Lao People's Democratic Republic

Laos is a beneficiary of the EU's "Everything but Arms" (EBA) scheme for least developed countries. With a per-capita income of $ 2.310 (2022), Laos is currently considered a lower-middle income country by the World Bank but has the ambition to reach middle-income economy status by 2026. Overall imports from Laos have been steadily increasing in recent years and reached € 420 million in 2022. Preferential imports in 2022 also increased compared to the previous year and amounted to €318 million.

What is the EBA?

The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements.

Lao People's Democratic Republic flag

At a glance: EBA beneficiaries' preferential imports to the EU

group

7,53 M

Population

account_balance
Communist State

Government

trending_up

2.70%

GDP Growth

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9.00%

Inflation

money

$ 15,47 B

GDP

13 -

Freedomhouse index

5 -

ITUC Global Rights Index

30.7 ^

Environmental Performance Index

Facts about Laos' economy

Landlocked Economy

Laos is a Southeast Asian, landlocked economy which is for the most part covered by mountains and forests. The country’s most important waterway is the Mekong river, which is also a significant source of the country’s hydropower.

Export Products

Laos' top export products are electrical energy and copper (refined and ores). Other export products include electrical machinery and equipment.

Trade Partners

Laos is highly dependent on two regional partners -neighbouring Thailand and China, which together account for about 74% of overall trade. Both countries are at the same time the most important export market as well as source of imports.

Economic Structure

Rice cultivation remains an important pillar of Laos' economy and the agricultural sector as whole employs about 70% of the workforce and contributes about 17% to the national income. Additionally, natural resources are of high importance. Laos possesses mineral resources like tin, gypsum, gold, granite, and limestone. Next to the mining sector, energy production, mainly focussing on hydro energy, is another important area of industrial activity. Other industries include food processing, sawmilling, production of building materials as well as the quickly growing garment sector.

Usage of EBA Preferences

About76% of total EU imports from Laos make use of EBA preferences. The preference utilisation rate, which represents the ratio of preferential imports to GSP eligible imports, currently stands at 95.3%.

Trade with the EU

Total trade with the EU summed up to € 553 million in 2022. With a share of 2.9 %, the EU only plays a minor part in Laos' overall trade relations.

Laos and the EU (2022)

Imports from Laos by product section

Imports from Laos over time (in € m)

LAOS AND THE EU’s GSP

Economic Impact

80%

The large majority of Laos' exports to the EU market are eligible for EBA preferences.

95.30%

Laos currently has a very high preference utilisation rate of 95.3%.

Preference utilisation and export diversification

Laos' imports to the EU

Preference Utilisation vs. total eligible imports

Laos belongs to the beneficiaries who take the most advantage of their preferential access to the European market across all three arrangements. Over the last eight years, Laos’ preference utilisation rate stood consistently above 90%. Following the introduction of the updated GSP regulation in 2014, eligible imports increased substantially. Almost 80% of imports from Laos are eligible for EBA preferences. Even though the country makes considerable use of the preferences, agricultural and machinery exporters could take even better advantage of the zero duties.

The largest product sections under EBA

The graph indicates that despite a variety of products are being imported from Laos, the export sectors remain heavily concentrated on apparel and garments. This sector accounts for 60% of total EU exports and 73% of exports under the EBA. Footwear exports rank second, followed by cereals and grains, fruits, nuts and vegetables, and plastic products.

SUSTAINABLE DEVELOPMENT

As a beneficiary of the EBA scheme, Laos' preferential access to the EU market is not conditional on the ratification of international conventions. Nonetheless, Laos has ratified all 7 fundamental UN human rights conventions and 5 out of 8 ILO conventions on the protection of labour standards. Laos shows strong commitment regarding environmental protection and has ratified 8 conventions in that area. Moreover, Laos has also ratified 4 conventions on good governance addressing inter alia drug trafficking and corruption.

Core international conventions on human rights and labour standards

Ratified

  • Convention on the Prevention and Punishment of the Crime of Genocide (1948)
  • International Convention on the Elimination of All Forms of Racial Discrimination (1969)
  • International Covenant on Civil and Political Rights (1976)
  • International Covenant on Economic Social and Cultural Rights (1976)
  • Convention on the Elimination of All Forms of Discrimination Against Women (1981)
  • Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
  • Convention on the Rights of the Child (1990)
  • Convention concerning Forced or Compulsory Labour, No 29 (1930)
  • Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
  • Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
  • Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
  • Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Additional Conventions

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
  • Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
  • Convention on Biological Diversity (1992)
  • The United Nations Framework Convention on Climate Change (1992)
  • Cartagena Protocol on Biosafety (2000)
  • Stockholm Convention on persistent Organic Pollutants (2001)
  • Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
  • United Nations Single Convention on Narcotic Drugs (1961)
  • United Nations Convention on Psychotropic Substances (1971)
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
  • United Nations Convention against Corruption (2004)

EU-Laos Bilateral Development Assistance

DG INTPA

Access all info about EU-Lao People's Democratic Republic relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/lao-peoples-democratic-republic_en

Opportunities in Lao People's Democratic Republic

  • Special Economic Zones (SEZ) support the development of domestic light industries
  • Further potential in expanding the agricultural sector, particularly with regards to organic vegetable and rice cultivation, fish production and animal husbandry
  • Large potential in the renewable energy sector, especially the generation of hydropower but also solar and wind energy

Contact points