Lithuania in the Baltic doghouse over free trade

VILNIUS - First, Riga angered its Baltic neighbors by flirting with import quotas on pork. Now, Lithuania has pushed Latvia out of the free trade doghouse by artificially inflating the prices of agriculture imports from the north.

Latvia and Estonia delivered notes to the Lithua-nian Foreign Ministry that said the measure is a violation of the Baltic Free Trade Agreement.

The Lithuanian move sets a price floor for imports of poultry, grains and sugar that prevents the products from dropping below the price of local goods. When imports are declared, taxes are added to their minimum price not their actual price increasing the tax burden.

Once the value added tax is added on, Latvia and Estonia say, their goods are too expensive to compete on the Lithuanian market.

The Lithuanian side has promised an official reply to the notes before the middle of February. But in the meantime, Lithuanian officials are reacting by shrugging their shoulders with bewilderment, unsure of what their neighbors are suddenly complaining about.

Toms Baumanis, a spokesman for the Latvian Foreign Ministry, said Lithuania's establishment of minimal prices was not in accordance with the Baltic Free Trade Agreement .

A couple of days later, on Jan. 29, the Estonians delivered a note of their own to the Lithuanian ambassador in Tallinn. The information in the note mirrored that in the Latvian one.

"The note said the minimal prices established by Lithuania Dec. 28 was not in accordance with the trilateral [Baltic trade] agreement and the principle of the World Trade Organization," a spokesperson of the Estonian Foreign Affairs Ministry said.

After receiving the note, Lithuanian officials have been unable to make head or tail of the complaints.

Foreign Ministry officials have so far not appeared overly anxious to dive into specific details until after their expected official response. Still, Arunas Ribokas of the ministry's foreign trading department, was able to shed some light on why Lithuanian officials seem so baffled by the accusations.

"Minimal prices are nothing new and were introduced more than half a year ago, in the middle of 1998," said Ribokas. "Maybe [the Latvians are complaining] because the crisis in Russia had more of an impact there. It's just a guess though."

Neither Baumanis nor Aiga Smiltane, director of the Agriculture Ministry's Foreign Trade Policy Department, denied that Lithuania's minimal prices could have been in place for over half a year. Still, they said the issue was brought to the Latvian government's attention only recently.

"The situation has only come up recently when some Latvian [producers] began ringing the alarm bells," said Baumanis. "These minimal prices are especially hard on egg [sellers]."

The problem over minimal prices seems to be only the latest in a series of wet blankets to cover the spirit of Baltic free trade. Lithuania and Estonia spent a good chunk of last fall finding reasons to reject each other's pork products until the situation finally cooled. And only a couple weeks before Latvia launched complaints over minimal prices, it retracted proposed quotas on Baltic pork imports after being pelted with criticism by their neighbors.

Despite the occasional road block, the spokesperson for the Estonian Foreign Ministry said the trilateral agreement was not only expected to get back on track, but was a "good example" of free trade "with fruitful and good results."