TWN Info Service on WTO and Trade Issues (Jul11/03)
12 July 2011
Third World Network
 
Laos WTO accession talks move to first draft of agreement
Published in SUNS #7181 dated 1 July 2011
 
Geneva, 30 Jun (Kanaga Raja) -- Members of the Working Party negotiating the membership of the Lao People's Democratic Republic to the World Trade Organization (WTO), at their seventh meeting on 29 June, have agreed to move to a first draft of the final agreement.
 
According to trade officials, Laos informed the working party's members that it has now concluded bilateral agreements with Australia (signed in Geneva as on 24 June), Canada, China, Japan, Korea, and Chinese Taipei, is close to concluding an agreement with the European Union, and has made "significant progress" with the remaining two, the US and Ukraine.
 
Trade officials said that the working party agreed to move to a first draft of the final agreement on Laos' membership.
 
Trade officials said that the bilateral market access agreements 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.
 
In a prepared statement for the seventh meeting of the working party, Laos Industry and Commerce Minister Dr Nam Viyaketh said: "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."
 
"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," he said.
 
The Chair of the Laos working party, Dr. Zhang Xiangchen of China, said: "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."
 
The members of the working party are: Australia, Bangladesh, Brazil, Brunei, Cambodia, Canada, China, Dominican Republic, European Union, Haiti, Honduras, Hong Kong China, India, Japan, Korea, Lesotho, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Nigeria, Panama, Paraguay, Philippines, Singapore, Switzerland, Chinese Taipei, Tanzania, Thailand, Ukraine, United States, Viet Nam, and Zambia.
 
Laos' application to join the WTO was made on 16 July 1997, and the General Council agreed to set up a working party on 19 February 1998. The working party has met on 28 October 2004, 30 November 2006, 15 November 2007, 4 July 2008, 14 July 2009, 24 September 2010 and now on 29 June 2011.
 
Trade officials said that on 24 May 2011, the main document describing Laos' trade regime was circulated as "elements" of a draft, including some proposed commitments. This will now be developed into a proper draft working party report, which will eventually include descriptions of the actions that Laos has taken to bring its laws and regulations into line with WTO rules, and the commitments it is making.
 
Trade officials added that as a Least Developed Country (LDC), Laos's application is covered by the 2002 General Council guidelines for accelerating membership negotiations (outlined in document WT/L/508).
 
At the seventh meeting of the working party, several developing and least developed countries called for a swift entry for Laos, particularly under the General Council guidelines, and for WTO members to be flexible in the negotiations.
 
According to trade officials, these included Cambodia (for Laos' fellow-members in the Association of Southeast Asian Nations, ASEAN), Viet Nam, Bangladesh (for LDCs), India, China and Nepal.
 
The EU, Australia, the US, Japan, Canada, Chinese Taipei, Korea and Ukraine also said that they support Laos' swift entry into the WTO, and referred to the technical assistance that they have offered to Laos. They welcomed the progress made, both bilaterally and multilaterally.
 
According to trade officials, since the last meeting of the working party in July 2010, Laos had revised its market access offers in goods and services and information on a range of issues such as customs valuation, product standards and legislation.
 
In their questions, said trade officials, 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.
 
The questions and comments came from Australia, Canada, the EU, Chinese Taipei and the US.
 
According to trade officials, Minister Nam thanked members for the technical assistance. He said that his delegation would study their comments. Calling for flexibility, he stressed that his country's market access offers in goods and services "far exceed least developed countries' common practice".
 
In his prepared statement, Dr Nam said: "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, he said that Laos has 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 minister said that "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."
 
Apart from being a least-developed country, he noted that 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," he added.
 
"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."
 
The minister went on to highlight some notable reforms undertaken throughout Laos' accession process.
 
According to the minister's statement, Laos' 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 (Subsidies and Countervailing Measures Agreement) 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 (sanitary and phytosanitary) and TBT (technical barriers to trade) 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 [of] 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," said Minister Nam.
 
The working party chair said that the next meeting could be held in the second half of 2011. +