Assessing the accession: highlights of Lao’s package

April, 2013. On 2 February 2013, Lao People’s Democratic Republic became the latest LDC to join the WTO. Negotiations lasted for 15 years and required Laos to make substantial changes in its legal and regulatory framework as well as to introduce new legislation. The working party on the country’s accession involved 66 members of the WTO.  During the negotiations, Laos received technical assistance by the WTO, other multilateral organizations and development partners. The terms of accession package were agreed by late September 2012 and approved by the General Council of the WTO in October 2012. This implies that several of the recommendations adopted in July 2012 to further strengthen, streamline and operationalize the 2002 LDC accession guidelines were not taken into consideration during the negotiations.

In fact, in terms of merchandise market access, Lao PDR’s concessions are beyond those suggested in the 2012 recommendations but in line with the concessions made by LDCs that join the Organization after 1995 (Cambodia, Cabo Verde[i], Nepal, Samoa and Vanuatu) which implies a degree of trade liberalization which is often greater than that observed in LDCs that are among WTO “founding fathers”. Compared to the latter, acceding members commit to binding a higher share of tariff lines, to a lower average bound tariff levels and to opening a greater number of services sectors and subsectors. Thus, Laos agreed to bind tariffs on agricultural products at an average of 19.3 per cent (while LDC Members were not required to make commitments on agriculture as per the Agreement on Agriculture). This is below the 50 per cent suggested by the 2012 guidelines and the 78.8 per cent average of the 30 original LDC members, although applied tariffs are much lower at 15.3 per cent.  For non-agricultural market access, Lao committed to binding all tariff lines at an average rate of 18.7 per cent, which compares to a recommendation of average bound tariffs of 35 per cent covering 95 per cent of non-agricultural products. Meanwhile, the original LDC members have bound 48.8 per cent of their tariff lines at an average of 44.4 per cent (applied rates are however much lower at 11.9 per cent.

Lower bound tariffs may reduce policy options for the country in the future. At the same time, Lao insisted on reserving rights to LDC flexibilities existing in the Agreement on Subsidies and Countervailing Measures regarding the use of export subsidies (Article 27.2), while new legislation adopted by the country abolished the use of incentives and subsidies contingent on local content which are not permissible under the ASCM. Laos, however, seemed to have given up the LDC flexibility of using TRIMS-incompatible measures (subject to notification and approval by the WTO) as provided by Annex F of the Declaration of Sixth WTO Ministerial Conference (extension of transition period for the phasing out of incompatible measures as well as possibility of introduction of new measures) and would apply the TRIMs Agreement from the date of accession without recourse to any transitional period. The country also indicated that, with the provision of capacity building and technical assistance, TRIPS could be fully implemented by 31 December 2016. Yet, it also stressed it would make use of “the special and differential treatment provisions provided for under the TRIPS Agreement and WTO Ministerial Declarations” for LDCs.  Currently, LDCs are to comply only with articles 3, 4 and 5 of the agreement. The extension of such flexibility –which is to expire on 30 June 2013— is currently under negotiation at the WTO.

Source: Report of Working Party on the accession of Lao PDR to the WTO

[i] No longer a LDC