl m3 4,0 4,0 0 4,0 4,0 0 4,0 4,0 0
4403 20 309 ---  Other m3 0  0 0 0 0 0 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 m3 3,0 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 m3 4,0 4,0 0 4,0 4,0 0 4,0 4,0 0
4403 20 909 ---  Other m3 0 0 0 0 0 0 0 0 0WT/ACC/SPEC/LVA/3/Rev.2
Page 62 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
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 m3 25,0 25,0 0 25,0 25,0 0 25,0 25,0 0
4403 91 009 ---  Other m3 0 0 0 0 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 m3 30,0 30,0 0 30,0 30,0 0 30,0 30,0 0
4403 92 009 ---  Other m3 0 0 0 0 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 m3 8,0 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 m3 10,0 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 veneer blocks, match blocks and A-ratesawn logs)bl m3 2,0 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 m3 3,0 3,0 0 3,0 3,0 0 3,0 3,0 0
4403 99 509 ---- Other m3 0 0 0 0 0 0 0 0 0
4403 99 990 ---  ther:
4403 99 991 ---- of other deciduous trees (soft):WT/ACC/SPEC/LVA/3/Rev.2
Page 63.
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
4403 99 992 ----- round timber with the length over 1.6 metres
and the diameter 16 to 24  centimetres (veneerblocks, match blocks and A-rate sawn logs)bl m3 8,0 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 m3 10,0 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 (exceptveneer blocks, match blocks and A-rate sawn logs)bl m3 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
veneer blocks, match blocks and A-rate sawn logs)bl m3 3,0 3,0 0 3,0 3,0 0 3,0 3,0 0
4403 99 996 -----  Other m3 0 0 0 0 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 over14 centimetresbl m3 25,0 25,0 0 25,0 25,0 0 25,0 25,0 0
4403 99 999 ---- Other m3 0 0 0 0 0 0 0 0 0
Chapter 49 PRINTED BOOKS, NEWSPAPERS, PICTURES
AND OTHER PRODUCTS OF THE PRINTINGINDUSTRY; MANUSCRIPTS, TYPESCRIPTS
AND PLANS
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:WT/ACC/SPEC/LVA/3/Rev.2
Page 64 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
4901 91 000 -  Dictionaries and encyclopedias, 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/SPEC/LVA/3/Rev.2
Page 65The applicable  code description and customs tariffs after 1 July 1997:
CN code DescriptionSupplementary
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-decoratedmanufactured 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 old - 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 old - 10 10 0
 9701 90 009 --  other -0 0 0
9702 00 000 Original engravi ngs, 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 old - 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 old - 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 complying with the above mentioned codes 0 0 0WT/ACC/SPEC/LVA/3/Rev.2
Page 66
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/SPEC/LVA/3/Rev.2
Page 67
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 AgreementEstablishing the World Trade Organization (hereinafter referred to as "WTO Agreement"), and theRepublic 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/.... (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 comprise the commitmentsreferred to in paragraph 127 of the Working Party Report, shall be an integral part of the WTOAgreement.
3. Except as otherwise provided for in the paragraphs referred to in paragraph 
... 126  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 thatAgreement shall be implemented by Latvia as if it had accepted that Agreement on the date of itsentry into force.WT/ACC/SPEC/LVA/3/Rev.2
Page 68
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 Protocoland 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 Agreementon Trade in Services (hereinafter referred to as "GATS") relating to Latvia.  The staging ofconcessions and commitments listed in the Schedules shall be implemented as specified in therelevant 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 Commitmentsannexed to this Protocol shall be the date of entry into force of this Protocol.
Part III - Final Provisions
7. This Protocol shall be open for acceptance, by signature or otherwise, by Latvia until .........
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 Scheduleannexed hereto may specify that it is authentic in only one or more of these languages.WT/ACC/SPEC/LVA/3/Rev.2
Page 69
ANNEX
SCHEDULE  - REPUBLIC OF LATVIA
Part I - Goods
[ To be circulated ]
Part II - Services
[ To be circulated ]
[ To be completed ]
__________