The European Commission said in a Thursday statement that the accession agreement the bloc's new member states signed in 2003 provided for a transitional period, giving the countries time to bring their legislation on farmland purchases in line with EU law. After the transitional period ended in 2014, Latvia, Lithuania, Bulgaria, Hungary and Slovakia passed new laws regulating farmland purchases.
This new legislation contains several provisions that in the European Council’s view restrict free movement of capital and business freedom, which in turn might deter foreign investors.
One of the main qualms about Latvia's (and Lithuania's) agriculture law is that allows sale of farmland specifically to farmers.
Some of the restrictions might be justifiable as they are intended to curb speculative deals or serve planning purposes and rural policy goals. Yet for the restrictions to be legitimate, they have to be proportionate and must not be discriminatory against other EU citizens, the European Commission says.
The European Commission has given Latvia, Lithuania, Bulgaria, Hungary and Slovakia two months to bring their legislation in line with EU law. If they fail to comply, the European Commission can take the countries to the EU Court.
The European Commission first raised its concerns about Latvia’s legislation restricting farmland purchases in April 2015.
In June 2015, the Latvian government decided to reject the European Commission’s warnings as it did not find in the Latvian laws any inconsistencies with EU legislation, the Agriculture Ministry said earlier.