Commission Report (2002): Latvia

• Progress since the last Regular Report
• Overall assessment
• Conclusions

Chapter 26: External relations

Progress since the last Regular Report

Since the last Regular Report Latvia has continued to align with the acquis on common commercial policy and to co-ordinate positions and policies within the World Trade Organisation (WTO) with the EU, in particular with regard to the Doha Development Agenda negotiations. Steps have been taken to prepare for Latvia`s participation in the EU development policy.

As regards the common commercial policy, upon accession Latvia will be required to align its tariffs with those of the EC. Latvia`s applied tariffs currently average 4.2% (MFN) on all products, 13% on agricultural products, 7.9% on fishery products and 1.7% on industrial products. By comparison, EC tariffs currently stand at 6.3% on all products, 16.2% on agricultural products, 12.4% on fishery products and 3.6% on industrial products.

With regard to the acquis in the area of dual-use goods, legislation on a new list of strategic goods entered into force in March 2002. The new legislation on controls regarding export, import and transit of dual-use goods will provide further alignment to the acquis, although full alignment to the acquis, in particular the general export authorisations, can only take place upon accession. Latvia keeps the industry regularly informed of developments in this field.

As regards bilateral agreements with third countries, Latvia has concluded negotiations on a Free Trade Agreement with the Republic of Bulgaria and negotiations are proceeding with Israel and the Faeroe Islands.

With regard to development policy, co-operation and assistance, amendments to the Law on Customs Duty were adopted in November 2001, introducing a General System of Preferences regime in conformity with WTO-rules. Moreover, Latvia is adapting its development practices to the guidelines laid down by the OECD Development Assistance Committee and the EU Development Policy (Policy document of Latvia`s participation in the EU Development policy). For the implementation of humanitarian aid initiatives, the authorities co-operate with non-Governmental Organisations established in Latvia. Latvia has no specific budget allocation for development or humanitarian aid, but has granted aid on a case-by-case basis.

Overall assessment

The EU and Latvia have established a framework for co-operation regarding WTO issues at both ministerial and departmental level. Latvia has been supportive of EU policies and positions within the WTO framework, in particular during the preparation for and the launching of the Doha Development Agenda. The close co-operation should continue. Close co-ordination is needed and should continue to ensure the smooth alignment of Latvia`s GATS commitments with the EC`s commitments and MFN exemptions and steps have been defined to this extent.

Latvia is an observer to the WTO Government Procurement Agreement (GPA) and a signatory to the WTO Agreement on Trade in Civil Aircraft (ATCA) and the Information Technology Agreement (ITA). With regard to the WTO Agreement on Trade in Textiles and Clothing (ATC), co-ordination has taken place within the third stage of integration under the ATC to align Latvia's integration programmes with those of the EC, although some discrepancies remain.

If Latvia provides medium and long term export credits, further efforts are necessary to align with the acquis. Although progress in the field of dual use goods has been made, completion of alignment is necessary.

Latvia has bilateral free trade agreements with the Latvia, Hungary, the Slovak Republic, Slovenia, Poland, Estonia and Lithuania (Baltic Free Trade Agreement), Ukraine, Turkey, Bulgaria and EFTA. Latvia needs to ensure that the Union is kept fully informed both about existing trade agreements and about any negotiations aimed at the conclusion of the new trade agreements with a third country. Prior to accession, Latvia will need to renegotiate or renounce all international agreements concluded with third countries that are incompatible with its future obligations as an EU Member State. Decisive steps are needed, as a matter of urgency, to bring bilateral investment treaties in conformity with the Treaty obligations. Failure to do so will mean that the conflict between the bilateral investment treaties and Treaty obligations will need to be resolved in the Accession Treaty.

Latvia`s alignment with and future participation in the common commercial policy is administered by the Ministry of Economy and the Ministry of Foreign Affairs. The department of trade policy within the Ministry of Agriculture deals with agricultural trade issues (including WTO matters). Some upgrading might be needed in order to have the necessary administrative capacity upon accession, also with regard to participating in the EU`s development and humanitarian aid policies. The administrative infrastructure, which needs to be in place with respect to customs services is discussed in the chapter on customs union (Chapter 25 -- Customs union).

Conclusions

In its 1997 Opinion, the Commission concluded that Latvia was well placed to meet Community requirements, provided existing trade barriers were eliminated so as to align more closely with the Community's trade regime.

Since the Opinion, Latvia has made gradual progress and has achieved a generally high level of alignment with the acquis.

Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, Latvia`s efforts now need to focus on finishing the process of legislative alignment, on taking decisive steps, as a matter of urgency, towards the renegotiation or abrogation of its bilateral investment treaties in full conformity with its EU membership obligations, as well as on ensuring that the capacity exists to fully implement and enforce the acquis in this field upon accession.

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