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1 Feb 2013

International Economy

[AEC Plus] Laos’ WTO Membership: Opportunities for Thai Exports (Current Issue No. 2312 Full Ed.)

Lao People's Democratic Republic (Lao PDR) will be the latest ASEAN state to become the World Trade Organization's 158th member on February 2, 2013. It is expected that Laos' WTO membership will not only help enhance ASEAN's role in the global trade arena, but also pave the way for Laos to align their trade and investment regimes in conformity with multilateral trade regulations, helping facilitate international investment there ahead.
Key market access commitments that Laos has agreed to under the WTO membership package include “bound” tariffs (maximum rates) that would average 18.8 percent for all products, plus market access for 10 service sectors covering 79 sub-sectors, that would facilitate foreign investment into their service sector.
KResearch is of the view that Thailand stands to gain substantial benefit from the ASEAN FTA, essentially becoming the AEC in 2015, plus advantages gained via the Regional Comprehensive Economic Partnership (RCEP) agreement wherein Laos will be committed to offering broader and deeper market access than accorded by the WTO framework. We may not directly benefit from Laotian WTO membership, but there might be some indirect benefit gained from better economic prospects within Laos later on.

Trading and investment with Laos is largely conducted via neighboring countries because it is a land-locked nation, meaning Thailand will continue to benefit from increased trade and investment with Laos following their WTO accession. In addition, our exports to Laos should thrive along with more favorable economic performance there, especially our consumer products that are already well-accepted among local consumers, as well as intermediate components needed for new investments and their growing export sector. However, it is expected that foreign direct investment to Laos will surge, thus resulting in intense competition, particularly among our key regional rivals such as Vietnam and China.

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International Economy