This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 VILNIUS 000317 
 
SIPDIS 
 
STATE FOR EUR/NB (MGERMANO), AND EUR/ERA (MHAWLEY-YOUNG) 
 
E.O. 12958: N/A 
TAGS: ETRD EINV PREL ECON BEXP KPAO LH
SUBJECT: LITHUANIAN STAKEHOLDERS TARGET STANDARDS AND 
REGULATIONS AS TRANSATLANTIC TRADE STOPPERS 
 
REF: A. SECSTATE 167813 
 
     ¶B. SECSTATE 218535 
     ¶C. VILNIUS 1035 
     ¶D. VILNIUS 1526 
 
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SUMMARY 
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¶1.  Lithuanians identified differing standards and 
regulations as the greatest impediments to transatlantic 
trade in two recent Embassy-sponsored stakeholders' 
roundtables.  The Lithuanian Free Market Institute, 
reporting on the events, encouraged elimination of U.S.-EU 
tariff barriers and mutual recognition of regulatory norms. 
The report urged the Lithuanian government to liberalize 
trade with the United States and to improve the domestic 
investment climate.  End Summary. 
 
¶2.  Specialists in international trade from Lithuania's 
government, business community, and academia participated 
in two Embassy-sponsored stakeholder roundtables on October 
27 and January 20, held under the rubric of the U.S.-EU 
Stakeholder outreach initiative (ref A), to discuss how 
best to strengthen the U.S.-EU economic relationship.  The 
Lithuanian Free Market Institute organized the roundtables, 
circulated a position paper, and compiled a final report. 
(A copy of the report follows via email.)  While noting the 
importance to the European Union of transatlantic trade, 
stakeholders pointed out that in 2003 the United States was 
the destination of only three percent of all Lithuanian 
exports and that only two percent of all Lithuanian imports 
came from the United States.  (The corresponding figures 
for the first nine months of 2004 were 1.5 percent and 4.3 
percent, respectively). 
 
¶3.  The first stakeholders' roundtable focused on 
regulatory barriers to transatlantic trade, with 
participants calling upon the EU to apply a more flexible 
regulatory regime both within its common internal market 
and to transatlantic trade.  They endorsed mutual 
recognition of U.S.-EU regulatory norms as the best means 
of removing such non-tariff barriers to trade and services. 
The alternative, regulatory harmonization, would require a 
prohibitive investment in Lithuania's regulatory 
infrastructure.  The roundtable report commended ongoing 
U.S.-EU regulatory cooperation in areas such as banking, 
public procurement, and auto safety, and urged a non- 
discriminatory approach in public tenders in both the EU 
and the United States. 
 
¶4.  Roundtable participants highlighted elimination of 
U.S.-EU tariff barriers as an obvious road to boosting 
transatlantic trade.  EU accession-mandated harmonization 
of customs duties in certain protected sectors, such as 
agriculture, steel, and automobile production, raised 
Lithuania's import tariffs.  The experts recommended that 
Lithuania pursue tariff elimination through WTO 
negotiations. 
 
¶5.  An MFA participant noted that differing standards, 
protection of intellectual property rights, and divergent 
approaches to biotechnology approvals complicate U.S.-EU 
trade, and particularly looked for easing the registration 
and procurement requirements of the Bioterrorism and Buy 
America Acts.  He further noted a broader challenge facing 
the United States and the EU -- to reach agreement on 
complex issues such as the Kyoto Protocol, chemicals, and 
genetically modified organisms (GMOs). 
 
¶6.  Roundtable experts looked to Lithuania to follow the 
lead of larger EU countries with greater stakes in 
transatlantic trade, such as the UK, in their efforts to 
liberalize transatlantic trade.  They would encourage 
Lithuania to take a long-term approach, and support 
liberalization and elimination of EU trade barriers, to 
stimulate U.S.-Lithuania trade. 
 
¶7.  The experts urged the GOL to improve the domestic 
investment environment.  They recommended that the GOL 
reduce social security and income taxes and regulatory 
reporting requirements.  They urged the GOL to accelerate 
privatization of the few remaining large state assets 
(airlines, energy distribution network, and railways) and 
to remove all barriers to competition in infrastructure 
services. 
 
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COMMENT 
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¶8.  Diverging regulatory frameworks and standards on either 
side of the Atlantic have not commanded much attention here 
in the past, because our bilateral trade relationship does 
not loom very large here.  Lithuania's natural markets are 
the European Union, Russia, and Eastern Europe, and 
Lithuanians are unaccustomed to focusing on transatlantic 
trade.  Lithuania's new EU membership is causing Lithuania 
to take a closer look at the issue, and increasing U.S. 
trade and investment in Lithuania will make the interest 
personal. 
 
MULL