Lao Trade Reform

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Lao PDR has been gradually integrating into the world economy through the accession to regional and multilateral trade organization such as ASEAN and WTO. The country initially applied to join the WTO in 1997, and has recently made accelerating progress. However, as its integration is still at an early stage, evidence suggests that Lao exports are less affected by the global financial crisis than initially expected. The GOL is implementing a sector-wide approach to trade-related reforms based on the 2006 DTIS/IF Action Matrix5, to help address the supply-side constraints that inhibit export competitiveness.

Key Reform Actions Taken

Progress in the WTO accession process appears to be accelerating. The fifth meeting of the Lao WTO Working Party (WP) took place on July 14, 2009, at which the Lao delegation reported the progress on substantial legislative reforms. These include the adoption of the new Law on Livestock Production, Veterinary Law, Law on Plant Protection adopted in 2008, and a new National Food Safety Policy. The Decree on Import-Export Licensing, facilitating the introduction of automatic import licensing procedures, was also adopted. The Decree on Import and Export Management, which unprecedentedly introduces the “national treatment” concept into the Lao legal system, is being revised. At the same time, a draft Decree on Rules-of-Origin is being finalized.

Lao PDR is progressively complying with requirements to reduce tariffs under AFTA Common Effective Preferential Tariff. As of August 2009, all remaining products on the sensitive list were brought into the inclusive list, of which 71 percent of products have a zero tariff. Lao PDR is required to reduce tariffs to zero on all inclusive list products imported from ASEAN countries by the year 2015. Eventually Lao PDR’s accession to the WTO would depend on the agreement with all WP members on goods and services. The GOL has begun to draft elements of the Working Party report, the final version of which will be submitted to the WTO Ministerial Conference or General Council by the WP. The final report will recommend that Laos be admitted as a member. The next Working Party meeting is planned for early 2010.

Important work on trade facilitation is progressing but challenges remain. Following the finalization of the Trade Facilitation Master Plan, a Trade Facilitation Action Plan is currently in the preparation and consultation process and expected to be finalized by the end of 2009. It will identify a strategic agenda for improving trade facilitation with a proposed implementation structure and clear responsibilities for lead agencies as well as pre-defined performance indicators. Along with the commencement of the deployment of the new customs IT system (ASYCUDA) to modernize and streamline customs systems, a Time Release Study is underway as part of efforts to establish a baseline assessment of trade facilitation costs.