BKK Post / November 28, 1997

LAOS
New man in Brussels has unique expertise

    A former commerce minister has been named ambassador to 
Belgium. Ask anybody in the textile business and they'll 
tell you its not a coincidence.

By Saritdet Marukatat

    In a surprise move, Laos has underlined the urgency of 
its need to boost ties with the European Union by shifting 
Sompadith Vorasane from commerce minister to become the 
country's first ambassador to Belgium.
    Mr Sompadith will become a key figure in running Laos' 
trade policy and as the ambassador of Brussels he will be 
given full licence to call the shots in regard to Laos' ties 
with the EU, diplomatic and Laotian sources said.
    When Laos opens its embassy in Brussels next year, the 
former commerce minister is prepared to bring unparalleled 
qualifications to the job due to his experience in 
international trade negotiations and his frequent contact 
with the EU, Laotian sources said. "He is sharpening 
diplomatic skills at the foreign ministry to prepare for the 
new post," one source said.
    Mr Sompadith was succeeded by former Xiengkhouang 
governor Phoumy Thipphavone in September in a decision which 
also saw Siaosavat Savaengsueksa, formerly a senior finance 
ministry official, promoted to deputy commerce minister.
    The move would have no effect on trade policy previously 
handled by Mr Sompadith, the source said, adding that the 
main reason for the change would be the boosting of 
contacts, particularly in commerce. However another source 
noted that the price hike in Laos was a primary reason for 
the change.
    The EU is a principal market for Laotian exports, which 
are dominated by textiles, as nearly 80 percent of all total 
goods end up in European countries.
    As a less developed country, Laos has enjoyed free 
access to the 15-member EU under the Generalised Scheme of 
Preferences.
    The scheme brought about a sharp rise in textiles 
exports from US$19.25 million in 1991 to $59.4 million in 
1995.
    But Brussels temporarily suspended the special treatment 
for Laotian garments from late 1995 to July 1997 after 
concluding that most raw materials used were not locally 
produced.
    The suspension sent shock waves through the industry as 
several factories were forced to shut down operations. After 
nearly two years of negotiations, a compromise was reached 
and the EU resumed the trade privileges in August this year. 
The contract expires in 1998.
    The compromise allows producers in Laos to use materials 
from all members of the Association of Southeast Asian 
Nations (Asean) expect Burma, the South Asian Association 
for Regional Cooperation (Saarc) and countries holding 
special ties with the EU under the Lome Convention, which 
allows compensation for countries deemed to have 
insufficient local supplies.
    The problem prompted the Laotian government to consider 
the need for a skilled negotiator in Europe to work closely 
with the trade bloc. The previous lack of experience in 
international trade negotiation was seen as a key factor 
prolonging the talks with Brussels, Laotian sources and 
diplomats in Vientiane said.
    Close consultations are crucial due to the EU's 
requirement that Laos make an effort to use more locally-
produced materials in its garments before Brussels 
reconsiders whether the GSP will be renewed after the 
current term is expires next year, the sources said.
    Laos will also need closer cooperation with the EU, said 
the sources, if it is to build on a number of proposed 
cooperation projects as stipulated in a bilateral agreement 
which the two sides signed last April.