ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Laos takes first steps onto stage of global trade
Publication Date : 30-10-2012
Laos is set to become fully integrated with the global economy after the World Trade Organisation (WTO) accepted the "least-developed" country's application for membership. Laos's entry to the world trade-governing body is welcomed: it paves the way to transition for one of the world's least-developed countries onto the stage of global trade.
The communist country was finally accepted as a member 15 years after it first applied to join the WTO. "Laos has come a long way since it embarked on the road to membership in 1997," said WTO director general Pascal Lamy. "This is never easy for any least-developed country, and Laos's first steps were slow, but it is now seriously reforming its economy and its institutions, and has shown skill in its membership negotiation."
The Laos National Assembly will ratify the negotiation process in December before a final 30-day wait, after which Laos will be an official member of the WTO, the Lao Ministry of Industry and Commerce said on October 15.
Laos will then have access to the markets of the other 157 WTO member-countries. The WTO entry will further encourage an economic reform process that is essential to the country's future prosperity and ability to attract foreign trade and investment.
Membership should also help ensure Laos abides by global rules of trade, with the international trade body able to hold the country's delegates to account through its process for settling disputes.
The entry is another important step for Laos, which has been an active member of Asean and the Asean Free Trade Area (Afta), and will become a member of the Asean Economic Community (AEC) on its launch in 2015. Laos will also host the 9th Asia-Europe Meeting Summit on November 5 and 6.
Integration with Asean should be the perfect platform for the global launch of a Lao economy whose steady growth rate reached 8 per cent last year, propelled partly by closer trade ties with other countries in the region.
Vientiane deserves praise for achieving economic reforms in line with WTO requirements. The communist government's reform process stretched beyond passing new laws.
"In a country like Lao PDR, the accession process was not limited to changing some laws and regulations. We had to change our way of doing business," said Deputy Prime Minister and Foreign Minister Thongloun Sisoulith. "Such a mindset creates a difficult and time-consuming exercise."
Since 2000, Laos has passed more than 90 new laws, amendments, decrees and regulations relating to trade. In line with WTO rules, maximum tariffs have been set at 19.3 per cent for agricultural products and at 18.7 per cent for industrial products.
Currently, the tariffs are 18.4 per cent for agricultural goods and 10 per cent for industrial products - well within WTO limits. Laos has also made market-access commitments in 10 sectors and 79 sub-sectors, out of a total of 160 economic sectors.
But Laos has huge challenges ahead. It must build the economy and infrastructure to ensure its citizens reap the benefit of the new economic status.
Thailand also stands to benefit from its neighbour's new openness and should seize the opportunity to provide support and assistance.
Greater prosperity among Laotians should boost trade across the border, increasing opportunities on both sides of the Mekong River.
Partners in Asean, meanwhile, have an obligation to assist Laos by sharing their technical knowledge and experience, as it becomes the final member of the bloc to join the WTO.
Membership in Afta and the AEC has served as a training ground, but Vientiane still faces steep challenges in implementing its remaining commitments and capitalising on opportunities that global trade will provide.
Asean has much at stake in this transition of Laos onto the world stage, and should do all it can to help achieve its success. Asean must grasp this opportunity to help one of its members take an important step on the path to regional economic unity with a single future shared by all members.