II. LEADING TRADE PROSPECTS FOR U.S. BUSINESS

The Latvian market appears to hold the most potential for
American consumer products, computers and office equipment, and
capital goods.  U.S. products enjoy a particular cachet because
they are American; companies frequently attempt to market
products and services on the basis of their "American-ness,"
sometimes even for products that are essentially Latvian.  Fed by
flight capital from Russia and a booming business community, the
market for imported consumer goods, particularly in Riga, is
substantially richer than the country's per capita GDP level of
$1,550 would suggest.

The private sector is expanding very rapidly in Latvia, and there
is now one registered private company for every fifty Latvians.
There is a high demand for office supplies and equipment,
particularly computers, cellular telephones, copiers, and fax
machines.  During the Soviet years, houses and office buildings
were allowed to deteriorate.  The commercial boom sweeping Riga
and, to a lesser degree, other Latvian cities has contributed to
the large-scale rehabilitation of commercial property.  Virtually
all products associated with building rehabilitation -- paint,
doors, windows, locks, plumbing supplies and fixtures, lighting
and alarm systems -- are in high demand.  Sheetrock, which was
unknown during the Soviet period, is beginning to be used.
Privatization of apartments is scheduled to begin in 1994 and
should contribute further to the demand for construction
materials.

While latvian heavy industry is on its back due to the shrinkage
of orders from russia and other former-soviet countries, there
are signs of revival in light industry, particularly textiles and
clothing manufacture and in the timber and wood products area.
The best prospects for sales of capital goods are in these
sectors and in the upgrading of plants producing electricity and
supplying district heating.   Prospects are also good for the
sale of electricity meters.

Sales of capital equipment in the agribusiness sector have been
hampered by the lack of financing.  With loans to agribusiness
now possible through the Latvian investment bank and a facility
established by the World Bank, a good potential market may be
developing for food-packaging and -processing equipment.  Water
purification equipment for commercial and institutional users is
another promising niche market.  Frozen foods, unknown during the
Soviet era, are coming on the market in Latvia, creating a demand
for commercial freezers and display cases.

The best opportunities for agricultural products are for items
not produced in these latitudes, including cotton, tobacco, rice,
and commercial seeds for farms.  Latvia imported food grains
valued at $3.8 million in 1993; other leading agricultural import
categories were fruits, nuts, sugar, coffee, tea, spices. Latvia
is also potentially a very good market for consumer-ready,
convenience foods, snacks and drinks.  In 1993, Latvia imported
$6.1 million in beverages.  Relatively high tariffs on
agricultural products notwithstanding, Latvia will be forced to
import meat and livestock due to the recent distress slaughtering
of livestock herds.  New entrants will have to be aggressive, as
suppliers from European countries have established distributor
networks for such products as beverages, coffee, cheese, tobacco,
and yoghurt.

Viewed strategically, Latvia is attractive as a gateway to larger
regional markets, including northwestern Russia with a population
of 44 million, Belarus (population 10.3 million) and the other
two Baltic countries (combined population 5.1 million).  In this
context, Latvia's capital, Riga, ranks with St. Petersburg and
Moscow as one of three regional centers for commerce, finance and
transportation.