Foreign Trade Policy Department

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China

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China is one of the biggest import markets in the world. Its key trading partners are the United States of America, Hong Kong, Japan, R.Korea, Germany, and Chinese-Taipei. In 2007, its value of exports and imports reached US$371.8 billion. China’s main import commodities are machinery and equipment, oil and mineral fuels, plastics, Light Emitting Diode (LED) screens, data processing equipment, optical and medical equipment, organic chemicals, steel, and copper.

For Lao PDR, China is the second largest trading partner after Thailand. The GoL and China have set a target to increase bilateral trade value of US$ 1 billion by 2006-2010. In October 2008, Lao-China trade was worth more than US$ 348 million. Major exports from Lao PDR to China are mining, agricultural products, handicraft, forestry products, wood and wood products and furniture. Lao PDR has market access opportunities to Chinese market in several ways.

ASEAN-China Free Trade Agreement (ACFTA)

ASEAN-China Free Trade Area (ACFTA) and the Framework Agreement on Comprehensive Economic Cooperation were established in November 2001 and were signed on 4th November 2002 during the ASEAN-China Summit in Phnom Penh, Cambodia. This marked the beginning of a process of setting up ACFTA within ten years.

Special Preferential Tariff - SPT

The Framework Agreement on Comprehensive Economic Cooperation is the main text of the establishment of ACFTA that focuses on reducing tariffs, removing non-tariff barriers between ASEAN and China and realizing facilitation of trade and investment. According to the agreement, China and the six original ASEAN Member States (Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand), and China and the CLMV (Cambodia, Lao PDR, Myanmar, and Vietnam) will eliminate import duties for products listed under normal track by 2010 and 2015 respectively. The Framework Agreement also aims to stimulate faster trade liberalization between the two Parties in specific fields mutually. China is committed to help the CLMV to facilitate their integration more effectively and to bridge the development gaps among the Parties. Based on this initiative, Lao PDR has received unilateral preferential treatment from China that covers 330 tariff lines which enjoy zero tariff rates.

Early Harvest Program - EHP

The Framework Agreement additionally established an Early Harvest Programme (EHP), which aims to reap the immediate concessions offered by the Parties. The EHP allows the reduction of tariff for agricultural products listed in Chapter 1-8[1] of the HS Code. A key element of the EHP is that China has offered unilateral concession to ASEAN members. ASEAN’s exports to China cover all products in HS Chapters 1-8 whereas China’s exports to ASEAN are not all covered in Chapters 1-8. Therefore, ASEAN is allowed to come up with exclusion lists indicating the items for which they would not grant tariff concession to China. The implementation timeframe of the EHP differs between the older members of ASEAN and China and the CLMV and China.

Regarding Lao PDR and China, the implementation of tariff reduction under the EHP began on 1st January 2006 and import duties of all tariff lines have been eliminated since 1st January 2009. There are 56 tariff lines at the 6-digit level (HS Code) that Lao PDR excludes from the EHP. While China places 178 tariff lines at the 8-digit level (HS Code) in the exclusion lists. In total, China has reduced import duties on 372 products mainly from the agricultural sector to Lao PDR.

Asia-Pacific Trade Agreement (APTA)

Under the APTA, China offers two lists of tariff reduction to Lao PDR as follows:

  • National List of Concessions consists of 1,967 tariff lines including live animals, fish and fish products, agricultural products, vegetables, industrial products, wood products, leather and garments. The highest MoP is 100% and the lowest MoP is 5%.
  • List of special concessions to LDC members consists of 161 products including fish and fish products, vegetables, agricultural products, garments, and leather products. The highest MoP is 100% and the lowest MoP is 20%.

Border Trade

In 1990s, the Chinese Government adopted special policies to boost economic development and border trade in the border areas between China and its neighboring countries including Lao PDR. Residents, who live in the border areas are exempted from taxation on the daily importation of products totaling a value of no more than RMB 3,000 (US$ 360). In November 2008, China increased the import value ceiling to RMB 8,000 (US$1,171.3).[2]

Chinese-Taipei’s Preferential Tariff Treatment

Since 10th January 2006, Chinese-Taipei has granted preferential tariff treatment to 50 LDCs including Lao PDR. Hence, Lao PDR is eligible for duty-free and quota free market access of 125 products to Chinese-Taipei.[3]



[1] Chapters 1-8 (live animals, meat and edible meat offal, fish, dairy produce, other animal products, live trees, edible vegetables and edible fruits and nuts)

[2] Website of the Ministry of Commerce of China

[3] Taiwan Times

Lao-China Trade Statistics

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