RIGA - EU Foreign Trade Commis-sioner Pascal Lamy pulled off a two-day three-city tour of the Baltics last week, touching upon a range of key trade and tax issues vital for the three countries' economies.
Lamy, who was visiting to assess preparedness for EU accession, said all three countries were ready to join, though he did stress that the Baltics would not enjoy any preferential trade rights vis-a-vis eastern countries such as Russia, Ukraine and Belarus.
In Vilnius, where he started his trip, Lamy told state officials and businessmen that the EU did not intend to levy any additional taxes on private individuals and that there were no plans to introduce uniform rates for basic taxes throughout the bloc. Any EU-wide tax reform, he said, would only take place in the distant future.
Tax sovereignty is a key issue in the Baltics, particularly in Estonia, where Prime Minister Juhan Parts recently argued in an open letter, along with U.K. Prime Minister Tony Blair, that tax issues were a matter of competitive advantage and should therefore remain in the realm of domestic, not EU, policy.
Lithuanian businessmen asked the trade commissioner about how the trade regime with Russia, Ukraine and Belarus, the main suppliers of raw materials for Lithuania, would change after May 1, since the EU applies customs duties on such imports from these countries. Lamy responded by explaining that no special conditions would be granted and that Lithuanians would have to play under the same rules as other member states.
As a result, businessmen throughout the Baltics are bracing themselves for a price rise in building materials, chemical products, steel and other commodities.
Speaking in Tallinn of the Partnership and Cooperation Agreement signed between the EU and Russia, Lamy said that talks with Russia in connection with the PCA were proceeding well and only a few technical problems had remained - for example transit through Lithuania to the Kaliningrad enclave.
"We believe that 90 percent of the issues have already been solved," he said. "The weather is no longer stormy and there is no longer any reason to speak about sanctions [concerning Russia]."
The existing PCA document will automatically extend to the Baltics, and the double customs Russia has in place with Estonia will lose legal force, Lamy said.
While in Riga, Lamy stressed that Latvia's trade policy with both EU members and nonmembers would now be governed by EU regulations.
This means that Latvia will have to lift all antidumping measures, import quotas and other regulations it had introduced in respect to Lithuania, Estonia and Poland, while Poland, for its part, would have to cease all its pork export subsidies.
As far as Latvia's current account deficit, which reached 9.2 percent of GDP last year, Lamy saw no grounds for concern.
"Such macroeconomic indicators are not surprising for a country, which is carrying out as extensive modernization as Latvia," said Lamy, adding that the current account deficit was bound to reduce itself in the long run.
He said Latvia could definitely make use of the fact that as a former Soviet republic it has many people with good Russian language skills and knowledge about CIS markets. This gives Latvian businessmen an advantage over Germans, for example, in establishing contacts with Russia and subsequent benefits, said Lamy.
The commissioner also met with Economy Minister Juris Lujans, who discussed Latvia's position as regards admission of new members to the World Trade Organization, the ministry reported. The two also spoke about other important matters that should be discussed with Russia - eliminating discrimination as regards railway rates and energy industry, improving customs laws.
The EU commissioner and Lujans also discussed revision and lowering of anti-dumping duties upon admission of new members to the EU. Lujans said he was pleased about the solution of the question on a higher quota for Russian steel imports.
