Talk of mutual sanctions heats up

The imminent trade war betweeen Lithuania and Latvia heated up last week when Lithuanian officials said they would consider imposing an import duty on some Latvian meat products if the two sides failed to reach a mutually acceptable decision in bilateral consultations.

The threat comes just two weeks after Latvia's Domestic Market Protection Bureau concluded that Lithuanian dairies were dumping milk on the Latvian market and that penalties should be applied to certain brands of Lithuanian milk.

Albinas Zananavicius, head of the foreign trade policy department of the Foreign Ministry, said Lithuania was weighing the possibility of imposing an import duty of 50 percent on sausage imports from Latvia.

Statistical data show that annual imports of these products to Lithuania amount to 20 million litas (5.8 million euros), the business newspaper Verslo Zinios reported Feb. 4.

Lithuania has the right to impose import duties on Latvian meat products according to the free trade agreement, which has a provision covering fulfillment of obligations.

"If a country believes that another country has breached the free trade agreement, the interested party has the right to take the measures it finds necessary," Zananavicius was quoted as saying.

However, before taking counter measures, the Lithuanian Foreign Ministry will initiate bilateral consultations or a sitting of the joint committee in February, said the official.

In these meetings, Lithuanian authorities will ask their Latvian colleagues to present additional information and exact figures about Lithuanian dairy-product sales in Latvia.

Moreover, in response to Latvia's intentions, Lithuania may address the World Trade Organization.

The Latvian bureau proposed to impose a duty of 0.03 lats per kilogram of milk imported by Panevezio Pienas, and a 0.06 lat (0.10 million) duty on milk imported by Zemaitijos Pienas and Pieno Zvaigzdes' Mazeikiai branch.

A final say about the application of anti-dumping duties on Lithuanian-made milk lies with the Latvian government. The longest application of the temporary penalty would be six months.