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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 with WTO rules.

Laos (officially the Lao People’s Democratic Republic or Lao PDR) signed its agreement with Japan in Vientiane in July and with China this week, Industry and Commerce Minister Nam Viyaketh told the 34 countries in Laos’ Accession Working Party. He added that Laos has reached agreement with the EU on goods and is close to a deal on services.

Membership talks’ chairperson Zhang Xiangchen of China welcomed progress made in Laos’ other bilateral talks, including with Australia, Canada and Rep. Korea.

Where is Laos now in its negotiation?

The main multilateral document describing Laos’ trade regime and eventually spelling out its commitments, is on the verge of moving on from a document containing “elements” of a draft, to a proper draft working party report.

Laos and some Working Party members proposed moving straight to a draft. One said the present text still lacks too many proposed commitments to be a proper draft. This member said it is preparing draft wording; the Lao delegation said it would respond quickly.

Normally a few more Working Party meetings are needed to work on the draft report before it is accepted. In the meantime, the applying member 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 negotiation, 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 Zambia (for least-developed countries), Viet Nam (for Laos’ fellow-members in ASEAN), China, Paraguay (for landlocked countries), India and landlocked least-developed countries Lesotho and Nepal.

Japan, Australia, the US, the EU, Canada, Chinese Taipei and Rep. Korea said they support Laos’ swift entry into the WTO.

Minister Nam thanked members for technical assistance, said his delegation would study their comments, and called for flexibility and a transition period to implement some provisions.

“I am sure that our friends in WTO will understand that Lao PDR’s request for transition periods is not a way to delay reforms, but is motivated by our objective to ensure a sustained reform process in line with our level of development and human and institutional capacities,” he said.

Almost 10 years ago, Laos circulated its Memorandum on the Foreign Trade Regime — the first document a country seeking membership submits to WTO members to introduce itself. Minister Nam said that in that period Laos has changed significantly from being a state-run economy to market orientation.

Ten years may seem a long time, but “let me assure you, that for the transformation Lao PDR has made, 10 years is a very short time,” he said.

Chairperson Zhang recalled a media interview when he want to Vientiane earlier this year. The journalist asked if Laos could become a member within the year, he related. As chairperson he knew this would not be possible but because of the enthusiasm in the journalist’s eyes, he said he replied that “nothing is impossible.” The entrance to the WTO is a door with two keys, he said. Laos holds one key; WTO members hold the other.

Recent developments

Since the last meeting in July Laos has revised its market access offers in goods and services and information on a range of issues such as customs valuation, product standards and legislation.

Minister Nam included foreign exchange reform, investment rules, import and export procedures, tax reform, legal and institutional frameworks for food safety, animal and plant health and other technical standards and intellectual property among the reforms Laos has undertaken (details in his statement, below).

In their questions, Working Party members raised issues such as pricing policies an controls, investment law, trading rights, judicial provisions, import licensing, import restrictions on used products, export duties, agriculture and agricultural products such as rice, product standards (ie, sanitary and phytosanitary measures, which deal with food safety, and animal and plant health, and other standards under the Technical Barriers to Trade Agreement), and intellectual property.

Questions came from Australia, the EU, and the US.

Next

Chairperson Zhang said he would try to hold the next meeting in the first half of 2011.

Background

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. 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 and 24 September 2010.

 

____________

Statement by H.E. Dr. Nam Viyaketh

Minister of Industry and Commerce, Lao PDR
6th Session of the Working Party on Accession of Lao PDR to WTO

24 September 2010

Mr Chairman, in a few months it will be the 10th anniversary of the submission of Lao PDR’s Memorandum on the Foreign Trade Regime at the beginning of 2001.

Ten years is a long and a short time:

• it is a long time for a country like Lao PDR that has to do so much to catch up with its neighbours and the international community;

• it is a short time to bring about structural change and major reforms that affect the daily life and the way one does business of the whole national community.

When I compare Lao PDR of 10 years ago with today, I realize the change we have experienced. Ten years of reform, ten years of substantial economic growth and social development have transformed my country. Any visitor to Lao PDR will see the change not only in Vientiane Capital, but in most areas of our beloved country.

The motor for this change has been reforms and opening up of Lao PDR to the rest of the world. Ten years ago, Lao PDR was largely a state run economy, today the private sector and the market are regulating our economic activities. The economic conditions and the trade framework of today are very different from the situation described in our economic memorandum ten years ago.

Mr Chairman, Lao PDR has well used those 10 years: we have made structural change not only in our laws, but in our behaviour and in the real economy. For some of you, the change may appear slow. Let me assure you, that for the transformation Lao PDR has made, 10 years is a very short time.

Today, the economic success and the social transformation that the reforms and the opening up of our country have brought about, have convinced all our members of the society that change and an open market economy are essential and beneficial to Lao PDR’s economic and social development. The incremental, sustained and properly controlled opening up has paid off. Lao PDR is now on a sustained and sustainable reform path, despite the impact of the current global financial crisis.

Have we done all that there needs to be done? Certainly not: reform is a long-term never ending process. However, we believe that we have set up the legal and institutional framework to implement all the required reforms for accession to WTO. I am pleased to highlight notable reforms undertaken since the 5th Working party meeting in July 2009 below:

• Our foreign exchange system is in line with international requirements. I am pleased to announce that the International Monetary Fund (IMF) has confirmed that Lao PDR is in compliance with Article 8 of the IMF;

• Our new investment promotion law is fully in compliance with WTO requirements: Any discrimination, local content requirements and/or export performance have been abolished. We are in the final process of reviewing the controlled business list and the regulation of border zones to make their regime compliant with the Subsidies and Countervailing Measures (SCM) Agreement and we have already finished the regulatory framework of one of them. In addition we have submitted the draft subsidy notification to WTO;

• We are in the process of revamping import and export procedures: we have streamlined and notified products submitted to non automatic licenses and are in the final stage of reforming automatic licenses. We have adopted rules and regulations of Rules of Origin in full compliance with WTO requirements. The decree on export and import management is in the final stage of amendment to ensure its conformity with WTO trading rights requirements;

• Our Customs Valuation system is being fully revamped. A WTO-conforming Customs Law and Decree have been promulgated and we adopted Ministerial Instructions and Departmental Guidelines on Customs Valuation. We are already implementing transaction value methods for selective low risk imports, which, I believe, is a first for a least developed country (LDC) that is not yet member of WTO;

• We have undertaken a major reform of our tax system to ensure the revenue base of the Government taking into account the diminishing revenue from tariffs. Value-added taxes (VAT) are in force since January 2010 for most businesses and we are in the process of amending the tax law to ensure that turnover taxes are non discriminatory.

• We have made substantial progress in putting the legal framework in place for food safety, animal health and plant protection. New laws and decrees have been promulgated and we are in the final process of drafting the Ministerial regulations to comply with key principles of the Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) agreements. I am happy to announce that the Decree on Trade related Notification and Enquiry was adopted to establish SPS and TBT Notification and Enquiry Points as well as General Agreement on Trade in Services (GATS) Enquiry Point thus enabling us to take the commitment to have them operational by the time of accession.

• On intellectual property (IP), the Law on Intellectual Property has been passed and we are advancing well in drafting the decrees and regulations to implement the IP law. We will introduce into the decrees the comments we have received by WTO member countries and we thank them for their constructive remarks. We have become members of most of the relevant international conventions and will be acceding to the Berne Convention in the near future.

Mr Chairman, as you can see, Lao PDR is progressing consistently and in a sustainable way in its reform process to comply with WTO requirements. We have submitted operational and precise action plans with concrete timelines to WTO. By adhering to them, we provide the proof that Lao PDR is serious and consistent in its efforts to become fully compliant with the WTO. We believe that the action plans can be easily transformed into commitments — with the necessary transition periods — to finalize our negotiating process.

Concerning the market access negotiations Lao PDR has submitted its third revision of the goods and services offers. We have substantially improved our tariff binding and specific commitments. Lao PDR has no quotas, no tariff quotas, no seasonal tariffs and no specific duties and Lao PDR offers to bind other duties and charges at zero. All our charges have been revised to make them compliant with the WTO requirements that they should be cost based: there are few members of WTO which fulfil all these requirements. We have substantially reduced all our tariff peaks: 87 % of all our agricultural and industrial tariffs are now below 30%. Our proposed average tariff rates compare favourably with the end result of recently acceded countries at a similar level of development.

Our services offer now covers 69 sub-sectors and we are offering substantive improvements in all modes of services supply. We believe that our offer compares very favourably with the commitments taken by recently acceded countries at a similar level of development.

I am pleased to announce, Mr Chairman, that we have concluded and signed bilateral negotiations with Japan in July and also with China this week while the goods negotiations with the EU was concluded where there remains a narrow gap on services. We believe that we have entered into the final stage of negotiations with most of bilateral negotiating partners.

Mr Chairman, I hope that this outline of our approach and reform activities and the submitted documentation will convince you and the WTO members that Lao PDR is well advanced in adapting its trade and economic regime to the WTO requirements. We hope to get members’ consent to upgrade the Elements of a Draft Working Party Report to a Draft Working Party Report. The very concrete, time bound and detailed action plans — and our adherence to them up to now — hopefully will convince our friends that Lao PDR’s objective is not only to pass the required laws and decrees to formally comply with WTO requirements, but also to establish the institutional and human resource basis to implement them. To achieve our objectives we do need transition periods and the support of our friends. We are very fortunate to benefit from very concrete and substantial support in our reform process from our friends and I would like to thank WTO members for this support and assistance. Your experts in the field will confirm to you our dedication and seriousness in the reform process.

Let me conclude, Mr. Chairman, by underlining that it is not the laws, it is not the decrees, it is not the action plans, that are the best guarantee that Lao PDR will comply with its obligations in WTO. No, the best guarantee is the fact, that Lao PDR is convinced that those reforms are essential for its sustained development. Structural adjustments are only sustainable if they are understood and supported by the population, the economic and political actors. Thanks to its prudent, but sustained and consistent reform policies, Lao PDR has the support of its society for the reforms. We want to make sure that we do progress in our reforms steadily, but at a speed that is adapted to the capacities both of the administration and the economic fabric of our country. I am sure that our friends in WTO will understand that Lao PDR’s request for transition periods is not a way to delay reforms, but is motivated by our objective to ensure a sustained reform process in line with our level of development and human and institutional capacities.

With these words I thank you, Mr Chairman.