Lao PDR is obligated under ASEAN Trade in Goods Agreement (ATIGA) to reduce import tariff from ASEAN countries to zero. At present, the zero import tariff covers 89% of the total products (9,558 items) and that will be increased to 96% in 2018. In other words, the import tariff of 9,206 items out of 9558 items will be reduced to zero and to import those products Form D will be used. Those 352 items compose of agricultural raw materials 265 items will maintain import tariff but not exceeding 5%, and 87 items lies under GE List including war equipment, airplane, opium extract, alcohol and others.
According to Foreign Trade Policy Department, Lao PDR had begun to reduce import tariffs on goods since 2008 and now import tariffs on many products including vehicles have been reduced to zero. Previously, import tariffs on cars stood at 40%.
Import tariff is trade barrier that is imposed by countries as part of efforts to protect domestic products. Many export countries find it impossible to export their goods to countries which impose high tariffs on imported goods.
In case of Lao PDR, it considers tariffs as a major source of income. In the past, 11% of state income was sourced from import tariffs. The abolishment of the import tariff on cars is meant to ensure that car makers in ASEAN nations can export their vehicles to Lao PDR without any tariff charges. Today, Lao PDR imposes consumption taxes so that it can generate enough revenue to replace the lost income from the tariffs.
Source: Vientiane Times Newspaper
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