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Country Commercial Guides FY 2000: Lithuania Report prepared by U.S. Embassy Vilnius, released July 1999 Note*

CHAPTER I. Executive Summary

With a population of 3.8 million, Lithuania is a relatively small, but potentially attractive market for American goods and services such as consumer products, pharmaceuticals, computers and office equipment, capital equipment and machinery, environmental and electric power generation technologies. Lithuania also has a growing potential for foreign investment.

Many businesses were privatized during the first round of privatization. The second round of privatization, in which an estimated $725 million of State property will be sold for cash, will presumably be one of the major attractions for foreign investment in 2000. The Lithuanian Government began its privatization drive in early 1997 with the State telephone monopoly. Some 200 companies were offered for sale in 1997, and for the first time these included companies from both energy and telecommunications sectors. The bulk of Lithuania's capital investment has been directed to the industrial sector.

Lithuania is seeking to liberalize its foreign investment laws to further attract foreign investors. The Lithuanian Government is following a cautious, but Western-oriented program of economic reform in banking and monetary policy, price structure, tax laws, land ownership laws, fiscal policy and foreign trade legislation. It has also adopted modern laws establishing copyrights, patents and trademarks. Lithuania has signed free trade agreements with 20 countries. In April 1994, a trilateral trade agreement between the three Baltic countries went into effect, abolishing all tariffs on industrial products.

Although there has been steady progress, the common problems found in the countries of the former Soviet Union remain. These include government bureaucracy, corruption and organized crime. These represent the most significant hurdles to U.S. trade and investment also in Lithuania.

This Country Commercial Guide (CCG) presents a comprehensive look at Lithuania's commercial environment through economic, political and market analyses. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government agencies.