In October 1994, Latvia established its current tariff schedule and customs laws. A general duty of 0–55% is applied to most goods. Higher tariffs apply to automobiles, alcohol, tobacco, and cosmetics. Raw material, fuel, and grain are exempt. However, tariff rates depend on both the type of good imported and its origin. Goods from countries with most-favored nation (MFN) status receive lower rates, usually 15% (but up to 45% for agricultural products), while goods from non-MFN countries receive slightly higher rates, usually 20% (but up to 55%for agricultural products).
Latvia has free trade agreements with Sweden, Finland, Norway, Switzerland, and Kyrgyzstan. US products receive MFN status. Latvia has also formed a free trade area with Estonia and Lithuania. In January 1995, a free trade agreement went into effect with the European Union, which reduced tariffs on most industrial products to zero and set a schedule on tariff reductions over a course of five years for certain agricultural products. Latvia joined the World Trade Organization in February 1999.