28 October 2004

Laos: WTO membership will ‘accelerate economic reform’

The Lao People’s Democratic Republic (PDR) kicked off its membership negotiations on 28 October 2004 by outlining the reforms it has already undertaken and calling on members to take account of its status as a land-locked, least-developed country without a representative in Geneva.

Membership will “offer an opportunity to accelerate the economic reform process undertaken by the Lao government,” Commerce Minister Soulivong Daravong told the first meeting of Laos’ accession working party. “It will have far-reaching implications for the Lao economy and its integration into the world trading system.”

The working party’s approximately 20 members (about 45 if the EU and its members are counted as 26) completed a first examination of Laos’ memorandum describing its foreign trade regime, and other accompanying documents, with further questions to be submitted in writing.

The Lao delegation also met some members bilaterally to discuss its membership bid.

Before the next meeting, Laos is expected to submit an action plan for enacting legislation with further information on agriculture, sanitary and phytosanitary measures, technical barriers to trade, services and intellectual property. Laos was also asked to prepare its first offers for market access in goods and services.

Members — including co-ordinators and representatives of groups such as the least-developed countries (LDCs), the Association of Southeast Asian Nations (ASEAN) — strongly supported Laos’ membership bid, and called for flexibility and a speedy negotiation in line with the General Council’s December 2002 guidelines for least-developed countries’ accession (document WT/L/508).

So did the working party’s chairperson, Ambassador Tim Groser of New Zealand who began the meeting by reminding delegations that Laos is not only a least-developed country, but also lacks permanent representation in Geneva. “The constraints faced by this delegation are therefore unique,” he said.

Laos has asked for technical assistance from members and from the WTO Secretariat to help it with the process of becoming a member, including the negotiations.

Chairperson Groser cautioned: “It must also be recognised that there is still considerable work to be done. As we all know, adherence to WTO rules typically requires reform of both legislation and the complementary enforcement infrastructure in the candidate Government. This is a process which often takes time to achieve. This is the major factor in determining how long any accession takes to reach completion. I am confident that today’s meeting will prove a success in helping us all identify what further needs to be done to move the accession process of Lao PDR forward rapidly and smoothly.”

At the end of the meeting, Ambassador Groser “kept open the possibility” that if enough input and new documents are received, the Secretariat might compile a “factual summary of points raised” for the next meeting. He added that the next meeting could be held in mid-2005. (These factual summaries are early stages of the working party reports which are eventually the core of the membership agreements.)


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Laos introduces itself

“Lao PDR is a land-locked, least developed country,” Lao Commerce Minister Soulivong Daravong said in his opening statement.

“Around 80% of the population lives in rural areas and is engaged in agricultural activities. Agricultural and forestry sector is the dominant source of production in the Lao economy, accounting for 47% of GDP, while industry accounts for 27% and services 26%.”

Industry’s share of GDP is rising slightly and agriculture’s is falling. Merchandise exports are about 12% of GDP, with imports at about 21%. A “weak and narrow export base” includes electricity, wood products, garments, and mining, he said.

“Since the mid 1980s we have been implementing a comprehensive reform program to transform the Lao economy from a centrally-planned towards a market-oriented system, allowing the private sector takes an active role in the socio-economic development process.”

Minister Soulivong described how Laos is already adapting to the types of rules, commitments and procedures it will face in the WTO through membership of ASEAN and its regional economic integration, the World Intellectual Property Organization and some of its conventions, Codex Alimentarius (the international organization on food safety standards), the International Animal Health Organization (Office International des Epizooties) and the International Plant Protection Commission.

He outlined moves his government has undertaken in making trade policies more transparent, on the trade regime being regulated by legislation passed by the national assembly rather than by decree, and on improving access to the Lao market.

“Lao PDR has a relatively open services sector which accounts for a quarter of the national economy,” he said. “The telecommunications sector has been opened for competition between foreign suppliers. Currently, four mobile phone operators are actively providing its best quality services. Other services sectors are also relatively open; of these are private professional and tertiary education and tourism services, among others.”

Liberalization and streamlining have also taken place in goods, particularly under the ASEAN Free Trade Area. At the same time, Minister Soulivong urged members not to press Laos to make commitments “beyond the levels applicable to the current WTO members with similar economic backgrounds”.

And because the issues are complex and technical, Laos needs “comprehensive” technical assistance in intellectual property, customs valuation, sanitary and phytosanitary measures, and technical barriers to trade.

“In addition, Lao PDR as a [least-developed country] would require a transitional period and flexibility to comply with these relevant WTO agreements,” Minister Soulivong said. “For example, a lack of well-trained and professionally-experienced specialists as well as laboratory facilities creates problems in implementing effective SPS controls.”


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Members are submitting more questions in writing and Laos is being asked to supply more information on its trade regime together with its first market access offers for goods and services. No date has been set for the next meeting although the chairperson is keeping open the possibility of a meeting by mid-2005.


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CHAIRPERSON: Ambassador Tim Groser (New Zealand)

Lao People’s Democratic Republic applied to join the WTO on 16 July 1997. The General Council agreed to set up a working party on 19 February 1998. The working party first met on 28 October 2004.