Latvia

1) REFERENCES

Commission Opinion [COM(97) 2005 final - Not published in the Official Journal]

Commission Report [COM(98) 704 final - Not published in the Official Journal]

Commission Report [COM(99) 506 final - Not published in the Official Journal]

Commission Report [COM(2000) 706 final - Not published in the Official Journal]

Commission Report COM(2001) 700 final - SEC (2001)1749 - Not published in the Official Journal]

Commission Report COM(2002) 700 final - SEC (2002)1405 - Not published in the Official Journal]

Commission Report [COM (2003) 675 final - SEC (2003) 1203 - Not published in the Official Journal]

Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its initial Opinion of July 1997, the European Commission expressed the view that the need for the Government of Latvia to consolidate its new industrial base was even more urgent now that it had ceased to subsidise industry. The most pressing need for the future was to strengthen measures to foster domestic capital formation and foreign direct investment (FDI). Provided that current positive trends continued regarding privatisation, enterprise restructuring and the ability to attract FDI, the Latvian economy should be able to cope with European integration in the medium term.

The November 1998 Report noted that some progress had been made, but maintained that the industrial policy under preparation needed to be adopted to promote industrial restructuring and competitiveness. Progress had also been made in the field of small and medium-sized enterprises (SMEs).

The October 1999 Report emphasised that Latvia had made progress in implementing key structural reforms and setting up a favourable regulatory and policy framework for business development. Further attention was being paid to enhancing industrial competitiveness.

In its November 2000 Report, the Commission pointed out that the Government had mainly concentrated its efforts on foreign investment promotion. Less progress has been made in the privatisation and restructuring of public enterprises.

The November 2001 Report stated that little progress had been made in the field of industrial policy. The main efforts had focused on investment promotion. Little progress had been made in terms of competitiveness and privatisation and restructuring. The government was involving enterprises more in drawing up industrial policy.

The "Guidelines for the industrial development of Latvia" - a document covering industrial policy and SMEs - had been adopted in March 2001 and should result in a more integrated approach to industrial policy.

With regard to SMEs, the business environment has been improved and corporation tax would be reduced.

The October 2002 Report emphasised the efforts made by Latvia in its approach to industrial policy, even though only limited progress had been made in terms of implementation. The main efforts focussed on the field of investment. Limited progress had been made in strengthening administrative capacity. For SMEs, limited progress had been made in revising the industrial policy and reforming the support system for businesses. The business environment had been improved.

The November 2003 Report considered that Latvia had complied with the commitments on industrial policy and policy to promote SMEs. However, it needed to continue strengthening its administrative capacities.

The Treaty of Accession was signed on 16 April 2003 and accession took place on 1 May 2004.

COMMUNITY ACQUIS

EC industrial policy seeks to enhance competitiveness, thus achieving rising living standards and high rates of employment. Its aim is to encourage an environment favourable to initiative, to the development of undertakings throughout the Community and to industrial cooperation, and to foster better exploitation of the industrial potential of innovation, research and technological development policies. EU industrial policy combines instruments from a number of Community policies, and includes both instruments related to the operation of markets (product specification and market access, trade policy, State Aid and competition policy) and measures related to industry's capacity to adapt to change (stable macro-economic environment, technology, training, etc.).

In order to cope with competitive pressure and market forces within the Union, the industry of applicant countries will need to have achieved a certain level of competitiveness by the time of accession. The applicant countries need to be seen to be pursuing policies aimed at open and competitive markets along the lines set out in Article 157 (ex-Article 130) of the EU Treaty. Cooperation between the EU and the applicant countries in the fields of industrial cooperation, investment, industrial standardisation and conformity assessment as provided for in the Europe Agreement is also an important indicator of development in the right direction.

EVALUATION

In terms of industrial strategy, Latvia has improved its competitiveness by encouraging investment. The administrative structures need to be strengthened, as do business associations.

This chapter has been provisionally closed (see the 2002 Report).

As part of its SME policy, Latvia has ratified the European Charter for Small Enterprises. The Charter principles are incorporated in the new SME strategy for 2002-2006. Progress has been made in the fields of access to finance and to information.

Whilst the interests of SMEs are starting to be taken into account, the administrative capacity remains weak. It will also be necessary to facilitate access to finance from the structural funds and to upgrade support services.

Latvia has made progress since the 1997 opinion in introducing an SME policy which is in line with European Union principles.

This chapter has been provisionally closed, no transitional arrangements have been requested and Latvia has met its commitments (see the 2002 Report). Latvia will need to strengthen administrative capacity and improve its implementation.

Last updated: 04.03.2004