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WEEKLY NEWSLETTER
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Laos
Index
Although the overall composition of trade did not
change
significantly throughout the 1980s and early 1990s, the
direction
of trade did change. Until 1989 major trading partners
were from
nonconvertible currency areas--mainly China, the Soviet
Union, and
Vietnam; Laos also traded with Bulgaria, Czechoslovakia,
Mongolia,
and Poland. From 1984--the first year with accurate
data--to 1988,
the nonconvertible currency area accounted for over half
of all
imports. Although the nonconvertible currency area never
had a
monopoly on exports (mostly because the largest export
until 1987,
hydroelectricity, was sold only to Thailand) it accounted
for over
half of the total trade volume through the end of the
decade.
However, following the easing of some trade restrictions
in 1988
and the improvement of relations with Thailand, including
a
reduction in the Thai list of 273 strategic goods in which
trade
has been prohibited, the pattern of trade began to shift
in favor
of the convertible currency area. Bilateral trade with
Thailand
increased 26 percent over 1987, and imports from the
nonconvertible
currency area dropped to about 35 percent of total
imports.
Eager to avoid Thai domination of its foreign trade,
Laos
sought to improve relations with China, and in December
1989, the
two countries signed their first bilateral agreement in a
decade,
including notes on cross-border trade. As a result, trade
with
China grew by roughly 40 percent in 1990. Despite the
positive
effect of this move on the growth of regional trade, new
agreements
with members of the former Soviet bloc work against the
trend. In
1990, at a Soviet-Lao Cooperation Commission meeting, it
was
determined that henceforth Soviet exports and loans would
be paid
for in convertible currencies at world prices. Previously,
payments
had been made in nonconvertible currencies and often on
barter
terms. Trade with Vietnam also shifted to a hard currency
basis. In
addition, the eventual disintegration of the Soviet Union
clinched
the shift in trade patterns toward the convertible
currency area:
in 1991 trade with the nonconvertible area accounted for
just 2 to
3 percent of total imports and total exports. The
convertible
currency area was more than able to make up for this loss:
trade
volume actually increased that year, although by only 4.3
percent.
Major trading partners from the convertible currency
area
include Britain, France, Japan, Malaysia, Singapore, and
Thailand.
Of these, Malaysia, Singapore, and Thailand accounted for
roughly
45 percent of imports from 1970 to 1978; their share
increased to
about 51 percent by 1987. Similarly, Japan's share of
imports from
the convertible currency area increased from 7 percent in
1978 to
19 percent in 1987. The United States accounted for less
than 1
percent of imports from the convertible currency area in
1987,
although the LPDR's first trade mission to the United
States in
1991 signaled its eagerness to expand trade. Three Asian
countries-
-Malaysia, Singapore, and Thailand--accounted for 65
percent of
Laos's exports to the convertible currency area in 1987,
up from 43
percent in 1978. This increase in regional trade made up
for the
decrease in the shares in exports from the United States
and Japan:
from 33 percent to 6 percent for Japan, and from 9 percent
to 4
percent for the United States. Thailand's removal of the
ban on
trade in strategic goods in late 1989 gave regional trade
another
boost.
Data as of July 1994
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