Overview on Lao PDR's Bilateral Trade Relations
Lao PDR actively pursues an open trade administration and the trade policy regime has been reformed to enhance transparency and secure an enabling trade environment. At the same time, the GoL has continually expanded its trade relations with countries around the world.
To date, Lao PDR has broadened its trade relations with more than 50 countries, in which the main trading partners are Thailand, Vietnam, Australia, Korea, Malaysia, England, France, Germany, Japan, and the United States of America. It has concluded and signed trade-related agreements with 18 countries namely Argentina, Belarus, Bulgaria,Cambodia, China, Indonesia, India, Korea DPR, Kuwait, Malaysia, Mongolia, Myanmar, the Philippines, Russian Federation, Thailand, Turkey, the United States of America, andVietnam.
The country’s major exports are coffee, crops and livestock, non-timber forest products, electricity, mining, garments and wood products. The export values have increased over the last few years; as a result, trade balance has been gradually improved. As a low-income country, Lao PDR imports goods needed for development and the day-to-day life of its people ranging from consumption goods, fuel, machinery and equipment, construction materials, raw materials, and intermediate goods.
Market Access for Lao PDR
Lao PDR has market access opportunities under unilateral and reciprocal preferences from 47 developed and developing countries. As a LDC, Lao PDR is granted the unilateral tariff preferences under the Generalized System of Preferences (GSP) from 36 countries including the European Union (EU), Australia, Belarus, Canada, Japan, New Zealand, Norway, Russian Federation, Switzerland and Turkey. In 2002 the European Union granted a duty free quota free market access to LDCs under the Everything But Arms (EBA) initiative. Moreover, Lao PDR also obtains preferential tariff treatments from some emerging economies like China, R. Korea, Chinese-Taipei and India. These systems of preferences aim to help LDCs reduce poverty by stimulating their exports.
In addition, Lao PDR is granted unilateral preferential treatments by older ASEAN members: Thailand, Malaysia, the Philippines and Brunei Darussalam under ASEAN Integrated System of Preferences (AISP) scheme. The AISP scheme was adopted on 1stJanuary 2002 in order to implement the Initiatives for ASEAN Integration (IAI) for narrowing development gaps between established and newly joined ASEAN member countries. Under this scheme, these countries have granted preferential tariffs to CLMV (Cambodia, Lao PDR, Myanmar, and Vietnam) on a voluntary and bilateral basis. There are in total 1,117 tariff lines eligible for tariff preferences under this scheme. Indeed, only Malaysia, the Philippines, and Thailand have legally enacted the implementation of the AISP Scheme.
Apart from that, as one of the LDC Participating States of APTA, Lao PDR has also been granted unilateral preferential tariff treatment by China, R. Korea, India and Sri Lanka.
With respect to the reciprocal tariff treatments, Lao PDR is eligible to export to ASEAN countries under CEPT scheme. Under this scheme the import tariffs of the member states have significantly been reduced to 0% - 5%. Similarly, as a result of FTA negotiation with ASEAN dialogues partners, China, R. Korea, Japan, India, and Australia-New Zealand have scheduled tariff reductions in a reciprocal basis with Lao PDR. Further, under APTA, Lao PDR is eligible to export some products to China, R. Korea, India, Sri Lanka and Bangladesh with lower tariff rates.
Additionally, Lao PDR and Vietnam have signed a preferential trade arrangement which focuses on tariff reduction and the elimination of tariffs on most goods with the exception of a few products.
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