EU DOSSIER

Latvian food producers will receive their first EU export subsidy payment this month for exports made to non-EU countries. The Agriculture Ministry's rural support service stated that the subsidies must be paid out within three months of receiving the applications, and that payments are already being made for those companies that have completed all the necessary documentation and customs procedures. At present 44 Latvian companies have signed up to receive the subsidies worth a total 74,500 lats (112,000 euros).

Since EU accession, a total of 6.5 million tons of meat has been transported through Latvia in 407 shipments, the Latvian Food and Veterinary Service reported. The issue is being raised by local farmers and beef producers, who are claiming that Lithuanian retail giant VP Market is flooding the country with cheap meat products. Most of the transit meat 's reaching 4.8 million tons 's shipped between May and August of this year came from the U.S.A. and headed for Kazakhstan. Meat shipments through Latvia to Russia totaled 1.3 million tons, mostly from Brazil and Canada. The Latvian Agricultural Organization Cooperation Council and the State Food and Veterinary Service have agreed to pay more attention to meat shipments in order to determine whether the meat is being illegally flooded onto the local market or used by local meat processing companies.

Estonian Finance Minister Taavi Veskimagi said that the call by his French counterpart Nicolas Sarkozy to harmonize corporate taxes within the EU was populist and aimed solely at winning support at home. "Instead of reforming the domestic, social and economic environment to improve France's competitiveness by making them more efficient, France is attempting to restrict the competitiveness of new member states," Veskimagi said on Sept. 17.

The minister added that given Sarkozy's present ambitions, it was difficult for the French minister to face his electorate with the fact that certain welfare benefits that people are used to must be given up if France is to remain competitive. The French minister vowed to press on with a campaign to penalize EU countries with low corporate taxes by withholding structural aid and warned that EU newcomers would gain nothing by upsetting public opinion elsewhere in Europe. Sarkozy wants more tax harmonization to reduce firms' incentive to migrate from France to EU states with lower corporate tax and cheaper labor costs.

Veskimagi said the French minister seemed to have forgotten that, apart from competition with new EU members, France and the rest of the EU are competing with countries outside the bloc.