Implications of WTO Accession for Selected Domestic Industries of Laos

The study examines the implications of Lao PDR’s WTO accessions on the domestic cement, steel bar and brewery industries with a view to developing recommendations on how to concurrently manage the Government’s domestic strategic objectives with the country’s effective involvement in the global economy. Calculations of total protection (TE) to the industries shows that beer receives the highest level of protection (110%), followed by steel bars (17%) and cement (16%). The actual level of effective rate of protection (ERP) with the existing tariffs and TEs of the non-tariff measures is 62 percent for cement and 50 percent for steel bars. Lowering the existing tariffs to zero on tradable inputs in the cement and steel bar industries would increase the effective rate of protection (ERP) on those industries to 84 percent for cement and 67 percent for steel bars. It would also create greater transparency, streamline administrative and bureaucratic procedures, and facilitate business practices in the country. As part of the WTO negotiations, Lao PDR is likely to undertake specific reforms of its trade regime covering tariff and non-tariff measures impacting on the selected industries covered by this study. The study examines the transformation of non-tariff measures to ad valorem tariff equivalents, and assessed the impact of alternative tariff reform strategies on the beer, cement and steel bar industries in terms of various performance indicators, including those related to the industry, government tax revenue and employment effects.