THIS NEWS STORY is designed to help the public understand developments in the WTO. While every effort has been made to ensure the contents are accurate, it does not prejudice member governments’ positions.
Essentially, the deal is done, but officially it is “ad referendum”, meaning it still needs to be confirmed, in this case at the General Council meeting.
WTO Director-General Pascal Lamy praised members for the remarkable acceleration in least developed countries’ accessions since 2011. Laos’ talks benefited from members agreeing to speed up the process and to provide essential technical assistance to the government. “It shows the commitment of the WTO to the least-developed countries,” he said.
Chinese Ambassador YI Xiaozhun, who chairs the working party of members negotiating with Laos (officially the Lao People’s Democratic Republic or Lao PDR), also welcomed the decision: “Lao PDR’s WTO accession is a strong, positive and clear signal for its commitment to engaging with the global economy in the framework of the rules-based trading system.
“For the WTO, Lao PDR’s accession means a warm welcome to another least-developed country into the multilateral trading system. This, in turn, has systemic benefits such as improved compliance with market access commitments in goods and services and with WTO rules,” Ambassador Yi said.
Laos’ Industry and Commerce Minister Nam Viyaketh thanked WTO members for concluding the accession negotiations. He praised the chairperson for his leadership and commended the Secretariat team for professional dedication.
The agreement by consensus in Laos’ 66-member Accession Working Party (counting the EU’s member states as well as the EU itself) comes 15 years after Laos first applied to join the WTO in 1997. The working party was set up in 1998 but did not meet until 2004.
The timing will allow Laos to meet its objective of being accepted as a new member by the time it hosts an Asia-Europe summit meeting (ASEM) in November, even though a few legal formalities still remain before it is officially a member.
Where is Laos now in its negotiation?
Essentially the negotiation is now over. The membership package now goes to the General Council for formal approval. After that, Laos still has to ratify the agreement and inform the WTO that it has done so by depositing its “Instrument of Acceptance”.. Thirty days later it officially joins the WTO. Minister Nam said he is confident the National Assembly will complete ratification in December.
As a least-developed country (LDC), Laos’s application is covered by new guidelines for accelerating membership negotiations for these countries, approved by the General Council on 25 July 2012 (document WT/L/508/Add.1), which in turn update the original 2002 guidelines (document WT/L/508).
After a slow start, Laos’ membership talks accelerated into a final sprint with three working party meetings in 2012 — before that the working party had never met more than once a year.
In this meeting
The working party’s 10th meeting informally went through the set of documents covering the details of the accession and Laos commitments before the chairperson formally gavelled through the agreement.
Minister Nam said: “Lao people place high hopes on today’s event. We have gone — and we continue going — through a process of intensive reforms. During the accession process, Lao PDR has amended and enacted more than 90 pieces of laws and regulations, all in compliance with WTO Agreements.”
He went on: “This process has been long and tedious and very difficult for us. As you know, as experienced negotiators, the position of a negotiator is not an easy one. We knew that we were engaged in a difficult exercise of convincing our trade partners of our good will, but also the constraints we are facing as a least developed country with a less bargaining power and still rely on ODA [overseas development assistance].
“We, however, underestimated the difficult negotiations we would have to undergo at the internal front. Quite frankly, trying to convince our trading partners of the position of Lao PDR only to go home, and to convince our internal partners of the justification of the reforms requested, was one of our most difficult and hard tasks.”
Members congratulated Laos. They supported approving the accession package and holding a special General Council meeting on 26 October to adopt it.
Fellow least developed countries Haiti, which coordinates the group in the WTO, Nepal and the Central African Republic, said the deal will inspire other least developed country applicants. Yemen, one of these applicants, said it hopes its membership deal can be approved by December.
The EU, US, Australia, Japan, Switzerland, Canada praised Laos’ commitment to the multilateral trading system and pledged to continue to give technical assistance to Laos after it has become a member. Also welcoming Laos’ membership were the Association of Southeast Asian Nations (ASEAN, which includes Laos), Chinese Taipei, Viet Nam, Hong Kong China, India, Argentina and Ukraine.
Part of the membership package contains the market access commitments that Laos is making in goods and services — tariff ceilings on goods, subsidy limits in agriculture, and access to its services markets. These are a combination of the offers Laos itself made, with additional commitments agreed in bilateral negotiations with the nine interested members — Australia, Canada, China, the EU, Japan, Rep. Korea, Chinese Taipei, the US and Ukraine — and built into the multilateral package.
The multilateral deal also contains descriptions of Laos’ trade regime, and wide-ranging commitments on laws and measures designed to ensure the regime conforms to WTO rules. Laos is also land-locked. In order to support the negotiations, Laos has received technical assistance from other WTO members, who said they would continue to provide aid after it has joined the WTO.
When it joins the WTO, Laos has agreed to the following:
For goods, Laos is committing “bound” tariffs (effectively maximum rates) that average 18.8% for all products — 19.3% on average for agricultural products, and 18.7% for the rest.
In services, Laos has made market access commitments in 10 sectors, covering 79 sub-sectors.
Other commitments include:
- Tariffs will be “ordinary customs duties” only, within committed levels, with no additional duties and charges.
- Agricultural subsidies to be according to Laos’ “schedule” of commitments — including no export subsidies.
- WTO rules, such as rules of origin, preshipment inspection, anti-dumping measures, countervailing duty, safeguards, customs valuation, export measures including prohibitions, subsidies, trade-related investment measures, free zones, laws on transit operations, preferential trade under bilateral, regional and other agreements, to comply with WTO agreements immediately.
- Technical Barriers to Trade (product standards and labelling) and Sanitary and Phytosanitary Measures (food safety and animal and plant health) agreements fully implemented by 1 January 2015.
- Intellectual property protection to comply fully with the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement by 31 December 2016.
- WTO rules on trading rights to apply from the date of becoming a member, with some exceptions for two years, although measures can be applied under WTO agreements on import licensing, technical barriers to trade (product standards and labelling) and sanitary and phytosanitary measures (food safety and animal and plant health).
- State enterprises to import or export broadly under commercial terms, and to notify their imports and exports to the WTO.
- Price controls will be consistent with WTO rules on trade in goods, agricultural products and services.
- Companies and individuals to have the right to legal appeal on government administrative actions covered by WTO rules, including those on trade regulations, subsidies, customs valuation, intellectual property rights and domestic regulation in services.
- Laos’ commitments and WTO rules to be applied throughout the country and enforced by the government without the need for recourse to the courts.
- Government fees and charges for services will be according to WTO agreements.
- Taxes and other charges on imports to comply with WTO agreements including national treatment (non-discrimination between imported and domestically produced products).
- No quantitative restrictions such as licensing, quotas, prohibitions, bans and other restrictions, except if for balance of payments purposes, which would follow WTO rules.
- Transparency: Laos to submit initial notifications as required within six months. All relevant laws, regulations and other measures will be notified as required by WTO rules and be made public in print and on the Internet. An Official Gazette to be set up within three years.
General Council: 26 October 2012.
Laos Accession Working Party members(according to the latest official list, but regularly updated):
Australia, Bangladesh, Brazil, Brunei Darussalam, Cambodia, Canada, China, Dominican Rep., EU, Haiti, Honduras, Hong Kong, China, India, Indonesia, Japan, Kingdom of Saudi Arabia, Rep. Korea, Lesotho, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Nigeria, Pakistan, Panama, Paraguay, Philippines, Qatar, Singapore, Switzerland, Chinese Taipei, Tanzania, Thailand, Ukraine, United States, Viet Nam, Zambia
Chairperson: Ambassador Yi Xiaozhun of China
Secretary: Mr Dayong Yu
Co-Secretary: Ms Petra Beslać
Director of the WTO Accessions Division: Mr Chiedu Osakwe
Lao People’s Democratic Republic applied to join the WTO on 16 July 1997. The General Council agreed to set up a working party on 19 February 1998. The working party met on 28 October 2004, 30 November 2006, 15 November 2007, 4 July 2008, 14 July 2009, 24 September 2010, 29 June 2011, 16 March 2012, 12 July 2012 and 28 September.
Statement by H.E. Dr Nam Viyaketh
Minister of Industry and Commerce, Lao PDR
10th Session of the Working Party on WTO Accession of Lao PDR
28 September 2012
On behalf of the Lao delegation, I wish to express my sincere gratitude to the WTO Secretariat, particularly the Accessions Division, for their hard work in planning, facilitating, and preparing for this final Working Party meeting of Lao PDR. I would also like to extend these sincere thanks to you, Mr Chairman, for your effective leadership in our accession process. Allow me to as well take this opportunity to thank all WTO Members and development partners for their constant support. Without your active engagement and support in the process, today’s concluding meeting would not have been possible.
Lao people place high hopes on today’s event. We have gone — and we continue going — through a process of intensive reforms. During the accession process, Lao PDR has amended and enacted more than 90 pieces of laws and regulations, all in compliance with WTO Agreements, covering various areas in particular on trading rights, import licensing procedures, customs valuation, investment regime, sanitary and phytosanitary measures, technical barriers to trade, and trade related intellectual property rights. Lao PDR has also made tremendous efforts in improving investment climate and opening its market for goods and services.
Lao PDR is able to open its economy as it is already a member in a free trade agreement with very competitive neighbours. Moreover, as a landlocked country with long porous borders which are difficult to control, our ability to protect the internal market with high tariffs is thus very limited unless we simply want to encourage fraud. This, however, does not mean that Lao PDR’s accession results should be used as a standard for other LDCs with different conditions. Let me conclude with the importance of a tailor-made approach for the accession process: each country has its own possibilities and constraints. Clearly guidelines and benchmarks for LDC accession are important. However, at the end, what counts is that WTO Members and acceding governments are sensitive to each other’s needs and possibilities and come to an agreement on the essential elements.
This process has been long and tedious and very difficult for us. As you know, as experienced negotiators, the position of a negotiator is not an easy one. We knew that we were engaged in a difficult exercise of convincing our trade partners of our good will, but also the constraints we are facing as a least developed country with a less bargaining power and still rely on ODA. We, however, underestimated the difficult negotiations we would have to undergo at the internal front. Quite frankly, trying to convince our trading partners of the position of Lao PDR only to go home, and to convince our internal partners of the justification of the reforms requested, was one of our most difficult and hard tasks.
Another important constraint in our accession process was to create the necessary capacity to implement the reforms once we got the political green light for them. Reforms cannot be made by outsiders: you need the internal capacity to fully measure the meaning and the implications of the reform. We had to build up this capacity both within our Ministry and in our partner Ministries, train them and introduce them to the multilateral requirements. This can help explain the amount of time our accession process took. I can proudly announce that today we have competent and dedicated team working on these issues, which allowed us to master a large reform program and which will ensure their full implementation.
Please allow me to take this opportunity to acknowledge the support we have received in form of financial and technical assistance by bilateral and multilateral donors. Without outside help it would be difficult for Lao PDR to achieve this reform goal. I appreciate the effective use donor support for Lao PDR to meet WTO standards.
Lao PDR has used the accession process as a useful blueprint for reforms in our trade and economic framework on the basis of international best practices. We were privileged to benefit from comments and suggestions of Working Party Members. Without your cooperation and your compassion for our country, we would not have been able to institute those reforms. The accession process — we are convinced — has provided us with the necessary basis to achieve our goal of meeting the Millennium Development Goals by 2015 and graduating from the LDC by 2020.
We are fully aware that WTO accession and this meeting are important milestones in our efforts, but the work continues. Our first task is to ensure that the WTO accession package is approved by the National Assembly as swiftly as possible. Right after this meeting we will submit the package to the National Assembly and we are confident that the whole package will be approved in this December session. Our confidence is based on the following elements: (i) we have already mobilized our National Assembly and have organized very useful sessions with neighboring countries; (ii) we have kept the National Assembly informed about the process and they have already approved all the laws that have lead us to this point; and (iii) we have prepared the necessary arguments to explain the benefits and the reasons for the package.
Our second task will be to share the results of our negotiations with the private sector and the public. We have foreseen a campaign not only in Vientiane Capital, but also in the provinces, both to inform them about the package agreed with our partners and to mobilize their support and their interest in taking full advantage of the new opportunities that these reforms are opening up. Only if the economic actors know their rights, can we ensure that they will also be respected.
Thirdly, we put ourselves to the task of fully implementing our commitments. You all know that one thing is to pass reforms another thing is to make sure that they are implemented. We are setting up the necessary structures to ensure this and to make sure that any new laws and regulations are in full compliance with our commitments. We need to train government officials to correctly apply the new policies. Allow me to make an appeal to our friends: we need your assistance and support in this implementation phase. Let us not lose time and the momentum we have built; we want to start our implementation work immediately. Lao PDR is very grateful for the transition periods it has received. It is for us also a matter of honor to ensure that we implement the measures foreseen in the transition period in time and fully.
We still have a long way to go on our development path. Lao PDR is an LDC of 6 million people, with more than 1 million of these still living under the poverty line. The limited human and financial resources and the lack of expertise are still major problem for Lao PDR. Even though our economy has experienced a high growth rate — with more than 7 per cent on average over the last decade — its main source of growth are still natural resources and prone to external shocks.
When we compare where we were at the beginning of this process and where we are now, it is easy to appreciate the tremendous effort Lao PDR has made. All Members’ interests, questions and requests have been fully addressed; and all relevant documentation has been circulated to WTO Members.
Today my delegates come with the high hopes of Lao people who are waiting for good news from us. On behalf of my delegates, I would like to seek the Working Party Members’ acceptance of the Draft Working Party Report, and provide a green light for us to become a Member of this family. This would be a historical achievement for my country, and it would also be the end of this long accession process. But, it would also be the beginning of the new phase of putting commitments and obligations into practice, a new challenge we are prepared and eager to begin.
In order to keep up the momentum back home, on behalf of the delegation from Lao PDR, please allow me to seek the agreement of the Members on the next step, permitting an early signing ceremony with the WTO Director General. The sooner we are able to proceed with this signature, the better momentum we can bring to our people back home. This is a crucial time, since we would like to announce this historical news as hosts of the 9th Summit of the Asia-Europe Meeting, which will be held in Vientiane in early November. Therefore, on behalf of the Government of Lao PDR, I would like to seek the support of the Members to facilitate the organizing of such an important signing ceremony as early as possible, in advance of the upcoming summit in November.
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