WTO forces Latvia to slash import tariffs

RIGA - When Latvia joined the World Trade Organization last week, 133 countries opened their markets to Latvian exports. In return, Latvia will have to lower import tariffs to make its market more accessible to others.

According to the WTO agreement, Latvia cannot have import tariffs higher than those set by the organization, and the existing law on customs taxes and tariffs will have to be amended.

Guntis Kozunda, director of the customs tariffs and legislation department at the Finance Ministry, said changes will be minimal and will not threaten the local market.

"The ceiling, which the WTO sets for tariffs, is pretty high, and depending on the inner market situation, we can raise or lower those tariffs," Kozunda said.

Amendments will affect goods that are now goverened by the WTO's most favored treatment system.

For example, Latvia will lower its import tariff on meat from 40 to 36 percent in 2000. Import tariffs on grain will be slashed from 75 to 50 percent, and a 0.5 percent import tariff on raw materials will be scrapped.

"This tendency could have been observed even before Latvia joined the WTO. We worked on a project where raw materials, which our manufacturing industry needs, will have a 0-percent import tariff," said Svetlana Kolupajeva, deputy director at the customs tariffs department.

Latvia's breweries, however, might feel more competition as import tariffs on beer will be lifted by 2001. Breweries now enjoy the protection of a 30 percent tariff on imports, but this will be lowered by 10 percent each year until 2001.

All indicators point to a favorable atmosphere for foreign producers in the coming years. Should Latvia worry about increased imports pushing local producers off the market?

Not necessarily, says Normunds Popens, head of the Foreign Ministry's foreign trade department.

"In principle, there won't be large changes in imports. Latvia has always had a very favorable import regime. Latvia's market is very small, and there will not be much interest in it," Popens said.

Kolupajeva said Latvia has held talks with New Zealand, Mexico, Australia, Canada and the United States, all of whom are interested in exporting to Latvia.

Mexico is interested in exported spices, pineapples and nuts; Canada offered grain and the United States is interested in exporting "everything," Kolupajeva said.

Latvia has reached agreements with these countries and lowered the most favored treatment tariffs that apply to some of their goods by 5 percent. Kolupajeva said Latvia's gains from joining the WTO are bigger than those of other countries.

"For Latvia import tariffs will be 50 to 60 percent lower than they are now. We have a better regime when we export because those countries have a stable trade relationship."

Latvia's most demanded exports are minerals, wood and textiles. After joining the WTO, Latvia has a very good opportunity to trade these goods on markets in Singapore, the Philippines, Egypt, Israel and Japan.

"We used to sell our wood to Egypt through Great Britain, but now we can trade directly," Kozunda said.