As noted by the Discussant, and for similar reasons, the EU also commends Lao PDR’s efforts to graduate from Least Developed Country (LDC) status in 2024. Indeed, since its WTO accession in 2013, and notwithstanding the floods in 2018, Lao PDR’s economy has been strong, mainly underpinned by expanding investments in large infrastructure and construction projects. Economic growth has resulted in a decline in poverty levels. To reduce poverty even further, the EU calls on Lao PDR to step up action to improve workforce training, public education and health services, and to address gender equality.
The services sector is the main contributor to GDP, with increased activities in the wholesale and retail business, as well as banking and insurance, in particular microfinance. Tourism, a sector of key importance to Lao PDR’s social and economic development, expanded even if remains dependent on regional arrivals. Tourism provides high foreign exchange earnings, supports the expansion of other services (such as telecoms, banking, insurance and transport), and delivers strong employment opportunities.
Since its accession, Lao PDR has implemented its commitments by updating its trade-related and investment policies, and adopting some institutional and regulatory reform initiatives in areas such as access to information, e-government, anti-corruption, investment promotion, and economic dispute resolution). The EU sees these steps as a demonstration that WTO accession generated reforms have the potential to lead Lao PDR towards further integration into global trade and a sustainable growth.
During the review period, Lao PDR improved its WTO commitments by ratifying the Trade Facilitation Agreement on in 2015 and notifying its Category A, B and C commitments. Lao PDR also signed the Madrid Protocol, which entered into force in March 2016.
The EU welcomes the fact the Lao PDR has joined a number of Joint Statement Initiatives such as for e-commerce, investment facilitation for development and MSMEs and also signed the Buenos Aires declaration on women’s economic empowerment and would be interested in learning more about any recent activities taken upon by Lao PDR in those areas of work and encourage further engagement in the discussions in the WTO.
Furthermore, the EU would encourage Lao PDR to consider becoming a Party of the plurilateral Agreement on Government Procurement in the future, notably as a new Law on Public Procurement was promulgated in 2017 with the objective to “secure effective, efficient, economic, transparent, accountable and fair use of government funds in contribution to national socio-economic development”.
During the review period, Lao PDR submitted notifications (e.g. tariffs, trade facilitation, customs valuation, rules of origin, import licensing procedures, SPS, subsidies, agriculture, and RTAs/services). However, its regular notifications (i.e. domestic support to agriculture, import licensing procedures, and subsidies) were received only once during the review period. In order to enhance transparency, the EU urges Lao PDR to submit its outstanding notifications according to its WTO commitments by developing relevant inter-ministerial mechanisms and request specific technical assistance.
We also note that Lao PDR has made significant progress in improving customs procedures and aligning them to international standards (e.g. automation of customs offices and the introduction of risk management regarding inspection). These measures, along with other initiatives, such as coordinated border management and post-clearance audits, have resulted in quicker customs clearance.
The EU has an important relationship with Lao PDR. We work closely with Lao PDR in the context of the EU-ASEAN Cooperation Agreement with the goal to ensure an effective environment for trade and investment relations. The EU is Lao PDR's fourth trading partner, with imports from Lao PDR concentrated on garment and textiles. Being still a LDC, Lao PDR benefits from duty-free and quota-free access to the EU market under our "Everything But Arms" (EBA) preferential arrangement.
Lao PDR and the EU, together with its Member States, are also important partners in development cooperation. In line with Lao PDR's development plan, cooperation focuses mainly on support to 1) education; 2) sustainable agriculture and food and nutrition security; and 3) governance, human rights and the rule of law. Our multi-annual indicative programme for Lao PDR allocates € 203 million in 2014-2020.
Finally, the EU would also like to highlight a few challenges, some related to the questions we addressed earlier.
First, the EU notes that Lao PDR is committed to a broader reform process aimed at improving the business climate and thus encourages Lao PDR to improve the environment for private investments including foreign direct investment. This requires deeper cooperation and coordination of the ministerial departments, among other efforts, as well as a more frequent and comprehensive consultation of the private sector. We also encourage Lao PDR to strengthen its attempts to combat fraud, corruption and money laundering.
Second, Lao PDR's economy relies heavily on natural resources (minerals, electricity and agriculture) and hence, remains vulnerable and highly exposed to risks linked to both natural disasters and external shocks. We support Lao PDR in its continued efforts to diversify its export basket and to develop productive sectors with high potential for growth and job creation.
On behalf of the EU, I look forward to a constructive exchange of views during this Trade Policy Review and wish the Delegation of Lao People's Democratic Republic the best of success.