The United States of America is the world’s largest importing country; its total imports in 2007 were US$ 2,020.4 billion contributing 14.2% of the world’s imports. Major imports of the United State include cruel oil and petroleum, luxury goods, mobiles, consumption goods, raw materials for manufacturing, food and beverage. The United States trades with 232 countries around the world. Lao PDR was ranked as its 182nd trading partner in 2007 moving up from the 193rd in 2005. Main exports of Lao PDR to the US consist of apparel and clothing accessories knitted or crocheted; coffee, tea, spices; apparel and clothing accessories not knitted or crocheted; works of art, collector’s pieces, antiques and other.
Lao PDR has established Normal Trade Relation (NTR) with the United States as a result of a signatory to a Bilateral Trade Agreement (BTA). However, Lao PDR is not a beneficiary of the GSP that the United States grants to some LDCs.
Agreement on Trade Relations between Lao PDR and the Untied States of America
In 1997, Lao PDR launched and concluded a negotiation on Trade Relations Agreement with the United States which was signed on 18th September 2003. Lao PDR was granted “Permanent Normal Trade Relation or PNTR” by the US Parliament in late 2004, following the ratification of the Lao-US BTA by the Lao National Assembly, Lao PDR acquired the NTR status and the BTA officially entered into force in February 2005. The Lao-US BTA is composed of 40 Articles with four main provisions: trade in goods, trade in services, trade-related intellectual property, and general provisions. Most provisions under the BTA are based on the WTO’s principles such as Most Favored Nation (MFN), National Treatment (NT), Transparency, and Market Access (MA).
The BTA enables Lao products to access the US market at MFN rates that are imposed for 228 trading partners of the US except People’s Democratic Republic of Korea and Cuba. Before the NTR, exports of Lao PDR to the United States faced an average import duty of 45%. In contrast, the average import tariff is now only 1.93%
Import duties on agriculture products, mainly coffee, green tea, and tropical fruits are relatively low (1.10% on average). Indeed the United States has very liberal tariffs due to many rounds of negotiations under the WTO. There are 632 agricultural and industrial products enjoying zero import duties. However, for some products such as clothing and other textile products i.e. footwear and umbrella products, their import duties remain high, on average 12.86% and 15.87% respectively. The fact that Lao PDR is not eligible for GSP granted by the United States puts local producers of clothing at a disadvantage compared to other US-GSP beneficiary countries in Africa and the Caribbean.
Moreover, the United States prohibits and restricts imports of some products such as alcohol, live animals and animal products, certain types of medicines, gun and arms, military arms, fruits, beans, meat and meat products, live poultry and poultry products, petroleum and petroleum products, and vegetables. Importation of such products, thus, requires an authorization by a special body of the US; for instance, importing of fruits, vegetables, and beans must get approval from the Department of Agriculture.