GENEVA - After almost a decade of
major economic transformation, the Lao People's
Democratic Republic is on the brink of World Trade
Organization (WTO) membership. The small country's
Herculean effort to join the exclusive trade club
is a reminder to the 10 other least-developed
countries (LDCs) now seeking membership of the
cumbersome process involved.
"LDCs think
it is easy to accede to the WTO, like becoming a
United Nations member, but it is not," Nicolas
Imboden, director of the Geneva-based Ideas
Centre, told IPS. The non-governmental
organization has been counseling Lao PDR, whose
accession will be completed in October, for 14
years. It is now starting to assist Liberia and
Comoros, two other least-developed countries on a
waiting list that also includes Afghanistan, Bhutan,
Equatorial Guinea,
Ethiopia, Sao Tome, Sudan, Vanuatu and Yemen.
"They have to adopt the rules of the WTO
and this is a huge task for most of them," said
Imboden. "They must undertake reforms, completely
revise their legal systems and establish rules
that apply to all foreign investors and importers,
without discrimination."
Laos could join
the WTO by the end of the year, the chairperson Yi
Xiaozhun, China's ambassador, told the working
party of delegations negotiating the membership
bid, said in March. Nam Viyaketh, Laos' Industry
and Commerce Minister, said this was an ambitious
but realistic target.
Imboden said many
LDCs justify clamoring for membership on the
grounds that it will open up new markets, a motive
he argued is "flawed", since LDCs already have
good trade relations with most countries.
Rather, the "benefits" of membership are
mainly domestic: aligning national economic
policies with the WTO regime sets up the basis for
improved economic efficiency and attracts
companies eager to invest in these countries, not
because of their market size but to export to the
neighboring region.
"Reforms related to
WTO accession require a change of attitude, not
only a change of law," Khemmani Pholsena,
vice-minister of industry and commerce for Lao
PDR, told IPS. "Lao PDR has reviewed and enacted
some 25 trade-related laws and 50 other pieces of
legislation since 2000. And I believe that these
reforms will strengthen the rule of law, thereby
cutting down on undue privileges and possibilities
of corruption."
Laos is still a communist
country and transforming its state-run economy
into a free market system is a huge task,
particularly when a part of the administration
wants to open up the economy and some party
members don't.
For example, before the
accession process began, exporters had to deposit
their money in Laotian banks and convert it into
the local currency, while importers had to pay for
a special license. If the government felt a
particular import was undercutting state-owned
enterprises, it simply did not issue the license.
"I remember having seen a whole store of
watches at the central market in Vientiane,"
Imboden said. "Importing watches was forbidden,
but they were coming in illegally and the
government would not acknowledge that it was
unable to control the licenses. Now all this
[illegal licensing] is abolished."
From
the experience of other recently acceded members,
such as Cape Verde and Tonga, contentious issues
for Laos at this stage may include trading rights,
customs valuation, and intellectual property, said
Pholsena.
Intellectual property has not
hitherto been protected in Laos, so the country
has had to build up a national institution and set
up laws on patents and patenting rights.
"In 2003, there were few lawyers in the
country and nearly half of them were working on
intellectual property," Imboden said. "This is not
in line with Laos' priorities. The WTO asks LDCs
to adopt provisions on intellectual property that
may be necessary and useful, but [they are] not
needed at this stage of development and take up
too many resources."
Services
liberalization may also be a challenge, since
acceding countries have to liberalize more
aggressively than others. "Recently acceded
countries have to pay a higher price for WTO
entry," Pholsena said.
For example, "Out
of a total of 160 services sub-sectors, Cambodia
committed to 110, in contrast to 24 sub-sectors
made by existing LDC members. Lao PDR is facing
pressure to liberalize at a similar level."
"We are aware that there will be both
winners and losers as a result of these reforms
and the government has to do its utmost to help
the latter overcome the negative effects and
transform challenges into opportunities," Pholsena
said.
She believes sectors like tourism,
agro-business and natural resource-intensive
industries are to Laos' comparative advantage and
will prosper.
Imboden, too, is positive.
He doesn't see many risks for Laotian industry.
Competition from the other nine members of the
Association of Southeast Asian Nations, with which
Laos has a free trade agreement, already exists;
and competition from the rest of the world is
going to be limited since Laos doesn't have big
industries or inefficient state-owned enterprises,
like China did.
In agriculture, he said,
the accession process has already had positive
effects. In flat lands, exports have increased.
Laos cultivates coffee that is processed locally
and exported with a good value added. And the
majority of people who live on small plots and
produce mainly sticky rice will face little
competition from abroad.
A big chunk of
the accession process is represented by the market
access negotiations that are held bilaterally.
Each WTO member asks the acceding country to
reduce tariffs on certain items by a given
percentage. Most of them don't put excessive
demands on LDCs, but some do.
Ukraine, for
example, put a lot of pressure on Laos at the end
of the accession process, like it did with
Montenegro, blocking the accession of this small
European country for a year. It asked Vientiane to
reduce a substantial number of tariff lines below
the applied rate, which had never before been
demanded of an LDC.
"We told Laos not to
give up and the other countries tried to convince
Ukraine [the last country with which Laos has to
resolve bilateral issues] to be less demanding,
particularly after the last WTO ministerial
conference, where the decision was taken to ease
the accession of LDCs."
Laos also had very
difficult negotiations with the United States, but
Washington has relaxed some of its requirements.
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