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									   Non-Tariff Barriers
Facing Lao Exporters

       NTM Workshop, World Bank
      4-5 May 2006, Krabi, Thailand
   Necessary to bear in mind the
    characteristics of Laos as a landlocked
   Dealt not only of NTBs imposed by
    trading country partners but also of
    mechanisms within Laos or the lack of
    these that limit exporters.
Lao Export Profile
   In the 1990’s, export growth was
    around 15% per year;
   In first 6 months of 2004, this increased
    by 22%
   Mainly driven by garments, electricity,
    mining and coffee.
Composition of Lao Export
 Highly concentrated to 3
  product categories:
 Wood and wood products

 Garments

 Coffee
 These products account for
  96% of total exports of
  merchandise goods (electricity
  not included).
 Almost 80% of exports are

  directed to EU and Thailand.
   Insufficiently exploited export potential
   Secondary wood processing products;
   Knitted garments;
   footwear;
   Livestock-based products; and
   Light manufacturing
Major Export Product
o   Accounts for 25% (equal to electricity)
    of the total exports;
o   EU is the biggest recipient
    country/region, 88% in 2000 and
    increased to 91% in 2003.
o   From 2001-2003, this accounted for
    17% of the total exports
o   Main destinations were Thailand (76%),
    Japan (14%), China (12%) and Taiwan
o   From 2001-2003, coffee products
    accounted for 3% of the total exports.
o   Since 1995, EU has emerged as the
    dominating recipient country accounting
    for 50-60% of the Lao coffee exports.
Other export products
o   Estimated total export value as a whole
    was approximately 12 M dollars in
o   Though having the benefits of GSP,
    destinations are mainly to EU countries,
    Singapore, Japan, and USA. Informal
    border trade to Thailand occurs.
o   These include commercialized products
    such as cardamom, broom grass,
    sticklac, mulberry and resin
o   Industrial crops such as: soybeans, job
    tears, sesame seeds, ground nuts.
o   Trading partners are neighboring
    countries like Thailand, Vietnam and
    China using border trades with a few
    cases of exports to EU like France.
o   Data indicates quite fluctuated export
    figures: 6.6 USD in 2000-01, 8.2 USD in
    2001-02 and 5.7 USD in 2002-03.
Main Products affected by
   Internal restrictions:
   Wood (timber, natural wood)

   External barriers:
   Garments (textile, cloth materials)
   Handicrafts (silk woven products)
Types of NTMs
   Internal measures that affect
   Unclear and changing regulations and
   Restrictive practices: Administrative
    procedures where too many steps and
    paper works are required to get ones’
    products approved
   Irregular amounts that have to be paid.
   Extra expenses paid (“to make the
    process faster”) which cannot be
    declared as there are no receipts issued
    for these.
   Customs valuation in which charges are
    not standard or the same.
   External Measures
   Most prohibitive were transport costs
    due to monopoly in Thailand
   Third country transit costs and paper
    works on Thai side
   Customs services and procedures both
    in Thailand and in Lao side
   Pre-shipment inspection: Double
    checking that cause delay and
    extra charges both on the Lao and
    Thai side
   Technical barriers; technical
    regulations and standards.
 Strict requirements set and
  additional costs to testing in
  other countries.
 Lack of laboratories in Laos for
  testing that can be accepted
Countries Most Constraining
   Thailand
   EU
   Japan

   Laos
 Summary NTBs (external)
Sector/product affected             Country applying barriers                   Nature of barrier
          1                                   2                                       3

Garment:                            EU                                  Prescriptive requirement by trading country
1. T-shirts                         USA                                 Marking requirements
2. T-shirts                         Thailand                            Slow paper works and asks for extra charges
3. Imported raw materials           China as against Pakistan           The use of Certificate of Origin is not the same for all
4. Imported raw fabrics             Thailand                            countries. China uses CO that allows it to impose
5. T-shirts (knitted and woven)                                          taxes.
                                                                         Transportation cost is high
Wood and wood products:             Thailand                            Does not allow to enter the market, technical
1. Carved seats                     Thailand                            regulations and standards
2. Knock down furniture             Thailand                            Changing enforcement of customs rules, delays
3. Wood wares: tables, chairs,      Thailand                            related to short and changing operating hours,
furniture set                       Thailand                            expenses to obtain customs clearance, expenses paid
4. Semi-processed wood: flooring                                         to get cargo transported,
5. Table tops, table legs, doors,                                        Checking/control of goods in Nong Khai (border of
frames                                                                   Thailand)
                                                                         Administrative costs (both in Lao and Thai side)
                                                                         Costly transportation and uncertain charges
Coffee:                             Thailand                    High cost of transit cargo in Bangkok
1. Raw coffee beans                 EU (France)                 There is strict requirement for toxin analysis
2. Raw coffee beans

Handicrafts (silk products)         Japan and EU                        Certification or strict testing requirements (e.g.
1. Scarf, blouses, pillow case,                                          consistency of fine fabric used, dyeing ingredients)
curtains                                                                 , labeling or marking or packaging requirements of
                                                                         trading partners
Agricultural products/NTFPs:        Thailand                    Cargo handling and port procedures, monopoly of
1. Gums and resins, medicinal                                    transportation service
2. Job tears
Internal Factors
        Inventory Category                           Nature of Barrier                         Sector/products affected
              1                                             2                                             3

Part (I) Government Participation in               Bidding processes, logging                        Wood
Trade and Practices Tolerated by the               quotas, and shipment ; lack of                     Handicraft
Lao Government (GoL)                               publications on export                             Barrier affecting all sectors
1.Lack of publications and                         procedures,duties and shipment                     including coffee exporters in
changing/unclear implementation of rules           Mutiple authorities who                           provinces
related to trade                                   inspect and approve the                            NTFPs
2.Restrictive practices                            products
3.Absence of standard procedures and               Different calculation of taxes
guidelines                                         from province to province
                                                   depending on how one district
                                                   sets up its own method
Part (II) Customs and                      There are fees charged at the border      All sectors affected with varying degrees
Administrative Entry Procedures            or port ; terminal handling charges,       Garments
1.Customs services (time and charges)      delivery fee, port gate fee, customs       Handicraft
2.Pre-shipment inspection                  guard fee, third risk premium, returning   Garments
3.Customs classification                   fee of the empty truck, and unloading      Textile
4.Customs formalities                      fee.                                       Wood
5.Rules of Origin                          Double inspection
6.Import license                           Typing mistakes and classifying the
                                           Forms change whenever there is a
                                           new Customs staff
                                           For fabrics which exporters have to
                                           deal with restrictions imposed within
                                           and outside of the country
                                           It took 45 days to get a license to
                                           import raw materials for wood
Part (III) Technical Barriers to Trade    Lacks laboratory facilities for testing    Textile handicrafts
    1. Testing and certification          the chemicals for the colors.
Part (IV) Sanitary and Phyto-             Absence of laboratories specially in       Industrial crops face this barrier the most
sanitary Measures                         provinces where these are planted;
    1. Testing, certification and other   extra costs and time for bringing to
conformity assessment (including          Vientiane,
chemical residue limits, freedom from     and not recognized internationally
diseases and level of humidity)

Part (V) Specific Limitations             Uncertain allocation of timber by GoL      Wood
1.Quantitative restrictions               and thus cannot predict the raw input       Wood
2.Exchange control                        that they can use.                          Wood and NTFPs
3.Export restraints                       Exporters are allowed to withdraw          All sectors
    4. Export taxes                       only a maximum of 5,000 USD/day
                                          Duplicated administrative work
                                          between border points; province to
                                          Several duties being levied
Part (VI) Charges on imports              Export certificate is required for each    Handicrafts, coffee, for wood, (license is
1.Export license/investment certificate   export shipment and takes 2 days to         valid for 1 year only)
(validity, services and requirements)     process                                     Coffee beans
2.Profit tax                              A 450kip/kg is paid for each export        Garments
3.Restrictions on imports                 regarded as “advanced profit tax”.
                                          Economic Police inspects without
Part (VII) Others                         Permit required for “internal transit of   Garments
1.Intellectual property issues            garments inputs” when sub-contracting

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