RIGA - The European Union may hit Latvia with sanctions if the Baltic state does not get rid of its excess stocks of sugar, Agriculture Minister Martins Roze announced last week.
Speaking on LNT television, the minister said that Latvia would have to prove that the accumulation of excess amounts of sugar was legitimate and linked with the country's rapid economic development. If unsuccessful, the country faces penalties of 1.5 - 2 million lats (2.1 - 2.8 million euros).
Roze said he was planning to inform the government about the problem this week and would go to Brussels on April 13 to discuss the issue with EU officials.
A final decision on whether to adopt penalties against Latvia is likely be made on April 20.
Roze did not rule out the possibility that should Latvia not be satisfied with the commission's decision, the government would appeal.
The European Commission has been assiduous in enforcing its anti-hoarding rules. It has slapped a 46 million euro fine on Estonia for stockpiling some 92,000 tons of sugar in the lead-up to EU accession on May 1, 2004, far more than the 13,000 tons that Latvia is being accused of amassing. Lithuania's sugar stocks were measured as being below the minimum norm.
The fine for each ton is 450 euros, which the EU will withhold from annual payments to farmers.
In contrast to Latvia and Lithuania, Estonia has no sugar production capabilities and relies wholly on imports to meet demand.
Roze told reporters April 8 that the commission's estimate of excess stocks is way off the mark and that the actual amount is much lower 's if there is any at all. He explained that the commission used a special formula based on imports and exports in the last three years to make its calculations.
"I do not deny that companies have been cheating on their sugar purchases but definitely not on the scale estimated by the European Commission," he said.
"The formula is not right because it does not reflect the development of the agriculture market. For example, soft drink production, consuming large amounts of sugar, has grown rapidly in Latvia in recent years," said the minister.