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Sunday 27.05.2018 | Name days: Loreta, Dzidra, Gunita, Dzidris
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Economic Diary of Latvia. Under the sign of China and globalization

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week, Latvian Foreign Affairs Ministry held a discussion for experts dedicated to the Transatlantic Trade and Investment Partnership between the EU and USA.

This discussion was organized to give Latvian audience a chance to ask questions directly to European Commission experts on topics related to TATIP. And although this topic is infinitely far away from Latvia, 60% of the world’s GDP, 33% of the world trade and 42% of the world’s service trade come from USA and EU, in which Latvia is a member state. There is a number of trade disputes between the two sides, but they nonetheless remain dependent on each other’s markets. Disputes cover only 2% of the total trade volume. The free trade area will supposedly compose the largest regional free trade agreement in history, covering 46% of the world’s GDP.

USA and the EY are the largest trade partners for the majority of other countries in the world. One-third of the world’s trade flows goes through them. Considering the already low tariff barriers (3%), to make the agreement successful, it is necessary to neutralize non-tariff barriers.

This was mentioned by the spokesperson of the European Commission’s Directorate General for Health & Food Safety Brian Kilgallen during the conference. He reminded that the food industry already has high customs tariffs. Reduction of those tariffs will give a positive effect for exports of confectionery, meat products and cheese products – things Latvia is strong in. He added that there are many non-tariff barriers in the field of sanitary and phytosanitary areas. Reduction or cancellation of certain requirements would lead to an increase of exports from USA.

Director of Department for Foreign Trade and Development of External Economic Ties of Latvia’s Foreign Affairs Ministry Martins Kreitus told about the importance of TATIP for Latvia, noting that economic and geopolitical interpretations are equally important.

The Transatlantic Trade and Investment Partnership is a planned agreement between the European Union and USA. Its supporters believe it will lead to multisided economic growth. Those who oppose this agreement believe it will lead to an increase of power for corporations and make it more difficult for governments to regulate markets in the interest of society. It was originally expected to complete the agreement by the end of 2014. In the end, however, it was moved to 2015. The last phase of talks took place in April 2016.

Under China’s sign

Globalization processes affect Latvia as well, which is demonstrated by the announcement of Foreign Affairs Ministry’s Andrejs Pildegovics about this year going under the sign of China this year. This outlook was provided by him at the meeting of the Long-Term Development Committee. He reminded members of the committee of the upcoming 16+1 format meeting this autumn and the meetings between Latvian and Chinese officials, calling it the highest point of Latvia – China relations.

Trade volumes between the two countries continue growing. The potential for economic cooperation is noted primarily in the field of transport and logistics. There is also potential for development in food production, cosmetics, trade and tourism, said Pildegovics.

Head of Transport Ministry’s Transit Policy Department Andris Maldups mentioned that Latvia can offer potential Chinese partners two types of projects: important state investment projects and private projects.

He mentioned the procurement of new aircraft for airBaltic and establishment of direct flight connectivity with China and the development of an inter-modal logistics centre in Salaspils as such projects.

To support the predictions of the ministry’s representative, Food Union Vice-President Normunds Stanevics has announced that the company currently builds two production plants in China. The company plans to begin producing dairy products there in 2018.

Rivers of milk

Because the situation with Europe’s dairy industry could potentially become critical this summer, the decision to move production to China may seem very timely.

Agriculture Minister Janis Duklavs was open in his comments this week. He said that summer for the dairy industry is the time of increased volumes of milk. Unfortunately, there no increase of prices is in sight. It is also impossible to predict when the situation could improve. There are also no signs to suggest Russia may lift its embargo anytime soon.

One of the possible solutions is to seek new export markets to sell dairy products. Agriculture Ministry and dairy farmers have begun their search.

Also, the government supported the allocation of nearly EUR 6.2 million as compensation to farmers for the financial damage and risk of bankruptcy. Statistics show there are approximately 21.8 thousand dairy farms in Latvia and 162 thousand dairy cows.

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