Lithuania offered to slash prices on certain groups of products, but this proposal does not satisfy its two Baltic neighbors, who want all the prices scrapped.
"Lithuania promised to review prices on certain goods so that they correspond to the market prices, but refused to revoke all the prices," said a spokesman for the Latvian Agriculture Ministry. "Now we are working out the same customs policy for Lithuanian products."
At the beginning of the year, Lithuania established minimum prices on imported foodstuffs which it uses to calculate customs duties. The established price floor is above the market level and renders exports to Lithuania uncompetitive.
Both Latvia and Estonia say this move violates the Baltic Free Trade Agreement and does not correspond to the World Trade Organization's regulations.
"At the committee meeting, Latvia expressed its opinion that Lithuania should drop these prices, and if it doesn't, Latvia will consider the same measures," said Ilga Preimate of the Latvian Economics Ministry, who headed the Latvian delegation in Vilnius.
Preimate said Lithuania has until March 15 to change its position. Meanwhile, the Latvian government will decide whether to take any counter measures.
Lithuania is reluctant to make any changes in its customs procedure, saying that it does not have to meet any WTO requirements since it is not a member.
"We will revoke these prices when we join the WTO," said Jonas Rekasus, a spokesperson at the Lithuanian Agriculture Ministry. "Now we don't owe Latvia anything."
In its drive for WTO membership, Lithuania has decided to apply the organization's procedures starting Jan. 1, 2000. Until then Latvia and Estonia may not expect any changes, Rekasus said.
Preimate was skeptical of Lithuania's explanation noting that the countries have the Baltic Free Trade Agreement that regulates the three country's trade relations.
"We have to find a consensus within the Baltic Free Trade Agreement," said Preimate. "We are talking about equal conditions for Latvian and Lithuanian exporters."
Several Latvian exporters had to stop their export to Lithuania because their products could not compete on the Lithuania market after it introduced the new procedure.