Ambassador's Speech

Text of the Ambassador's Speech

Ambassador Haslach and Lao Minister of Commerce, Dr. Nam Viyaket, open a ASEAN Trade negotiation course

As I have said in other venues, NTR is not a gift. It is an opportunity. In February 1 of 2005, Laos was presented with that opportunity. NTR with the US came into force on that day, our tariffs on Lao products immediately fell, and the Bilateral Trade Agreement immediately became the main document governing our economic relationship, requiring reciprocal actions on the part of the Lao PDR.

The BTA is a reform-oriented document, containing many clauses similar to those required for accession to the WTO-a goal the Government of Laos professes. As such, it is intended not only to regulate trade with the US, but to prepare Laos for full membership in the international trading environment.

For example, it requires structural reforms in the banking sector, a pre-requisite to a good environment for business and investment. It also mandates efficient IPR protection, without which any economy is viewed by its trading partners as hazardous to investment.

The BTA also provides for what is called National Treatment–which means that American investors and business people may not be accorded any lesser degree of access to markets than domestic business entities enjoy.

Laos agreed to these provisions. However, implementation of the BTA has been tardy on the Lao side.

Now, we know that the Lao Government has its work cut out. It is not easy to reform a banking sector or to jump-start an economy, particularly an economy accustomed to large infusions of donor support and lacking a well-functioning commercial court and mechanisms for arbitration.

In addition, there is the nervousness factor: the hard steps needed to accomplish reforms often seem likely to be steps downward for domestic industries. National treatment is easy to promise, but when the time comes to deliver, there can be foot-dragging.

It need not be the case that domestic businesses are disadvantaged by competition, but they may be. Inefficient commercial operations lose ground in an efficient market, but Laos also has many people with good business ideas, and they can be expected to thrive in an efficient market. Laos’ entrepreneurs deserve their chance.

It is an article of faith among most economists that competition is good, not bad. For Laos to prosper in the international trading regime it certainly is going to be necessary to foster competitive spirit–something that has not been a prominent feature of business in Laos heretofore.

To give Lao entrepreneurs their chance, to live up to the agreements they have signed, and to have any hope of entering the WTO, the Government of Laos must make changes – the change that occurs to me immediately is smoothing the way for investment by making the process for applying for business licenses as easy and painless as possible.

The time to do this is now.

Vietnam has done it, and is profiting from it. With liberalizing economic reforms, Vietnam has raced from far behind to achieve a dominant economic position in the region, able to hold their own even against regional competition. Laos should profit by Vietnam’s example. Vietnam has become a major trading partner for the US, and is likely to enter the WTO before long.

The way was not easy, but the Vietnamese were willing to make some fundamental changes in their business environment. Laos is now facing this difficult path.

But the path must be taken. Laos is a least-developed country, with a burgeoning youthful population, underdeveloped health and education systems, little industry, and a business environment widely acknowledged to be among the worlds most difficult and challenging. This is the first, crucial order of business for Laos–to make the country attractive to investment and business.

The ultimate goal should be to integrate Laos into the world trading system, and to maximize what comparative advantage Laos has.

From the perspective of Vientiane the world trading system seems large and imposing, even threatening. It certainly is large and competitive, but it need not be threatening. The USG has offered assistance in this endeavor. NTR is part of that assistance–though it is not to be mistaken for a development program. This Technical Assistance and Training Facility is another part of that assistance.

NTR and the BTA represent trading opportunity, an opportunity of which Laos has yet to take advantage. I hope this gathering will be a springboard for those in Laos who know what they want to accomplish in the wider world.

The time for a step-by-step approach to economic development is over for Laos. Reforms across the board are long overdue. It’s time to leap into much wider trade relations and the well-charted territory of sound business environment–to leap with the intention of landing in the WTO. |July 26-28, 2006|