The Lao PDR’s duty-free access to the EU market

Duty free access to the EU market – incentivising Lao traders to export to the EU

The Lao PDR, as a Least Developed Country (LDC), currently benefits from duty-free, quota-free (DFQF) access to the EU market for all goods, except for ammunition and arms. This preferential access is provided under the EU’s Everything But Arms (EBA) scheme, which is one of the three categories of schemes provided by the EU under its ‘Generalised Scheme of Preferences’ (GSP scheme). The other two categories are the Standard GSP and the GSP+ scheme, which apply to developing countries and cover 66 percent of tariff lines. The EBA scheme, only available for LDCs, is the most generous of the three categories under the EU GSP scheme.

The Lao PDR’s current exports to the EU and potential to expand.
The Lao PDR has increasingly been making use of its EBA preferences over the past decade, with EBA exports from the Lao PDR increasing as evidenced in Figure 1 below. However, this growth appears to be moderate in comparison to its neighbours also benefitting from EBA access, namely Cambodia and Myanmar, as demonstrated in Figure 2 below. 
Despite the scope of market access as an EBA beneficiary, the Lao PDR’s exports to the EU currently account for only 5 percent of its total world exports. In comparison, all its neighbours have been able to make better use of the opportunities available in the EU market.
From the Lao traders already exporting to the EU, it is evident that good use is being made of the duty-free access through the EBA, with the the Lao PDR demonstrating a high EBA preference utilisation rate of over 95 percent over the past nine years. However, there is significant potential for the Lao PDR to further grow its exports to the EU and increase its export share to the EU market.
To do so, Lao traders can look into:
Growing existing exports in the textiles, garments, footwear and agricultural products; and Diversifying exports to cover other merchandise produced in the Lao PDR and already exported to other markets, for which reaching the EU market would be logistically feasible while the duty-free, quota-free access under the EU EBA scheme might create an advantage.
Effectively utilising the EU EBA scheme
The Lao PDR is scheduled to graduate from LDC status from 2026, following which the EBA scheme will be withdrawn, but only after a three-year transition period. This means that Lao exporters have duty-free, quota-free access to the large EU market for at least another eight years. This is an important opportunity for Lao exporters to make use of this preferential access and establish a presence in the European Union market.
Following its graduation, the Lao PDR can qualify for preferential access as a standard GSP or negotiate deeper preferences under the GSP+ scheme, through which it can benefit from reduced and/or duty-free access for 66 percent of tariff lines. If approached strategically, the Lao PDR can direct its efforts towards exporting products and establishing a presence in the EU market at this stage under the EBA scheme – which can then be brought forward to the GSP+ (or Standard GSP) scheme in the future, after the EBA entitlement ends.

For more information on the EU’s GSP scheme, the application of the EBA scheme for the Lao PDR, and why it is relevant for the Lao PDR’s exporters to make use of these duty-free benefits now – read the full article online on: https://dtp.moic.gov.la/home/eu-eba-business-guide/
This is the first article in a four-part series on the Lao PDR’s preferential access to the EU market under the EBA scheme, developed by the International Trade Centre (ITC) under the ARISE Plus Lao PDR project, funded by the European Union. For more details, follow the FB page for more details: https://www.facebook.com/groups/ariseplus/.
Refer also to the following websites for business guides developed under the project to support Laos’ exporters to understand the application of the EU GSP schemes, and guide on the technical and regulatory requirements that must be complied with in order to export to the EU under the EBA scheme: https://dtp.moic.gov.la/home/eu-eba-business-guide/

By Advertorial Desk
  (Latest Update November 16, 2021)