RESTRICTED
WORLD TRADE WT/ACC/LTU/9
29April 1996
ORGANIZATION(96-1605)
Original: English
ACCESSION OFLITHUANIA
Communication from Lithuania
Thefollowing communication hasbeenreceived from thePermanent Mission ofLithuania
withtherequest thatitbecirculated forinformation toMembers oftheWorking Party.
_______________
Statement ofHead ofDelegation byMr.Algimantas Rimkunas,
Deputy Minister forForeign Affairs,
ontheservices régime andLithuania ’sevolving economic andtrade policy
given atthemeeting oftheWorking Party,
heldon25-26 March 1996
Statement
Thisisthesecond Working Party meeting thatthedelegation ofLithuania isattending inthe
process ofaccession totheWTO. During thefirstmeeting, onthebasis oftheearlier presented
Memorandum onForeign Trade Regime (L/7551) andinadditional written replies (WT/ACC/LTU/2;
WT/ACC/LTU/4) thedelegation responded toquestions fromWTO members concerning import and
export regulations, other policies affecting foreign trade, etc.(WT/ACC/LTU/7).
DuringthefirstWorkingPartymeetingLithuaniaalsosubmittedaMemorandumontheServices
Regime (WT/ACC/LTU/5). Namely, thissubject isontoday’smeeting agenda, andfollowing my
general presentation onLithuania ’sservices regime, members oftheLithuanian delegation representing
various governmental agencies willprovide descriptions oftheregulatory framework andactivities
thataretaking place inprincipal service sectors.
However, providing youwithageneral outlook onthecurrent situation inLithuania ’sservices
sector, Iwould liketodirect yourattention torecent developments inLithuania ’seconomic andtrade
regime thathavetaken place since thefirstWorking Party meeting inNovember 1995, andcould be
ofinterest toyou.
Chronologically speaking, Ishould startbyexplaining thatLithuania isweathering abanking
crisis which began attheveryendof1995. Itaffected agroup of3private commercial banks with
arather substantial share ofthecountry ’sfinancial market. Itresulted inthereplacement ofLithuania ’s
Prime Minister, thegovernor oftheCentral Bankand5ministers (outof19)oftheformer Government.
Currently anewGovernment isinplace anditsactivities programme hasbeen approved bythe
Parliament. What Iwould liketostress isthatthenewGovernmental programme envisages continuation
ofLithuania ’sintegration intotheworld economy onthebasisoffreemarket principles. Itmaintains
thecourse ofreform process currently under wayandrespects theprinciples oftheWTO intheareas
oftrade ingoods, services andintellectual property rights protection.WT/ACC/LTU/9
Page2
Asfarasthesituation inthebanking sector isconcerned, itiscurrently under control.
Introduction ofadditional measures directed attheimprovement ofdiscipline andresponsibility inthe
banking sector hasalready allowed thebanks mentioned above torenew some ofthefunctions. These
additional measures willnotaffect thetreatment accorded toforeign financial service providers as
establishment offoreign banks isconsidered bytheGovernment asaneffective factor which, through
competition, would leadtoaprofound strengthening ofLithuania ’sbanking sector.
Another important issue Iwould liketoinform youabout isafirstvoteintheParliament of
Lithuania lastweek infavour ofamending theConstitution ’sprovisions toallow theacquisition of
landbyforeigners. Weconsider thisasanextremely important event inthefurther development of
economic, financial andtraderelations withforeign partners. Toenforce theConstitutional amendment
asecond favourable voteisrequired within 3months.
Iwould alsoliketomention thatthedraftofanewCustoms Code hasbeenpresented bythe
Government totheParliament forapproval. Itprovides thebasisforamore uniform customs regime
inonelegalactandreplaces several existing pieces oflegislation dealing withcustoms issues. Achapter
onCustoms Valuation oftheCode willreplace current legislation andhasbeendrafted toinclude WTO
requirements inthisarea. After theCode hasbeenapproved, wewillsubmit acopyofitsrelevant
chapters totheWTO Secretariat forreview bythemembers oftheorganization.
AndnowIwould liketoreturn totheissueofservices andgiveabriefoverview oftheservices
sector ofLithuania. Intheoverall process ofrestructuring oftheLithuanian economy, theservices
sector experienced thebiggest changes. In1994 -themostrecent yearforwhich complete statistics
onservices areavailable -theportion ofthesector inthecountry ’sGDPmade upmorethan68percent;
invalue terms -2.89billion USD. Services exports totalled 320million USD; overhalfofservices
exports wereinthetransport area; tourism andconstruction andrelated engineering services alsowere
significant exports. In1994, services imports totalled 374million USD; transport services constituted
overhalfoftotalservices imports; government procurement ofvarious services andtourism services
were thenextlargest areas ofimports.
AlsoIshould emphasize that,asaneconomy intransition, Lithuania isstillintheprocess of
formulating itslegalstructure togovern services trade, sothedescription intheMemorandum should
beregarded asasnapshot intimerather thanafinalresult. Government Resolution No.511 "On
Approving Regulations forRendering Services" (12April 1995), provides thebasisforGovernmental
institutions involved withcertain services issues toimprove existing legislation ortoformulate new
legislation togovern theprovision ofservices. Anumber ofother sector-specific legalinstruments
arealready inplace.
However ingeneral, despite difficulties ofthetransitional period, Icanaffirm thattreatment
offoreign service providers inLithuania isinlinewiththeaccess offered bytheWTO Members.
Currently,afewrestrictionsaremaintainedoncommercialpresence.Foreigninvestmentsarepermitted
inallspheres withtheexception ofsectors relating tothesecurity anddefence oftheState; manufacture
andsaleofnarcotics andrelated substances; thegrowing, processing andsaleofcrops containing
narcotics andpoisonous substances; andorganization oflotteries.
Lithuania doesmaintain licensing requirements forafewservices areas under theLawon
Enterprises butforeign service providers mayapply forsuchlicences onthesame basis asdomestic
suppliers.
Otherwise,Lithuaniadoesnotmaintainanyrestrictionsonthetotalvalueofservicestransactions
orassets, thetotalnumber ofservices operations, thetotalquantity ofservices output orthetotalnumber
ofpersons whomaybeemployed inaparticular services sector. Restrictions inrelation topresenceWT/ACC/LTU/9
Page3
ofnatural persons aremaintained inconnection withtheforeign employment quotas decided bythe
Lithuanian Labour Exchange.
Concerning TRIMS, asLithuania states inAnnex IItoWT/ACC/LTU/7, theGovernment of
Lithuania hascarefully reviewed theprovisions oftheWTO Agreement onTrade-Related Investment
Measures (TRIMS), including itsAnnex containing anillustrative listofTRIMS, and,aftercomparison
ofthese provisions withLithuanian legislation andpractice, hasconcluded thatLithuania doesnot
maintain anymeasures thatcould beconstrued asTRIMS.
Iwould alsoliketotaketheopportunity informing participants oftheWorking Party meeting
thatLithuania willpresent itsinitial offer onmarket access forgoods within afewweeks afterthe
WTO Working Party meeting. Itwillbebased onthenewcustom tariffs system which isunder
consideration bytheGovernment ofLithuania.WT/ACC/LTU/9
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Short presentations byLithuanian experts onprincipal areas ofservices
I. Financial services
1. Insurance andrelated services
Anyforeign service provider thatwishes tooperate inLithuania mayoperate under thesame
conditions asnational companies, aslongasitcomplies withtherequirements oftheLawonInsurance
(adopted in20September 1990).
Atpresent anewLawonInsurance isunder discussion bytheParliament. Aforeign insurance
company musthavepermission ofitsGovernment toconduct insurance activity inforeign countries;
other thanthisexception, treatment ofdomestic andforeign insurance providers willbethesame.
Foreigners areabletoestablish aswholly-foreign owned companies, joint-ventures orsubsidiaries.
Foreigners must meetthesame licensing requirements asdomestic providers.
Inaddition, thenewLawwillcodify thecurrent situation under which allexceptional rights
fortheState Insurance Company areeliminated.
2. Securities market
Thesecurities market isregulated bytheLawofSecurities Public Turnover, which wasadopted
on16January 1996.
According tothisLaw, theLithuanian Stock-Exchange isestablished asanon-profit enterprise.
Thestatutes oftheStock-Exchange andtrade rules shallbeconfirmed bytheLithuanian Securities
Commission. Trade rulesoftheStock-Exchange havetoregulate themembership, co-titration, clearing,
settlement, procedures ofarbitration andtheinsertion ofthesecurities onthetrade list.
Foreign providers mayenter theLithuanian securities market through enterprises established
inLithuania asjoint-ventures orwholly foreign owned companies orsubsidiaries.
Inthefieldofsecurities market, foreign providers ofsecurities services mustmeetthesame
requirements asdomestic providers.
Onlyenterprisesoffinancialbrokersordivisionsoffinancebrokeringofbanks,holdingalicence
from theLithuanian Securities Commission, canactinpublic circulation ofsecurities. Brokers,
representing those enterprises ordivisions, mustbecertified bytheLithuanian Securities Commission.
Inallsuchfields, thereisnodiscrimination against foreign service providers, although services
related topublic securities turnover canbeprovided fromforeign countries onlythrough enterprises
established inLithuania orrelevant bankdivisions.
Enterprises established inLithuania andowned byforeigners maybecome members ofthe
National Stock-Exchange ortheCentral Securities Depositorium under thesameconditions asdomestic
entities.WT/ACC/LTU/9
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3. Banking services
Atwotierbanking system isestablished inLithuania: theBank ofLithuania (which operates
asthecentral Bank ofLithuania) andcommercial banks. Thesystem isregulated bytheLawonthe
Bank ofLithuania (1December 1994). ThisLawprovides thepowers andfunctions oftheCentral
Bank andgives directives onplanning andimplementation ofitsactivities inconformity withtheLaw
onCredibility ofLitas (17March 1994) andtheprocedures forlicensing andsupervising banks and
other financial institutions. Theother principal lawregulating thebanking system istheLawon
Commercial Banks (21December 1994) which regulates banking activities, includes provisions on
theestablishment, reorganization andliquidation ofbanks.
Anylegal person canfreely exchange foreign currency intoLitas andviceversa tomake
international payments andorders; crediting transactions aremade without anyrestrictions. Itisalso
possible tofreely repatriate profit orincome received frominvestments. Aninvestor wishing toacquire
10percentormore ofanexisting banks stock capital must firstobtain thepermission oftheBank
ofLithuania. Capital transactions arealsofree.
Theprocedure forfounding aforeign commercial bankwithforeign capital andtheprocedure
foritsoperation isestablished bytheLawonCommercial Banks. Aforeign bank intheRepublic
ofLithuania may:
- establish asubsidiary;
- acquire shares inafunctioning bankand,withtheconsent oftheBank ofLithuania,
acquire controlling interest inafunctioning bank; and
- upon receiving permission oftheBank ofLithuania establish bankagencies.
TheBankofLithuania reviews allapplications forlicences toopencommercial banks, whether
submitted byLithuanians orforeigners.
TheBoard oftheBank ofLithuania shallconsider theapplication andissueabanking licence.
II. Communication Services
Asanupdate totheinformation provided intheMemorandum ontheServices Regime, itshould
benoted thatLithuania hasmade several recent improvements tothelegal framework governing
communication services.
AnewLawonCommunications (3November 1995) provides thepotential forgreater foreign
participation inLithuanian telecommunications markets byauthorizing theGovernment monopoly
"LietuvosTelekomas"totakeonforeignpartnersfortheintroductionofnewtechnologiesandnetworks.
ThatLawprovides newmonopoly rights fortheGovernment toprovide mailservices.
AnewLawOnRadio Communications (7November 1995) establishes rules togovern use
ofradio communications aswellasuse,production, import andtrade ofrelated equipment.
Government Resolution No.1400 "OnLicensing ofPostandTelecommunications Services"
(31October 1995) establishes apublic tender/licensing system forsuppliers wishing toengage inthe
following activities: provision ofinternational, interurban andlocaltelephone andtelegraph services;
establishment ofwireradioandcabletelevision; establishment ofmobile radiocommunication services;
establishment ofradio andtelevision transmissions; and,establishment ofsatellite transmissions.WT/ACC/LTU/9
Page6
Italsoshould benoted thatinaddition totheabove requirements, theGovernment ofLithuania
mustapproveeachforeigncapitalinvestment(whetherwhollyforeign-ownedoraspartofajoint-venture)
inthesphere ofcommunications services.
III. Transport Services
Asanupdate totheinformation provided intheMemorandum ontheServices Regime, itshould
benoted thatseveral improvements areplanned tothelegalframework fortransport services. In1996,
theMinistry ofTransport willbeworking onadraftofanewTransport Infrastructure Lawandanew
addition totheLawonFundamentals ofTransport Activities. These willhavetheaimofspecification
andreflection ofother laws.
TheParliament isnowconsidering thedrafts ofanAirTransport Code, theRailway Code,
theTrade Shipping Law, theInland Water Transport Code andtheKlaipeda (region ofLithuania) State
Seaport Law. Once adopted, these willbring thelisted sub-sectors under alegalframework forthe
firsttime.
Inregard toroadtransport, theformer State-owned roadtransport companies havebeenbroken
upintofreight andpassenger transport companies. Thepassenger transport companies operate under
municipal management. Privatization ofthefreight transport companies isnearly completed andthis
hasencouraged theformation ofafreemarket fortransportation services. Inregard toairtransport,
theformer Government monopoly hasbeenbroken intoindependent enterprises: infrastructure objects
(airports andairtraffic services) andaviation companies (Lithuanian Airlines andAirLithuania).
Inregard towater transport, in1992, Klaipeda Portwasestablished astheLithuania State
Seaport. BothState andprivate companies areoperating stevedoring, shiprepair, andshipbuilding
services inthisPort. Railtransport services areprovided bytheGovernment monopoly "Lithuanian
Railway".