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U.S. Signs Trade and Investment Framework Agreement with Laos

Monday, February 22, 2016
Sandler, Travis & Rosenberg Trade Report

The U.S. signed a bilateral trade and investment framework agreement with Laos Feb. 18, creating a forum for the two countries to engage on issues such as intellectual property, labor, the environment and capacity building. The TIFA will also allow coordination on multilateral and regional issues, including those related to the Association of Southeast Asian Nations. 

According to the Office of the U.S. Trade Representative, Laos’ membership in the World Trade Organization and its preparations for the entry into force of obligations for the Association of Southeast Asian Nations Economic Community have spurred trade liberalization, improvements to the business environment and enhanced trade facilitation. Customs value is based on transaction value according to WTO rules and the country is transitioning to a value-added tax system. The government is also working to establish an effective system for civil litigation and criminal enforcement of intellectual property rights.

However, Laos took in only $29 million worth of U.S. goods exports in 2014, and USTR’s latest trade barriers report indicates that this low figure could be due in part to the following.

- uneven implementation of sanitary and phytosanitary standards at entry points and the often limited technical knowledge of enforcement officials

- import licensing requirements for products such as motor vehicles, petroleum and gas, timber products, cement and steel

- irregularities and corruption in the customs clearance process

- arbitrary or selective enforcement of tax provisions

- medical, postal, telecommunications and some leasing, media and transportation services remain effectively closed to foreign competition

- very low technical and regulatory capacity for e-commerce

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