RESTRICTED 
WORLD TRADE 
ORGANIZATION 
ACCESSION OF LATVIA 
Memorandum on the Foreign Trade Regime 
Addendum 
Services Regime 
1. Market structure 
The Ministry of Finance of Latvia estimates that in 1994, total Latvian Gross Domestic Product 
(GDP) was approximately Ls 1.9 billion (approximately US$3.5 billion), Ls 0.95 billion 
(US$1.74 billion), or 49.9 per cent of which was derived from services activity. 
The attached chart illustrates Latvia's trade in major services sectors. Unfortunately, Latvia 
does not yet have the ability to collect services trade information broken down by countries or 
geographical areas. However, it is likely that the geographical composition of Latvia's services trade 
is similar to the composition of its goods trade, which has been reported on in the Memorandum. 
Export and import services - 1994 
(Chart is based on Latvia's balance of payments statistics and therefore its sectoral classifications 
do not fully match those in the WTO services sectoral classifications list. Information in chart is based 
on preliminary data for 1994.) WT/L/63 
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19 April 1995 
Limited distribution 
(95-0952) WT/L/63 
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Page 2 
(US$ million) 
Total Services 
Transportation 
Tourism/Travel Related 
Communication 
Construction/Related 
Engineering 
Financial Services excluding 
Insurance 
Insurance 
Royalties and license fees1 
Other Business Services2 
Computer and Information 
Services 
Personal, Cultural Services3 
Government services4 Exports 
Value 
623.3 
511.5 
17.3 
3.6 
9.8 
4.1 
0.1 
0.4 
71.5 
0.7 
0.1 
4.2 As per cent 
of total 
services 
exports 
100 
82.1 
2.8 
0.6 
1.6 
0.7 
0.0 
0.0 
11.5 
0.1 
0.0 
0.6 Imports 
Value 
204.7 
130.1 
26.8 
1.5 
0.3 
2.0 
12.9 
0.0 
6.1 
0.7 
0.04 
24.3 As per cent 
of total 
services 
imports 
100 
63.6 
13.1 
0.7 
0.1 
1.0 
6.3 
0.0 
3.0 
0.3 
0.0 
11.9 Balance 
418.6 
381.4 
-9.5 
2.1 
9.5 
2.1 
-12.8 
0.4 
65.4 
0.0 
0.06 
-20.1 
'The royalties and licence fees are derived in pan from activity related to other sectors of the chart. 
2Other business sectors are comprised of intermediate trade operations (wholesale trade services), 
advertisement services, professional business services, leasing with operators, market research, map making, etc. 
'Personal and cultural services include audio-visual services and recreational, cultural and sporting services. 
•"Government services are comprised of income and expenditure of Latvian embassies abroad, services 
provided by the Latvian Government in the process of withdrawal of Russian Army, services related to the SDR 
account, and technical assistance provided by foreign sources to Latvia. WT/L/63 
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Unfortunately, Latvia does not yet have the ability to collect information on the value and 
composition of stock of foreign direct investment in services, or on the direction of labour-related flows. 
2. Policy Orientation 
As the service sector is one of the most competitive sectors of the Latvian economy, Latvia 
pursues a very liberal policy regarding trade in services. For most service sectors, Latvia maintains 
no or few restrictions on market access or national treatment for the four modes of supply defined 
under the Uruguay Round Agreement on Services. Continuing this policy, Latvia does not intend to 
introduce any new restrictions in the service sector. 
A. Regulatory framework 
1. Relevant laws and other legal instruments 
(a) Laws and other legal instruments applying to specific sectors: 
The Resolution and Law " On Entrepreneurial Activity " (plus amendments) - 26 September 1990 
Resolution and Law "On Banks" (plus amendments) - 19 May 1992 
Law "On Insurance" - 12 January 1993 
Regulations "On Securities" - 7 January 1995 
Law "On Aviation" - 5 October 1994 
Regulation No. 168 "Maritime Regulations" - 16 August 1994 
Law "On Ports" - 22 June 1994 
Draft Law "On Railways" - March 1995 
Law "On Municipalities" - 19 May 1994 
Law "On Posts" - 12 May 1994 
Regulations No. 60 "On Works and Supplies for State Needs" - 1 March 1994 
Draft Law "On Government Procurement" - October 1994 
Regulation No. 41 "On Autotransport Conveyance" - 21 December 1993 
Law "On Telecommunications" - 4 May 1993 
Law "On Scientific Work" - 10 November 1992 
Law "On Radio and Television" - 6 May 1992 
Law "On Stock Exchange" - 28 January 1992 
Regulations No. 40 "On Issuance and Turnover of Bills" - 21 February 1995 
Law "On Lotteries and Gambling" - 16 June 1994 
(b) Laws and other legal instruments applying to foreign direct investment in services: 
Resolution and Law on Foreign Investment (plus annexes, amendments) - 5 November 1991 
(c) Laws and other legal instruments applying to the entry and temporary stay of foreign natural 
persons supplying services: 
Law "On Entry and Stay in the Republic of Latvia of Foreigners and Persons Without 
Citizenship" -19 June 1992 WT/L/63 
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3. Specific measures 
(a) Cross-border trade 
Latvia does not place any market access or national treatment limitations on cross-border services 
trade with the exception of air transportation. Access to air transportation in Latvia is based mainly 
on reciprocity (flight exchanges) or is subject to bilateral agreements on air transportation, which have 
been concluded with Austria, Denmark, Finland, Germany, Hungary, the Netherlands, Norway, Poland 
and Sweden. 
Regarding the ability of foreign insurance companies to participate in insurance operations, 
the current Latvian legislation provides that foreign insurance companies may engage in insurance 
operations in Latvia provided that they either establish insurance stock companies or become the stock 
holders of such companies. Foreign insurers have the right only to reinsure if they have not founded 
insurance companies in Latvia. 
(b) Consumption abroad 
Latvia does not apply any market access or national treatment restrictions in this mode of supply. 
(c) Commercial presence 
Foreign direct investment requirements 
Latvia maintains some restrictions or requirements on the ability of foreign service suppliers 
to establish a commercial presence in Latvia. Regarding the type of legal entity or joint venture that 
may be established in Latvia, the Law "On Foreign Investment" excludes establishment of partnerships. 
However, as an exception to the Law, Latvia ' s bilateral investment protection and promotion agreements 
may provide that investors of certain foreign countries may establish partnerships. Those countries 
are Denmark, Finland, France, Germany, Great Britain, the Netherlands, Norway, Poland, Taiwan, 
Sweden and Switzerland. 
Regarding limitations on the participation of foreign capital in enterprises, the same Law prohibits 
foreign investors from gaining control of enterprises in the following service sectors: mass media (radio 
and television services, news agencies services, audiovisual services), national education (primary, 
secondary and higher), real estate services, organization and performance of lotteries and gambling 
operations, and port management (stevedore companies' services, ships' agent activities). ("Gaining 
control" under the Law is defined as gaining the right to control over the type of business activities 
and direction of the business development via voting shares or other means, but is not a prohibition 
of an investment.) 
The Law also provided that the Cabinet of Ministers must approve the investment if the foreign 
investor (1) invests in a state enterprise; (2) obtains control over an enterprise or establishes a new 
enterprise whose capital worth exceeds US$1 million. In the case of such a request, the Cabinet of 
Ministers shall take into consideration the impact of the investment on the economy of Latvia, including 
the use of local resources and services. (The United States, under the terms of the Latvia-United States 
bilateral investment Agreement, will not be subject to these provisions, when the Agreement is ratified 
by the Latvian Parliament.) This section of the Law is being considered for modifications to make 
it conform with the requirements of the Uruguay Round Agreement on Trade-Related Investment 
Measures. WT/L/63 
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Latvia maintains some limitations on the ability of foreign services suppliers to obtain 
privatization certificates and to engage in activities in the primary market for government securities. 
According to Latvian legislation, the majority of the council members or credit institutions 
("banks") must be citizens or permanent residents of Latvia. 
Existing monopolies and exclusive supplier rights 
Latvia has granted exclusive rights to the joint stock company "LATTELEKOM" (a joint venture 
between British/Finnish corporation TILTS COMMUNICATIONS and the Latvian Government) to 
supply basic telecommunications services, excluding public mobile radio telecommunication networks. 
The Latvian Law "On Posts" provides for the establishment of a monopoly for postal services. 
Monopoly rights (with some minor exceptions) have been granted to the State Enterprise "Latvijas 
Pasts" ("Latvian Post"). 
In some additional service sectors, there exist enterprises having monopoly features, including 
railroad services (the State Enterprise "Latvijas Dzelzcels" or "Latvian Railways"), utilities, energy 
distribution, and sewerage and refuse disposal services. Latvia considers these to be natural monopolies 
as these have not been created because of any specific monopoly rights under Latvian law. 
Subsidies 
Some Latvian service suppliers are granted subsidies for their operations. They are maintained 
(partly or wholly) from the State budget allocations. These sectors are as follows: research and 
development services, market research and public opinion polling services, National Radio and Television 
services, educational services, health related and social services and cultural services (libraries, archives, 
museums). 
The State Investment Programme of Latvia provides for State investment and foreign loans 
in various sectors of the Latvian economy, including, in particular, general improvement of infrastructure 
and services provided by infrastructure. 
Price controls 
According to Regulation No. 185 of 23 August 1994, "On Setting of Prices and Tariffs for 
Goods and Services", services in some sectors cannot be supplied above a certain price. This requirement 
is applied in a non-discriminatory fashion to both domestic and foreign service suppliers. 
(d) Presence of natural persons 
At present, the Ministry of Foreign Affairs and the Department of Citizenship and Immigration 
are working to establish a more liberal visa regime for tourists, business people and other categories 
of foreigners coming to Latvia with plausible intentions. The validity period of visas will be for up 
to one year instead of the present three months. 
In Latvia, foreigners are permitted to be employed only after receiving a work permit. For 
persons holding a visa, such work permit is valid for up to three months. If the supplier of professional 
services wants to stay in the country for more than three months, the supplier must apply for a permanent 
stay permit. WT/L/63 
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Some services can be provided after obtaining a licence for a specific type of employment 
activity. Some services can only be provided after establishing a commercial presence - see sections 
above. 
The applicants for licences often need to fulfil certain educational and professional requirements 
which are the same as for domestic service suppliers. 
B. Institutional structure 
Latvia continues to elaborate an institutional structure to cover all major services sectors. At 
present the following services sectors are under the supervision of Latvian governmental authorities, 
or professional associations under their supervision (licensing of business activity is one aspect of this 
supervision and is discussed in more detail later in the paper): 
Ministry of Transportation 
Communication services (excluding those related to audiovisual services) 
Transportation services 
Rental and leasing services (excluding those related to other machinery and equipment) 
Computer and related services 
Ministry of Finance, the Bank of Latvia 
Financial services 
Professional services (accounting, auditing and bookkeeping services, taxation services) 
Ministry of Social Welfare 
Professional services (medical and dental services, services provided by midwives, nurses, 
physiotherapists and para-medical personnel) 
Other business services (placement and supply of services of personnel) 
Other health-related and social services 
Ministry of Eduction and Science 
Research and development services 
Printing and publishing (together with the Ministry of Culture) 
Educational services 
Other business services (related scientific and technical consulting services) 
Ministry of Culture 
Audio-visual services 
Cultural services 
Sporting and other recreational services (together with the Ministry of Regional Development and 
Environment Protection and the Ministry of Welfare) 
Architectural services and urban planning and landscape architectural services (together with the Ministry 
of Regional Development and Environmental Protection) 
Advertising services WT/L/63 
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Ministry of Economy 
Technical testing and analysis service (together with the Ministry of Agriculture and the Ministry of 
Social Welfare, and services incidental to manufacturing) 
Construction and related engineering services 
Distribution services (together with the Ministry of Finance, Ministry of Transportation, Ministry of 
Foreign Affairs, Ministry of Agriculture and Patent Office) 
Ministry of Regional Development and Environmental Protection 
Business services incidental to mining (together with the Ministry of Economy) 
Environmental services (together with the Ministry of Transportation) 
Tourism and travel-related services 
Ministry of Justice 
Legal services 
Ministry of Agriculture 
Veterinary services 
Business services incidental to agriculture, hunting and forestry and fishing 
Ministry of Interior 
Investigation and security services 
Some services of the Services Sector Classification List are not under responsibility of 
governmental authorities, including building cleaning services, photographic services, packaging services 
and convention services. Some of those sectors are under the supervision of municipalities. It should 
be mentioned that municipalities are taking part in decision making for a number of services sectors, 
not just those mentioned above, but in all cases their decisions have to be consistent with laws and 
regulations adopted by the Latvian Parliament and Government. 
For such services sectors as engineering services, integrated engineering services, real estate 
services, rental and leasing services related to other machinery and equipment, management consulting 
service and services related to management consulting, almost all government ministries are involved 
in their oversight. Non-governmental institutions also are involved in this process. The institutional 
framework for these service sectors is being elaborated and improved. 
Licensing 
According to the Law "On Entrepreneurial Activity" and the Law "On Business Operations" 
(plus amendments and additions) of 5 August 1992, some service activities provided by legal persons 
are subject to licensing. The issuance of these licences is automatic and does not discriminate against 
foreign applicants. Latvia has implemented such a licensing regime for reasons of environmental 
protection, public health and safety, public morality, as well as prudential reasons for some types of 
financial services. WT/L/63 
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However, it should be noted that the Parliament of Latvia is considering amendments to the 
Law to make the current business licensing system more flexible and more speedy. If the amendments 
are approved as drafted, the Parliament will authorize the Cabinet of Ministers to appoint institutions 
(government institutions or professional associations) with responsibility for licensing and to elaborate 
new lists of business activities to be licensed. The major purpose will be to shorten the current list 
of sectors subject to licensing. These amendments will not change Latvia's current objectives to use 
licences for reasons of safety, public morality or professional requirements. 
Current system: 
Licences issued by Rural and Urban Local Governments 
Retail trade of tobacco products 
Cooperatives of pre-school and out-of-school educational establishments 
Shooting-gallery services 
Passenger transportation services within the territory of a region or city 
Operation of hospitals, including veterinary clinics 
Provision of the services of a coach, sports instructor, or other specialist 
Provision of medical services 
Licences issued by the Cabinet of Minsters or Authorized Ministries (see list above for responsibilities) 
Sale of pharmaceuticals 
Wholesale of tobacco products and importation of such products for the purpose of trade 
Operation of educational institutions 
Land, air, water and rail communication services 
Wireless communication services, radio and television programmes (except cable-television service) 
Detective guards's activities 
Practice of sworn auditors 
Other auditor activities 
Provision of legal services 
Provision of notary services 
Insurance operations 
Import and sale of guns, explosives and special appliances (guns, pistols, their cartridges, gas-bags) 
Geological, hydro-geological activities and geological engineering 
Purchase and sale of precious metals and stone 
Provision of services related to safety engineering in the workplace 
Inspection of measuring appliances used in trade, mail and taxation operations 
Inspection of measuring appliances used in labour and health protection 
Inspection of measuring appliances used in court, inquiries and in other state institutions 
Design, manufacturing, assembling, servicing, repair, operation and modernization of dangerous 
equipment 
Blasting operations 
Repair of sports, hunting and other guns and special appliances 
Import and sale of pyrotechnic materials and appliances and pyrotechnic services 
Specialist training in labour protection and dangerous equipment service staff 
Operation of stock exchanges 
Training of all vehicle drivers 
Dissemination of films and video films and their public demonstration 
Purchase of ferrous and non-ferrous iron-scraps 
Export of ferrous and non-ferrous metals WT/L/63 
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Shipping activities in Latvian ports 
Repair and testing of shipwreck and rescue equipment 
Repair and testing of navigation equipment 
Publishing of navigation materials and marine maps 
Underwater activities in ports and ship repair 
Training of shipping specialists 
Rescue works in cases of shipwreck, including liquidation of sea pollution consequences 
Operation of tugboats in ports 
Job placement services 
Insurance mediation services 
Maintenance of all types and lotteries and gambling houses 
Activities in the securities and privatization certificate market 
Sugar wholesale and import 
Trade of plant life protection aids 
Retail trade of mechanical vehicles and their trailers 
Licences issued by the Spirits Monopoly Board 
Wholesale and retail trade in spirits and alcoholic beverages 
Licences issued by the State Land Agency 
Practice of land surveyors 
Practice of sworn values (related to surveying) 
System of land use 
Production of geodetic works, photo-grammatical works and topographical works 
Certificates or licences issued by Professional Associations (in accordance with provisions of Latvian 
Laws) 
Veterinary services 
Medical services 
Architectural services 
Building engineering services 
Legal services 
Educational services 
Licences issued by the Bank of Latvia 
Purchase and sale of foreign currency 
Activities of banks and credit operations with precious metals and their products 
Future licences 
The Cabinet of Ministers will at some point in the future issue regulations on entrepreneurial 
activity requirements for provision of services to install or repair of electronic appliances (electronic 
cash tills) and electronic systems for the recording of tax and other payments. WT/L/63 
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C. International agreements and other arrangements 
Economic integration/free trade agreements 
The free trade agreements concluded by Latvia traditionally do not cover trade in services. 
Currently the Republic of Latvia has entered into negotiations with the European Union in 
order to conclude an Association (Europe) Agreement with the EU. This Agreement will cover trade 
in services and establishment issues. 
Membership of multilateral agreements and arrangements 
At present Latvia 
UNCTAD 
UNECE 
EBRD 
IBRD 
IMF 
FAO 
ILO 
WMO 
UPU 
WIPO 
ICAO 
ITU is a member of the following multilateral economic organizations 
United Nations Council for Environment and Development 
United Nations Economic Commission for Europe 
European Bank for Reconstruction and Development 
International Bank for Reconstruction and Development 
International Monetary Fund 
Food and Agriculture Organization 
International Labour Organization 
World Meteorological Organization 
Universal Postal Union 
World Intellectual Property Organization 
International Civil Aviation Organization 
International Telecommunication Union 