U.S.-Laos Business Opportunities
“Making Normal Trade Relations a Reality”
December 15, 2005

U.S. Ambassador Patricia  Haslach Attended a Seminar on Normal Trade Relations

On December 15th Ambassador Haslach presided over and Economic Officer attended a seminar on Normal Trade Relations, jointly hosted by the Ministry of Commerce, the Lao Chamber of Commerce, and the Fund for Reconcilaition and Development, a Lao-American Business coalition. Also presiding was Minister of Commerce Soulivong Daravong and Mr. Chao Lee, a staffer from the office of Congresswoman Betty McCollum. The Lao American Group, composed of more than 60 persons, was the largest ever to come to Laos, and the atmosphere was business like rather than merely exploratory. As the investment climate in the Lao PDR has not improved much over the past year, and as the stated intention of the delegation was to find ways to invest, the Embassy took the opportunity to drive home some hard truths about the need for reforms.

Ambassador Haslach remarks at “U.S.-Laos Business Opportunities “Making Normal Trade Relations a Reality” seminar:

Minister Soulivong, Officials of the Government of the Lao PDR, ladies and gentlemen - fellow Americans:
You are the first business delegation of anything like this size to come to Laos. And, we're glad to see you. It is very gratifying to see Lao Americans here, doing business with the country of their origin.

It was a long, hard struggle to get our trade relations normalized, and as we hoped, Lao Americans are showing considerable interest. But we need to remember NTR was not a gift but an opportunity.

It is plain to me, as I'm sure it is to you, that business is the best way for the Lao economy to grow. Private business is also the only way economic growth can have a real impact upon poverty – this is a stated goal of the Lao Government. A viable private sector is the only way out of poverty for the general population. The bilateral relationship between Laos and the US is dominated by what we call “heritage” issues” – which means old issues.

The recovery of the remains of MIAs from the era of the Indochina War is gratifying, and very comforting to their families. The assistance we offer to develop the rural economies in areas where opium was formerly grown is helping to eradicate poppy cultivation and to offer alternative livelihoods to people, who formerly saw no alternatives to opium cultivation.

But these laudable activities will not pull the average Lao person out of poverty. Only making and selling can do that. There are skilled makers of handicrafts in Laos who need little help in the making, but they may need help in the selling. That is the initial business niche into which we suggest Lao Americans fit themselves.

While I'm on the question of help, let's look at American help to Laos in a broader context. The US donates money on a moderate scale to several areas of development in Laos, ranging between 7 and 14 million dollars per year. Most recently, we gave $3.4 million to combat the threat of Avian Influenza.

This is a regional, indeed a world-wide effort. If we can find appropriate categories, we will expand that. In such international emergencies we want the Lao Government and people to know that we will help first and most. But aid is not the way to fix the poverty problem. There are no example of developing countries being raised out of poverty by donor assistance.

There are many examples of countries rising up out of poverty through commerce and sound finance. Being landlocked is not the problem (look at Switzerland). Being unfriendly to business and investment is the problem. Several among you have expressed a desire to help the people of Laos. That is exactly what you are doing when you trade with them. Business conducted by private sector companies is what makes economies tick, and whatever inhibits business, by definition, harms an economy.

Unfortunately, this is something governments seldom learn easily or cheaply. 2005 has been a big year for Laos on the trade front. At the beginning of the year, NTR with the US began as the Bilateral Trade Agreement came into force, bringing the average ta riff for Lao products entering the US down from 45 percent to only 2.5 percent. That is all that should be needed to foster trade, if people are energetic and entrepreneurial. The Lao Government also took some preliminary steps toward WTO accession this year. We wish Laos well in this endeavor.

Some developments that might have damaged the Lao economy have not yet had a strong negative effect. The International Multi-Fiber Agreement expired in January 2005, leaving small garment producers like Laos at a disadvantage against Chinese competition. However, so far the Lao garment manufacturing sector is holding is own, and there is still room for some optimism. But that is only one sector, and the traditional one for developing economies. Everybody is in the garment business. What Laos needs is light industry at which the country can excel. But there is a big problem. Laos is not yet competitive as the location of first choice for companies interested in investing in this sector or in this region.

If Laos can manage to make itself more investor friendly, there is no reason why light industry of many kinds cannot flourish here, just as it has in other countries in the region. It is our sincere hope that Laos will succeed in doing that, sooner rather than later. It is a matter of letting business work its magic, but before they can do that, they have to be enticed to come and then encouraged to stay.

Investors must see an open road before them, not a thicket of application procedures. Investors must feel that their money is safe, that they can set up a business with the same speed they are accustomed to run one. Investors must feel confident that the courts will adjudicate a business dispute fairly, and promptly and that the judgments they ob ta in will be enforced. These things are not optional they are essential to a good business climate.

There are some other areas in which we note concern. Full implementation of the BTA has not progressed as rapidly as we expected. Laos' aspirations to enter the WTO would be given a big boost by full implemen ta tion of the BTA, as the commitments made to us bilaterally are quite similar to those Laos must make multilaterally in order to become a full member of the global trading regime.

I should also mention that many of the provisions of the BTA are also the things needed to improve the investment climate. We want American businesses to come to Laos so long as the business conditions are right. The fact that such a large group of Lao Americans are sitting in front of me now, looking forward to doing business in Laos, testifies to the fact that Laos has many friends in the United States who want to offer the Lao economy exactly the boost it needs.

Lao products, especially high-quality handicrafts such as silk fabric, will find a ready market in the US. Therefore, I urge those of you in search of a Lao product line to represent in the US to examine a range of these products from many quality producers while you are here.

Thank you, now let's get down to business!