The Lao PDR is focusing on regional and international economic integration in order to promote trade and enable Lao products to be part of a global value chain which will contribute to the economic growth and facilitate the graduation of the country from Least Developed Country status by 2020. At the same time, the Lao PDR also prioritizes an implementation of trade facilitation activities, aiming to reduce unnecessary trade barriers and create a favorable environment for trading. A free flow of goods results from liberalization of trade with a higher level of competition meaning that it is likely to cause an injury to a domestic industry inevitably. With regard to this situation, the Lao PDR developed the Law on Safeguards as a legal instrument to protect the domestic industry which aims at strengthening the domestic industry and improving competitiveness with imports under the international economic integration requirements. The Lao PDR also needs to have this law in place in order to fulfill its obligations of World Trade Organization (WTO) accession.

      The Law on Safeguards was endorsed during the 4^th ordinary session of the National Assembly’s 8^th Legislature on 30 October 2017, and it consists of 7 Chapters and 53 Articles. An application of a safeguard measure under this law is not deemed as a trade barrier measure and shall not be contrary to trade liberalization because it is the measure which WTO allows its members to use as an instrument to protect the domestic industry temporarily. This legal instrument stipulated principles and disciplinary actions on the application of the safeguard measure under the specific terms and conditions which does not mean that upon a receipt of any requests by the domestic industry, the safeguard measure under this Law shall be immediately applied.

            The safeguard measure can take the form of either increase of tariff rate or quantitative restriction which shall only be applied when there is a substantial increase of imports, and that has caused a serious injury, or a threat thereof to domestic-like products. The measure shall not be applied permanently, but for a certain period of time in order to strengthen and enable the domestic industry to compete with imports. WTO designated its member countries with a different duration of application of such measure based on conditions and level of development of each country. For the Lao PDR, a maximum duration of the application of the measure is ten years, and shall not be used up ten years in a row, for which includes an initial period of four years and it can be extended two times, the first extension of not exceeding four years and for aperiod up to two years for the second time. The measure shall be extended only after an assessement is carried out and found that there is still a need for continued application of the measure and with a view that such measure shall be progressively liberalized.

      In summary, by having this particular Law, the domestic and foreign investors will be protected at a certain level and have confidence in investing and operating business in the Lao PDR. Furthermore, it will also create favorable conditions for development of products manufactured in the Lao PDR, enable them to compete with imported goods and participate in regional and international markets which will ultimately contribute to stability and promotion of the economic growth of the country.

      For more information please contact: Multilateral Trade Division, Department of Foreign Trade Policy, Ministry of Industry and Commerce. Tel: 021 450065; Fax: 021 450066.