Lithuania, Poland to begin talks on joint border economic zone

VILNIUS - Lithuania and Poland are set to begin talks on establishing a joint special economic zone near their border, a senior official said, following a Lithuanian proposal to create an industrial hub alongside a new military training ground in Kapciamiestis.

Deputy Economy and Innovation Minister Paulius Petrauskas said on Monday that a preliminary agreement is expected to be signed within the first half of this year.

"We are preparing an agreement between Lithuania and Poland to launch this type of zone - appointing a negotiating group from both sides to arrange these mechanisms. I hope that by June we will sign a starting agreement and appoint negotiating groups, as there are many issues to resolve," Petrauskas told reporters.

According to the official, the zone could incorporate Poland’s Suwalki industrial area, which Warsaw has proposed to expand, and link it with a similar territory yet to be established in Lithuania’s Lazdijai district.

"However, challenges arise regarding conditions and similar matters; we would still need to request permission and a separate assessment from the European Commission, as such a variant has not yet existed in Europe, and it would follow other global examples," Petrauskas said.

He said Lithuania is analysing international experiences, including the Johor-Singapore Special Economic Zone between Malaysia and Singapore, though he cautioned that this model would not be directly applicable due to differing conditions.

The deputy minister said the future zone would require specific bilateral legal and tax regulations to harmonise two different systems.

Petrauskas added that the zone being developed in the Kapciamiestis region would be particularly attractive to the defence industry, noting significant interest from companies in the sector.

"For all companies planning to operate in the Baltic States and Poland, this location is very suitable. Interest from defence industry companies is huge (...) the question is how we will manage to implement it," Petrauskas said.

The idea for a joint Suwalki-Lazdijai economic zone was previously introduced by President Gitanas Nauseda, who emphasised its potential to stimulate regional economic growth and investment.