New import tax on pork

Years of Baltic talk about setting up an unfettered, free-economic zone amongst themselves received another blow after Latvia this week imposed a new import tax on pork. The law, which was adopted Thursday, sets up a strict pork quota system for the other Baltic states, Poland and European Union nations. Latvian lawmakers said the move is designed to provide modest protection for economically hard-hit Latvian farmers, who have complained for years about increasing competition from importers, especially from those based in Estonia and Lithuania. While Latvia would be forced to drop the effective tariffs when it joins the EU in May, 2004, the parliament's decision to protect pig farmers in the interim has had the immediate effect of severely irritating its neighbors. Estonians and Lithuanians both strongly criticized the measures as a violation of existing Baltic free-trade treaties, not to mention of World Trade Organization rules. Officials in both Baltic nations said they may retaliate by erecting new barriers of their own against Latvia. Baltic economists have argued for over a decade that setting up a common economic space, with as little inter-Baltic red tape as possible, was the only sound option for such relatively small markets; the combined population of the three Baltic states is under 8 million people. But political urges to appease one constituency or another has often led to protectionist moves; bureaucracy, including at Baltic customs borders, has also hampered cross-Baltic trade.