Where is Laos now in its negotiation?

Laos — officially the Lao People’s Democratic Republic (PDR) — and its negotiating partners now envisage the talks moving faster, 12 years after Laos first applied and 11 years after the working party was set up. Dr Zhang said the sixth meeting could be before the end of this year or early next year.

The working party accepted chairperson Zhang Xiangchen of China’s proposal that the next meeting should examine “elements of a draft working party report”. This will include Laos’ first possible commitments on implementing the WTO agreements, added to the present series of drafts that the working party has been examining — the “factual summaries of points raised”.

The change effectively shifts the talks beyond “getting to know you” and into drafting membership terms. In the end, the working party’s report will be the central document in the new member’s accession agreement.

“With hard work, flexibility and goodwill on all sides, I believe this [least-developed country] accession has the potential to accelerate,” Dr Zhang said. “As chairman, I would certainly like to build on the momentum generated at today’s meeting.”

Thirty-two WTO members are in Laos’s working party (59 if the EU’s member states are also counted). WTO members are free to choose whether to participate in the working party.

As a least-developed country (LDC), Laos’s application is covered by the 2002 General Council guidelines for accelerating membership negotiations (document WT/L/508). Laos is also land-locked. In order to support the negotiation, Laos is receiving technical assistance from other WTO members. Laos thanked them for this and called for more.

Chairperson Zhang welcomed new offers of technical assistance for Laos from the US and China and urged other members to do the same.

 

Recent developments

Since the last meeting in July 2008, Laos has reached a bilateral agreement on market access with China and continues to negotiate with some others, including: Australia, Canada, Chinese Taipei, the EU, India, Japan, Rep. of Korea and the US. It had already reached agreement bilaterally with the EU on goods but not yet services, by the previous meeting. (WTO membership agreements require bilateral agreements to be “multilateralized”, ie, whatever Laos agrees bilaterally would have to apply to all WTO members.)

Laotian Industry and Commerce Minister Nam Viyaketh listed for the working party the important new laws and regulations enacted since the last meeting a year ago. The areas covered include investment, importing and exporting, customs, food safety and animal and plant health (“sanitary and phytosanitary measures” or SPS), product standards and other technical barriers to trade (TBT), tax reform, and foreign exchange and payments. (See details below.)

“The team that I have brought to Geneva has worked tirelessly since we met last year to bring Lao PDR’s trade regime closer into line with WTO requirements,” Minister Nam said. “A tremendous amount of progress has been made.”

This, despite Laos being hit by the global economic downturn, with “slower exports and foreign direct investment, lower tourist revenue, and a strain on the fiscal budget,” he said.

Nevertheless, Laos continues to believe that “trade integration is a crucial means and an essential driving force to our socio-economic development,” he went on.

“My government is committed to pushing forward internal reforms despite global fears of rising trade protectionism. Maintaining the momentum of these reforms, we believe, is important for the longer-term competitiveness of the Lao economy.

“At the same time, we must be mindful that the reforms do not further exacerbate the problems faced by weakened sectors.”

He highlighted one in particular: banking. “I trust that Members will show flexibility in negotiations and allow Lao PDR time to adopt, for example, banking regulations that ensure macroeconomic stability or a modern customs valuation regime over time so that government revenues are not eroded. Lao PDR is currently working with the Asian Development Bank to set up the software and hardware for such a system.”

 

Next

No date set. Possibly late 2009 or early 2010. The Secretariat will start drafting “elements of a draft working party report”.

 

Background

WORKING PARTY MEMBERS (according to the latest official list, but regularly updated): Australia, Brazil, Brunei Darussalam, Cambodia, Canada, China, Dominican Republic, European Union, Haiti, Honduras, Hong Kong, China, India, Japan, Korea, Republic of, Lesotho, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Nigeria, Panama, Paraguay, Philippines, Singapore, Switzerland, Chinese Taipei, Thailand, Ukraine, United States, Viet Nam, Zambia,

CHAIRPERSON: Dr Zhang Xiangchen of China (replacing Ambassador Bruce Gosper of Australia)

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 met on 28 October 2004, 30 November 2006, 15 November 2007, 4 July 2008 and 14 July 2009.



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Statement by H.E. Dr Nam Viyaketh,
Minister of Industry and Commerce, Laos
at the 5th Session of the Working Party on the Accession of Laos to the WTO

14 July 2009, Geneva, Switzerland

Mr. Chairman
Distinguished delegates
Ladies and gentlemen,

Mr. Chairman, Dr. Zhang Xiangchen, I have the great honour today to take part in this very important meeting and I would like also to express our deep gratitude for your very warm welcome and for accepting to be the chairperson of the Working Party of Lao PDR. I have no doubt that we will benefit greatly from your tremendous professional accomplishments and wisdom.

In addition, I wish to express our sincere appreciation to the WTO Secretariat, particularly the Accession Division, Members and development partners for making this meeting possible. Lao PDR counts on your understanding and continued support in expediting our accession process.

As today is the 14th of July, I also wish to congratulate the delegation of France on its National Day.

Like all Members, Lao PDR is being affected by the global economic downturn. The effects are mainly felt through slower exports and foreign direct investment, lower tourist revenue, and a strain on the fiscal budget.

Against this backdrop, Lao PDR re-affirms that trade integration is a crucial means and an essential driving force to our socio-economic development. My Government is committed to pushing forward internal reforms despite global fears of rising trade protectionism. Maintaining the momentum of these reforms we believe is important for the longer-term competitiveness of the Lao economy. At the same time, we must be mindful that the reforms do not further exacerbate the problems faced by weakened sectors. In this regard, I trust that Members will show flexibility in negotiations and allow Lao PDR time to adopt, for example, banking regulations that ensure macroeconomic stability or a modern customs valuation regime over time so that government revenues are not eroded. Lao PDR is currently working with the Asian Development Bank to set up the software and hardware for such a system.

Mr. Chairman,

The team that I have brought to Geneva has worked tirelessly since we met last year to bring Lao PDR’s trade regime closer into line with WTO requirements. A tremendous amount of progress has been made — which is outlined in the legislative action plan fully — however, allow me on this occasion to highlight key achievements since July 2008 as follows:

TRIMS / Investment Incentives

• The previous incentive laws have been replaced by a new Investment Law — passed last week by the National Assembly — The new Law eliminates the local content related investment incentives as well as discriminatory provisions found in the previous Domestic and Foreign Investment Promotion Laws.

Import-Export Procedures

• A Decree on Import Licensing Procedures incorporating the requirements of the Import Licensing Agreement has been adopted.

• The first National SME Development Strategy was adopted in 2008. Under this direction, our business environment in import and export management will become more transparent, predictable and reliable.

Cost-based importation charges

• The Presidential Decree on Fees and Service Charges has been amended. The previous ad valorem inspection fee for imported food has been replaced by a cost-based fee in line with the requirements of GATT Article VIII.

Customs Valuation

• A regulation was adopted to give effect to the 2006 Customs Law and its implementing Decree.

TBT/SPS

• On food safety — the National Food Safety Policy and Regulation on Food Safety Management were adopted.

• A new Fisheries Law was passed by the National Assembly last week.

• On animal and plant health, there are two new Laws on Livestock Production and Veterinary and on Plant Protection and Quarantine.

Tax reform

• The VAT Law has now been passed and will enter into force on 1 January 2010.

Foreign exchange and payments

• The Regulation 1/BOL has been abolished thereby removing the requirement that payments for wood exports to be transferred through the State Bank

Mr. Chairman,
Turning to market access, Lao PDR has also made substantive improvements, by working very hard in the past year to study Members’ requests and consult with the relevant stakeholders with a view to improving Lao PDR’s revised offers to our best efforts. These offers far exceed the commitments of existing LDCs and what could be reasonably expected of an economy and social issues as fragile as Lao PDR. The offers propose predictable and real market access to Laos’s economy on excellent terms.

The revised goods offer has 100% tariff coverage. Lao PDR has added a line-by line commitment to bind ‘Other Duties and Charges’ at zero, without exception. The average tariff in agriculture is 34.7% — which is less than twice the applied tariff. This is an important concession from our perspective, given the overwhelming dependence of the Lao economy and society on agriculture. The average bound NAMA tariff is 26.5%, which is considerably low.

In services, the revised offer has been improved and far outpaces the level of commitments by existing LDCs — which averages 26 bound sub-sectors — and now covers some 68 sub-sectors. Moreover, the offer includes important improvements to access in modes 1, 2, 3 and 4.

On both goods and services we have held very constructive bilateral meetings — and we look forward to one more meeting this afternoon. Trading partners have largely been open to Lao’s development sensitivities in terms of their requests. My assessment, Mr. Chairman, is that we have come a long way on market access and are making substantial progress with a view to concluding negotiations with some partners.

Mr. Chairman,

As I have said earlier, Lao PDR will continue to build on political momentum, continue consultations and work with line ministries. We have concrete plans of action for continuing the reforms requested by the Working Party. For example:

• A draft Decree on Rules-of-Origin is at an advanced stage of preparation

• Replacement of an ad valorem with a cost-based inspection fee on cement, steel bar and fuel is also in the final stage

• A draft notification on Subsidy measures, in line with the requirements of Article 25 of the ASCM, is under preparation

• We are reviewing our Decree Regulating Import-Export to accommodate Members’ right to trade

• A Regulation and List of goods subject to import and export licenses is being prepared to take account of border procedures related to SPS and TBT that no longer require obtaining a license

• A draft instruction to establish SPS, TBT and GATS enquiry and notification points is in the process of being prepared

• Other work is being pursued in line with various action plans that have been submitted to the Working Party.

I hope that I have conveyed to Members a sense of the commitment Lao PDR attaches to WTO accession and will support us in implementing work in transition periods. The Action Plans also show that we still have some work ahead and Lao PDR is committed to moving forward expeditiously. I also hope that enough work has been achieved that we can move today to identifying the elements which my government must focus on in the next few months in order to prepare the draft elements of the working party report. Positive feedbacks from trading partners today will add impetus and sharpen the focus of work internally. Such a “working agenda” of the final issues that Lao PDR must address between now and the next Working Party and transition periods beyond that — would help us to focus our limited resources on priority issues and expediting progress on Laos’s accession to the WTO.

Let me finally thank you Mr. Chairman, for your efforts to advance the work on Lao PDR accession to the WTO. Allow me also to put on record our appreciation to Members and development partners for this opportunity to participate in this meeting as well as understanding and support for Lao PDR at this juncture. I look forward to meaningful progress in the coming months under your highly knowledgeable guidance.

Last but not least, Lao PDR is proud to announce its hosting of the 25th Southeast Asian Games in December this year. We welcome everyone to visit and witness this special event.

Thank you.