RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/LVA/4
22 October 2001
(01-5172)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Replies to Questions from the UNITED STATES1
Regarding the Updating Notification of LATVIA2
The following communication, dated 18 October 2001, has been received from the Permanent
Mission of Latvia.
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State Aid to the Manufacturing Sector
Q1. Is aid to the manufacturing sector provided to any company or enterprise that, under
commercial and market considerations, wo uld not be able to obtain financing?
Reply
In 1999 state aid was not granted to the companies who would not be able to obtain financing
under market conditions.  Most of the aid to the manufacturing sector was granted in the form of taxdebt capitalization (debt accrued before the privatisation) and tax extensions (since 1 January 2000, no
new tax extension has been granted).
The capitalization of tax debt and tax extensions are one-off steps to help companies
overcome the consequences of the previous economic system, no direct aid from the State budget wasgranted.  Besides, tax debt capitalization was possible only in cases where companies complied at
least with minimum financial viability criteria (certain financial indicators like liquidity and own
capital assurance were stipulated as a yardstick plus no minimum defaults in current tax payments).
As to restructuring aid, the aid was granted only with condition, that the recipient had to
contribute at least 25 per cent of restructuring costs (e.g. at least 25 per cent of restructuring costs
should not be state or municipal financing).
                                                     
1 G/SCM/Q2/LVA/3
2 G/SCM/N/60/LVAG/SCM/Q2/LVA/4
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Q2. Is any aid mentioned in your notification contingent on a company’s ability or intention
to export its goods or services?
Reply
In 1999, no export aid was granted to the companies.  State aid to companies was granted
only to partly cover the companies’ costs of part icipation in fairs, international exhibitions etc.
State Aid to the Agricultural Sector
Q1. Please provide information on the amounts of aid provided to the agricultural sector.
Reply
The following information is provided:
1. Title of the subsidy
Support for Agriculture
2. Period covered by notification
1999
3. Policy objectives and/or purpose of the subsidy
The purpose of state aid in the agricultural sector is to promote the competitiveness of Latvian
produced agricultural goods (in the form of price support, certain forms of credit guarantees etc.) and
to stimulate the technological modernization of farms, to increase level of skills and knowledge
among farmers, to improve scientific system that underpins livestock breeding and plant production in
Latvia.
4. Background and authority for the subsidy
Ministry of Agriculture
5. Legislation under which it is granted
Law on 1999 State budget and Decree of the Ministry of Agriculture No. 15 dated from
18 January 1999.
6. Form of the subsidy
Grant
7. To whom and how the subsidy is provided
The subsidies were available to natural and legal persons, who meet certain criteria, they are
registered as taxpayers, manage bookkeeping, have at least first level agricultural education andprovide data for statistics.G/SCM/Q2/LVA/4
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8. Subsidy per unit, or in cases where it is not possible, the total amount or the annual budget for
the subsidy
Financing to general services.
Procedure Costs in ('000 SDR)
Research programmes financed by state on specific needs related to agriculture-
pedigree work; maintenance of genetic fund and seed breeding; development of
science( technical equipment); center of comparing plant sorts2,943.4
Extension and advisory services for farmers; improvement of qualification and
provision of the methodological work for educational establishments; other
agricultural activities, exhibitions etc.16,969.7
Inspection services related to seed, food quality, sanitary border inspection,
veterinary medicine;  establishment of united animal register8,118.3
Culture – technical  and agro-technological improvement of soils;  maintenance of
melioration system;  hydrometry and cadastre for melioration3,638.7
Liquidation of consequences of accidents 8.1
Artificial renovation or private forestry land and forestation of non-agricultural
lands44.3
Improvement of technology, renovation of technical equipment of production. 4,537.9
Payments for income loss due to bankruptcy of sugar production factory 1,438.0
Total 37,698.4
Sector specific subsidies
Payments are distributed according to the table.  Certain quality requirements have to be met.
Product Costs in 1999, government
budget ('000 SDR)
Flax 405.7
Barley 83.0
Rape 164.9
Potatoes 258.6
Certified seed material 2,687.0
Vegetables from greenhouses 168.8
Grain (other than wheat) 419.9
Pig-meat 1581.8
Beef 1,003.8
Dairy 2,568.3
Total 9,341.8
Aid not linked to specific forms of agricultural production
Programme Aid in '000 SDR
Credit interest rate subsidy 93.7
Support for purchase of breed animals, seamen material from aboard 253.1
Formation of credit guarantee fund 962.9
Total 9,341.8G/SCM/Q2/LVA/4
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Intervention programme
The market intervention programme was implemented through the state intervention buying
of grain that meet specific quality requirements from Latvian cereal producers for set prices.
Support is estimated as not exceeding world market price level.
9. Duration of a subsidy and/ or other time limits attached to it
Individually, according to the programme.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.
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