VILNIUS - Lithuanian diplomats have turned to the European Commission for help in pressuring Ukraine to cancel a new import duty on EU-made household appliances that has put a dent in exports of Lithuanian refrigerators.
Diplomats want the EU executive body to help mediate with Ukrainian authorities, who recently levied a 10 percent duty on manufactured household goods, included refrigerators made by Lithuania's Snaige.
The daily Lietuvos Rytas reported on April 8 that Raimundas Karoblis, director of the economics department at the Foreign Ministry, said Ukraine's economy minister had promised during a meeting held at the commission's initiative to have the duty cancelled.
The duty, which came into force in March, has hampered Snaige's exports to Ukraine, which last year amounted to 160,000 refrigerators.
Ironically, Snaige CEO Mindaugas Sestokas has downplayed the impact of the duty-hike, saying that the company would send refrigerators to Ukraine from its plant in Kaliningrad. Last year all units delivered to Ukraine had been assembled at the company's core plant in Alytus.
"[The duty] will not affect us as we have a plant in Kaliningrad, and exports from Russia to Ukraine carry a zero-duty. So sales from our Kaliningrad facility will be more advantageous compared with our plant in Alytus," said Sestokas.
He did not say when Snaige would start exporting Kaliningrad-made refrigerators to Ukraine. Shipments from the plant have not started due to logistical issues, production scheduling and other factors, he explained.
Nevertheless, this year sales volumes in Ukraine should grow, Sestokas said. "These duties are projected to remain in effect for about one year, as Ukraine is planning to join the World Trade Organization next spring, which means that the duty should not exceed 5 percent afterward," he said.
Meanwhile, Snaige is also projecting ambitious sales growth in both Russia and Belarus. The company said earlier this year that it intends to boost its market share in Russia to 10 percent in 2005 and to 20 percent in several years' time. In regards Belarus, the company launched a trial sale in March.
"The Belarusian market is interesting to us. We are re-entering that market after a long absence. We will see how things will go for us. This year we are planning to sell only 3,000 to 5,000 units there. Customs duties are not favorable for us," Sestokas said.
Snaige sells its products to more than 40 countries around the world. Its sales to CIS markets soared by 72 percent last year and accounted for 48 percent of the total exports. For 2004 the company reported pre-tax consolidated earnings of 18.4 million litas (5.3 million euros) on sales of 313.6 million litas.