In connection with the draft Saeima decision “On the immediate suspension and future prevention of imports into Latvia, including transit through Latvia, of grain originating from the Russian Federation and the Republic of Belarus”, the Latvian Stevedoring Companies Association (LSA) is urging lawmakers to assess the practical, economic and legal consequences before taking a decision and to discuss them with the industry.
“Latvia in this case is only one link in an international food supply chain. Grain transported through Latvia’s transport infrastructure is owned by major global agricultural commodity traders, including companies from the United States and other countries that are Latvia’s strategic partners, while the final recipients are located in third countries, including Nigeria, Senegal, Cameroon, Mozambique, Egypt, Tanzania, Congo and Kenya.
If Latvia, as one link in this chain, halts or substantially changes transportation conditions through a political decision, the consequences will affect not only Latvian companies but also international cargo owners, carriers and final recipients.
If grain transit through Latvia were banned, there is a high risk that claims amounting to several hundred million euros could be brought against Latvian companies, including state-owned enterprises, for failure to fulfil existing obligations,” the Association stresses.
At the same time, according to the industry’s preliminary estimates,
the state budget and state-owned enterprises could lose several hundred million euros more in planned revenue.
Therefore, when taking such a political decision, it is essential to fully assess its fiscal impact in advance and recognise the state’s responsibility for the consequences caused by a sudden change in the rules governing an international supply chain, the Latvian Stevedoring Companies Association explains.
The Association also calls for the European Union’s common approach to be taken into account. EU sanctions are not directed against international trade in food and agricultural products between Russia and the rest of the world. Even when the EU introduced significantly higher tariffs on imports of Russian and Belarusian grain, transit through the EU to third countries was maintained in view of global food security and food availability considerations.
“As an EU member state, Latvia must assess whether national decisions are consistent with the EU’s common approach, how effective they would be, and what consequences they could have for Latvia’s economy and international obligations,” the Association stresses.
The LSA and port companies already cooperate with all state institutions involved in cargo controls,
including the Customs Board of the State Revenue Service and the Food and Veterinary Service, and comply with established requirements for checking cargo and accompanying documentation.
Cargo is already subject to strict controls, and if the competent authorities conclude that control mechanisms need to be strengthened further, the industry will support legally justified and proportionate measures. Port companies are interested in ensuring that the control system is sufficiently effective to prevent sanctioned, illegal or unverifiable-origin cargo from entering Latvia’s transport system, the LSA stresses.
“The state’s task is not only to impose restrictions but also to create a safe, predictable and competitive business environment. Decisions taken by the Saeima affect both the public interest and companies and international partners that have entered into long-term commitments in reliance on the existing regulatory framework. A significant and sudden change in the rules of the game also affects Latvia’s reputation as a reliable, predictable and legally stable partner in international markets,” the Association warns.
The LSA says it will comply with any legally adopted decision by the Latvian state and the European Union. However, before such a significant decision is taken, it urges lawmakers to hear the industry’s position and fully assess the consequences, taking into account not only the political objective but also the economic, fiscal and reputational cost to Latvia.
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