Accession to the European Union: Impact of Legislation Change on Performance of Lithuanian Companies/ Prisijungimas Prie Europos Sajungos: Juridiniu Nuostatu Itaka Lietuvos Imoniu Veiklai

Article excerpt

1. Introduction

Almost unanimous agreement exits that globalization processes considerably affect international business environment. The liberalization of markets and reduced or modified trading barriers, as it is believed, open new business opportunities. In some cases, alas, globalization brings new unexpected challenges. One of the greatest challenges is the growing competition, or changing conditions, which expose trading companies to new restrictions of both economic and political character. Under globalization the response to this challenge depends on the qualities of the organization (Ciburiene 2006), on competing products cost level and structure (Tvaronaviciene et al. 2008a, b) and on specifics of economic activity (Tvaronaviciene, Travkina 2006).

Generally, country's ability to occupy a global market share depends on its competitiveness. There are a lot of criteria elaborated for country's competitiveness measuring. For example, World Competitiveness Yearbook (2008) uses 331 criteria such as: economic performance, government efficiency, business efficiency, infrastructure, etc. It is notable that those criteria are intertwined and, finally, affect countries' economic growth and sustainable development (Grybaite, Tvaronaviciene 2008).

In this paper we concentrate on the external factors that affect Lithuanian companies' economic performance with a special focus on the degree of redirection of international trade caused by changing legal conditions. It is being aimed to scrutinize change of international trade conditions as Lithuania globalizes, and to reveal some unexpected implications for its competitiveness. The article is structured as follows: at first we overview transformation of foreign trade legal conditions after Lithuania has regained independence, including changes in trade policy after the EU accession. Analysis of a particular case study let us disclose controversial impact of adoption of new regulation on Lithuania's ability to compete in international markets.

2. Foreign trade reforms in Lithuania

Lithuania became an independent state in 1990, what has led to radical political, economic and social changes. Changes in foreign trade were partially conditioned by change of economic policy and new agreements. Specifically, foreign trade was liberalized due to a number of unilateral decisions and treaties, which created the current Lithuanian foreign trade regime and trade policy-making structure. A bilateral and regional free trade agreement, particularly with the EU and the two other Baltic countries, was another important factor in the development of Lithuania's foreign trade policy. WTO commitments have already carried out a positive role in removing trade barriers and measures that discriminate foreign products and services. The main areas, which still needed further liberalizing by elimination of both tariff and non-tariff barriers restricting trade and access to the market, were agriculture and infrastructure (Bagdanavicius 1999).

From 1st of May 2004 Lithuania applies European Union's contractual relations with third countries and international organizations. Thus, the foreign trade policy making is delegated to the Council and the European Commission as Republic of Lithuania joined the European Union's common trade policy area.

Enlargement of the European Union has opened additional opportunities for business in Lithuania as it joined the common market, with more than 450 million consumers. For the new EU Member State it is important to cope with increased competition, and, on the other hand, to penetrate larger markets in order to increase its own economic growth.

Lithuanian-made products now obtain the EU origin and, respectively, other countries apply corresponding customs tariffs. In Lithuania free trade (preferential) agreements with Macedonia, Algeria, Egypt, Israel, Lebanon, Morocco, Palestine, Syria, Tunisia, Jordan, South Africa, Mexico, Chile, and ACP (Africa-Caribbean-Pacific Ocean) countries are valid. …