Laos (officially the Lao People’s Democratic Republic or Lao PDR) told the working party’s seventh meeting it has now concluded bilateral agreements with Australia (signed in Geneva as recently as 24 June), Canada, China, Japan, Korea, and Chinese Taipei. It said it is close to concluding with the EU, and has made “significant progress” with the remaining two, the US and Ukraine.

The bilateral market access deals in goods and services have to be built into a multilateral package, which will also include the new member’s wide-ranging commitments on laws and measures designed to ensure its trade regime conforms to WTO rules.

Deals with China and Japan were announced at the last meeting in September 2010.

“On the multilateral front, the most important evolution has been the change in the mindset of our country,” Industry and Commerce Minister Nam Viyaketh said in his prepared text for the working party, which was set up in 1998 and first met in 2004.

“The positive effects of the reforms and the opening up of our economy on our development strategy are already visible. This has convinced all sectors of our society that the integration into the world trading system is essential and beneficial to Lao PDR and its people.”

He went on: “Nevertheless, Lao PDR is a newcomer to the system with limited resources and capacities to manage change: we therefore have to proceed with caution and balance conservative and liberal views in our policy making to achieve economy-wide benefits.

Working Party Chairperson Zhang Xiangchen of China congratulated Laos on the progress it has made: “I welcome these developments and continue to urge the concerned members and Lao PDR to intensify their efforts to advance and, where possible, conclude their bilateral negotiations.”

Accessions working parties consist of those WTO members that want to negotiate with the government applying for membership.

 

Where is Laos now in its negotiation?

The main multilateral document describing Laos’ trade regime was circulated as “elements” of a draft — including some proposed commitments — on 24 May 2011, about a month before this meeting. It will now be transformed into a more substantial first Draft Working Party Report, which will be revised in future meetings. It will eventually include descriptions of the actions Laos has taken to bring its laws and regulations into line with WTO rules, and the commitments it is going to make.

Normally a few more working party meetings are needed to revise the draft report before it is accepted by the working party and ultimately the General Council. In the meantime, the applying government continues to answer questions and provide information on the laws and regulations it has in place or is planning to enact that affect its WTO obligations.

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 negotiations, Laos is receiving technical assistance from other WTO members. Laos thanked them for this and called for more.

Several developing and least-developed countries focused their comments on calling for a swift entry for Laos, particularly under the General Council guidelines, and for WTO members to be flexible in the negotiations. They included Cambodia (for Laos’ fellow-members in the Association of Southeast Asian Nations, ASEAN), Viet Nam, Bangladesh (for least-developed countries), India, China and Nepal.

The EU, Australia, US, Japan, Canada, Chinese Taipei, Rep. of Korea and Ukraine said they support Laos’ swift entry into the WTO, referred to the technical assistance they have offered Laos, and welcomed the progress made bilaterally and multilaterally.

 

Recent developments

Laos has revised its market access offers on goods and services in 2010. Since the last meeting in September 2010 it has submitted more information on a range of issues, including newly-enacted legislation.

Among the reforms Laos has undertaken, Minister Nam included trading rights, foreign exchange reform including complying with IMF Article 8, investment rules, industrial and pricing policies, import and export procedures and licensing, tax and customs reforms, legal and institutional frameworks for food safety, animal and plant health and other technical standards and intellectual property (details in his statement, below).

In their questions, working party members asked about, commented on or praised Laos for progress on issues such as state ownership and privatization, trading rights, import licensing including on rice and used products, customs valuation, rules of origin, pre-shipment inspection, export subsidies and taxes, investment measures, measures on food safety and animal and plant health (sanitary and phytosanitary measures), other product standards (technical barriers to trade), agricultural policy and intellectual property.

Questions and comments came from Australia, Canada, the EU, Chinese Taipei and the US.

Minister Nam thanked members for technical assistance, said his delegation would study their comments, and called for flexibility and observed that his country’s market access offers in goods and services “far exceed least developed countries’ common practice”.

 

Next

Chairperson Zhang said the next meeting could be held in the second half of 2011.

By that time, the working party will have a new chairperson because Dr Zhang is returning to Beijing. Bidding farewell, he quoted a Chinese saying: “There’s no everlasting banquet. It’s time for me to leave. But I will attend another banquet to celebrate Laos’ membership, hopefully soon.”

 

Background

Laos Accession Working Party members (according to the latest official list, but regularly updated):

Australia, Bangladesh, Brazil, Brunei Darussalam, Cambodia, Canada, China, Dominican Republic, European Union, Haiti, Honduras, Hong Kong China, India, Japan, Rep. of Korea, Lesotho, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Nigeria, Panama, Paraguay, Philippines, Singapore, Switzerland, Chinese Taipei, Tanzania, Thailand, Ukraine, United States, Viet Nam, Zambia

Chairperson: Dr Zhang Xiangchen of China

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, 14 July 2009, 24 September 2010 and 29 June 2011.

 

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Statement by H.E. Dr. Nam Viyaketh (as prepared in writing)

Minister of Industry and Commerce, Lao PDR
7th Session of the Working Party on WTO Accession of Lao PDR

29 June 2011

It is my great honour to take part in today’s meeting, which will constitute a major milestone in the final phase of our accession process. I wish to express our sincere gratitude to the WTO Secretariat, particularly the Accessions Division, Members and development partners for making this meeting meaningful.

This gathering is of particular importance for Lao PDR. We hope that WTO Members will appreciate the effort made by our country to get its trade regime in line with both the letter and the spirit of WTO regulations. Lao PDR is ready to make its final and crucial effort towards the goal of joining the WTO in the shortest time span possible.

To keep up the reform momentum internally, it is extremely important for Lao PDR to show that its efforts of reform do lead to the goal Lao PDR has set for itself: to be a full member of the international community with all the rights and obligations this implies.

We sincerely hope that Members will give Lao PDR’s accession their full attention and support. We are fortunate to have benefited and to continue to benefit from their advice and technical support towards that goal.

We have made a substantial and concerted effort in our accession negotiations both on the bilateral and multilateral fronts, and we can show substantial progress.

On the bilateral front, we have concluded bilateral negotiations with Australia, Canada, China, Japan, Korea, and Chinese Taipei. We have just an inch to strike a deal with the EU. We have made significant progress with the two remaining Members: the USA and Ukraine. With our determined efforts and the good will of all parties concerned, we should be able to conclude all our bilateral negotiations very soon.

On the multilateral front, the most important evolution has been the change in the mindset of our country. The positive effects of the reforms and the opening up of our economy on our development strategy are already visible. This has convinced all sectors of our society that the integration into the world trading system is essential and beneficial to Lao PDR and its people. Our willingness and ability to undertake reforms have thus been strengthened. Nevertheless, Lao PDR is a newcomer to the system with limited resources and capacities to manage change: we therefore have to proceed with caution and balance conservative and liberal views in our policy making to achieve economy-wide benefits.

Apart from being a least-developed country (LDC), Lao PDR is landlocked with a small economy that is quite vulnerable to external shocks. Opening up the economy, both internally and externally has to proceed with determination, but in a way that allows our economy and institutions to adapt. Economic agents know where we are going and we have to give them time to adjust to the new environment.

Reforms require a change of attitude, not only a change of law, and capacity to manage the change. Reform is a long-term, continuous, and resource-consuming process. Lao PDR still lacks some of these required resources.

Therefore, we would like Members to acknowledge our LDC status and provide material flexibility in line with the spirit of the 2002 General Council Decision on LDC Accessions for accelerating membership negotiations.

With these flexibilities, support and special arrangements provided for LDCs, including transitional periods and technical assistance, we are confident that Lao PDR can complete its transition process speedily while still respecting its sensitivities for the benefit of its long term sustainable development, and for the benefit of a functioning and universal multilateral trading system.

Lao PDR is working hard towards its goal of WTO membership after more than a decade of economic and legal reforms through the accession process. Lao PDR has made significant progress and achievement by setting up the legal and institutional framework to implement all requirements for accession to the WTO and commits itself to defined time frames for the implementation of its commitments.

On this occasion, I am very pleased to highlight notable reforms undertaken throughout our accession process. Our major achievements include:

• Trading rights: Internal coordination and policy decisions in the right direction allowed us to bring our trading rights regime into compliance with the WTO through the adoption of the Decree on Import and Export of Goods, which widens the freedom of importation. Another milestone to revamp the import and export regime is the adoption of the Trade Facilitation Strategy in April this year.

• Foreign exchange and payments: Lao PDR has undergone a major conversion, by going from a managed system to an open system, complying with the obligations of Article VIII of the IMF.

• Investment regime: The new Investment Promotion Law, which treats domestic and foreign investment on an equal footing, is fully in compliance with WTO rules. Incentives based on local content requirement have been abandoned, and a one-stop service for investment registration was established. In addition, its Implementing Decree with the list of promoted sectors, promoted zones and concession activities was adopted.

• Industrial policy: Lao PDR issued the Decree on Specific and Special Economic Zones. The Decree is in compliance with WTO rules. Lao PDR commits to eliminate local content requirement upon accession but reserves the right to export performance requirement under the SCM as an LDC.

• Pricing policy: The revised Decree on Prices of Goods and Services was adopted in November 2010. The new Decree is based on the principles of non-discrimination and transparency.

• Import regulations: They are also fully in line with WTO rules. Lao PDR has adapted its list of prohibited import products according to the requests it has received, and its list is now in full compliance with WTO requirements. Lao PDR has only ad valorem duties, applies no quotas, no tariff quotas and has no “other duties and charges”. Tariff exemptions also conform to the principles of the WTO.

• Licensing: Lao PDR has revised its import and export licensing system. A largely reduced list of products subject to automatic and non-automatic licenses has been submitted. The importation and exportation of goods subjected to SPS and TBT measures no longer require an import or export license, and will only require an SPS or TBT certificate from the respective authorities.

• Internal taxes: They are applied to local products and imports in an identical way through the harmonization of previously different excise and turnover tax rates thanks to the revised Tax Law adopted by the National Assembly last week. The Value Added Tax is being implemented. In addition, the Budget Law implementation increases the transparency of public finances.

• Fees and charges: All fees and charges for services have been converted to fixed amounts according to the costs of the services rendered.

• Customs: Lao PDR has revised its Customs Law and legislations to follow the hierarchy of valuation in line with the CVA (Customs Valuation Agreement). We plan to bring our legislation into full compliance with WTO rules by 2012 and to ensure full implementation by December 2015. Reference prices will be eliminated by December 2012. Thanks to technical assistance received, the introduction of the ASYCUDA system is progressing well, with the aim to streamline the customs processes by harmonizing procedures within international norms. Lao PDR also complies with the Agreements on Rules of Origin and on Pre-shipment Inspection.

• Export duties: Lao PDR only applies a limited number of export duties for development and revenue purposes. Export restrictions have been brought in line with WTO requirements.

• Technical Barriers to Trade: Lao PDR has embarked on a major reform effort to bring its technical regulations, standards and conformity assessment into conformity with the TBT Agreement, taking into account technical difficulties. The support from donors including the multi-donor trust fund (Trade Development Facility), USAID, and other donors have played an important role to facilitate our legal reform. Lao PDR is well advanced in bringing its legislation in line with WTO requirements. The legal and organizational decisions concerning the establishment of the Notification and Enquiry Points have been taken, enabling Lao PDR to take the commitment to have them operational upon accession.

• Sanitary and Phytosanitary measures: In parallel, SPS measures are undergoing major reforms to incorporate all of the principles and rules of the SPS Agreement. Lao PDR is well advanced in compliance with the SPS transparency requirements, both legal and institutional reform have been accomplished, the Enquiry Point, Notification Unit, and website support are already in place. Lao PDR commits again to having the Enquiry Point and Notification Unit operational upon accession. Apart from technical support, operation of the Enquiry Point and Notification Unit will be a key step to enhance the implementation SPS related laws and regulations of Lao PDR, to reach full conformity with the SPS Agreement.

• Intellectual property rights: Lao PDR is a member of the World Intellectual Property Organization, a signatory to the Paris Convention and the Patent Cooperation Treaty. Lao PDR expects that by the end of this year it will join the Berne Convention and adopt the Decree Implementing the Intellectual Property Law. The Regulation on IPR Border Measures has been drafted in consultation with stakeholders, and is now in the final stages of adoption. These will address the need of increased regulation and the reform of rules required to fully comply with the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement. This does not underestimate the time and resources required for Lao PDR to fully implement the TRIPS, which leads us to request a transition period for the implementation of the TRIPS Agreement.

Lao PDR continues to work closely with all interested WTO Members to narrow the gap in the bilateral negotiations with the aim of concluding them in a timely manner. I should stress, however, that much of the necessary regulatory framework remains to be done, particularly in the area of trade in services to ensure that the benefits of liberalization accrue to all our people. This will take time given the restraints on our capacities. However, Lao PDR will make the effort required and will try hard to fine-tune mutual satisfactory solutions with WTO Members, commensurate to its development and financial needs.

Our common objective is to provide Members with meaningful access to the Lao market, while ensuring that the country’s developmental aspirations are taken into account and boosted through WTO membership, its participation and contribution to the multilateral trading system. Lao PDR remains fully committed to WTO membership and is convinced that this objective is within reach.

Clearly this will require effort and the goodwill of all parties concerned, but I am fully confident that there is horsepower, firepower and willpower in Washington D.C, Brussels and Kiev that can make this aspiration fulfilled.

I can only hope that negotiators are mindful of our LDC status, because it will be a great failure of cooperation on the part of some Members if this accession is delayed. Lao PDR’s prompt accession will prove that the multilateral system is functioning. It will prove that a country that is willing to undertake the necessary reforms can count on the understanding and support of Members; that accession is a collaborative effort where each party respects the needs and priorities of its partners; and that LDC flexibilities are granted to allow a harmonious implementation of reforms.

Lao PDR is ready and willing to engage in the full conviction that WTO commitments will be applied to Lao PDR in such a manner as to contribute to the sustained development of its people, whilst taking into account the interests of its economic partners — to the fullest extent possible.