[WPRT 105-5]
[From the U.S. Government Publishing Office]



105th Congress 
1st Session                 COMMITTEE PRINT                       WMCP:
                                                                  105-5
_______________________________________________________________________

                                     


                         SUBCOMMITTEE ON TRADE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS

                     U.S. HOUSE OF REPRESENTATIVES

                               __________

                            WRITTEN COMMENTS

                                   ON

 
 EXTENSION OF UNCONDITIONAL MOST-FAVORED-NATION TREATMENT TO MONGOLIA 
                                AND LAOS









                           AUGUST 28, 1997



    Printed for the use of the Committee on Ways and Means by its staff

                             ---------

                    U.S. GOVERNMENT PRINTING OFFICE
 42-689 CC                WASHINGTON : 1997

------------------------------------------------------------------------------
          For sale by the U.S. Government Printing Office
 Superintendent of Documents, Congressional Sales Office, Washington, DC 20402


                          BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois          CHARLES B. RANGEL, New York
BILL THOMAS, California            FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida         ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut      BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky              WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York             SANDER M. LEVIN, Michigan
WALLY HERGER, California           BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana             JIM McDERMOTT, Washington
DAVE CAMP, Michigan                GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota             JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                   RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                 MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington          WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia               JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                  XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania    KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada                
JON CHRISTENSEN, Nebraska          
WES WATKINS, Oklahoma              
J.D. HAYWORTH, Arizona             
JERRY WELLER, Illinois             
KENNY HULSHOF, Missouri            
                                   

                      A.L. Singleton, Chief of Staff
                    Janice Mays, Minority Chief Counsel

                             -----------

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman
BILL THOMAS, California            ROBERT T. MATSUI, California
E. CLAY SHAW, Jr., Florida         CHARLES B. RANGEL, New York
AMO HOUGHTON, New York             RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota             MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington          WILLIAM J. JEFFERSON, Louisiana
WALLY HERGER, California           
JIM NUSSLE, Iowa                   









Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are published in 
electronic form. The printed hearing record remains the official version. 
Because electronic submissions are used to prepare both printed and 
electronic versions of the hearing record, the process of converting 
between various electronic formats may introduce unintentional errors or 
omissions. Such occurrences are inherent in the current publication process 
and should diminish as the process is further refined. The electronic 
version of the hearing record does not include materials which were not 
submitted in an electronic format. These materials are kept on file in the 
official Committee records.


                                (ii)



                            C O N T E N T S

                               __________

                                                                   Page

                          COMMENTS ON MONGOLIA

Advisory of May 30, 1997, announcing request for written comments 
  on the extension of unconditional most-favored-nation treatment 
  to Mongolia....................................................     1

                                 ______

AMONG Foundation, Sioux Falls, SD, Jon Mostrom, letter...........     3
Asia-Pacific Council of American Chambers of Commerce, Tokyo, 
  Japan, Ken Richeson, letter....................................     4
Caterpillar Inc., S.R. Ramseyer, letter..........................     5
Forte Cashmere Company, Inc., Woonsocket, RI, James Coleman, 
  letter.........................................................     5
                               __________

                            COMMENTS ON LAOS

Advisory of June 19, 1997, announcing request for written 
  comments on the extension of unconditional most-favored-nation 
  treatment to Laos..............................................     6

                                 ______

Asia-Pacific Council of American Chambers of Commerce, Tokyo, 
  Japan, Ken Richeson, letter....................................     7
Chagnon, Jacquelyn, and Robert Rumpf, Warrensburg, MO, joint 
  statement......................................................     8
Lao People's Democratic Republic, His Excellency Hiem 
  Phommachanh, Ambassador, statement.............................    10
National League of Families of American Prisoners and Missing in 
  Southeast Asia, Ann Mills Griffiths, letter....................    13
Parnall, Theodore, University of New Mexico, letter..............    14
U.S.-ASEAN Business Council, statement...........................    15

                               (iii)


ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-6649
FOR IMMEDIATE RELEASE
May 30, 1997
No. TR-7

              Crane Announces Request for Written Comments
                   on the Extension of Unconditional
               Most-Favored-Nation Treatment to Mongolia

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee is requesting written public comment for the record from 
all parties interested in the extension of unconditional most-favored-
nation (MFN) treatment to the products of Mongolia.
      

BACKGROUND:

      
    At present, Mongolia's trade status is subject to the Jackson-Vanik 
amendment to Title IV of the Trade Act of 1974, the provision of law 
governing the MFN status of nonmarket economy countries ineligible for 
MFN treatment as of the enactment of the Trade Act. A country subject 
to the provision may gain MFN treatment only by complying with the 
freedom-of-emigration provisions under the Act and by concluding a 
bilateral commercial agreement with the United States providing for 
reciprocal nondiscriminatory treatment. The extension of MFN treatment 
is also subject to approval by the Congress. The Act also authorizes 
the President to waive the requirements for full compliance with 
respect to a particular country if he determines that such a waiver 
will substantially promote the freedom-of-emigration provisions and if 
he has received assurances that the emigration practices of the 
countries will lead substantially to the achievement of those 
objectives.
      
    On January 23, 1991, the President issued a waiver from the 
Jackson-Vanik freedom-of-emigration requirements for Mongolia. Later 
that year, the President signed into law a joint resolution, H.J.Res. 
281 (P.L. 102-157), approving the extension of MFN treatment for the 
products of Mongolia, pursuant to the bilateral commercial agreement, 
on November 13, 1991. Mongolia's MFN status continued in effect under 
Presidential waivers in subsequent years. On September 4, 1996, the 
President found Mongolia to be in full compliance with the requirements 
contained in the Jackson-Vanik amendment.
      
    After the extension of MFN treatment to the products of Mongolia, 
two-way trade between the United States and Mongolia rose from $13 
million in 1991 to $35 million in 1996. Last year, U.S. exports to 
Mongolia totaled $4 million while U.S. imports in return were valued at 
$31 million.
      
    In 1996, Mongolia became a member of the World Trade Organization 
(WTO). However, because the United States has not extended 
unconditional MFN treatment to Mongolia, the United States does not 
apply the WTO Agreements to that country.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit at least six (6) 
copies of their statement and a 3.5-inch diskette in WordPerfect or 
ASCII format, with their address and date of hearing noted, by the 
close of business, Friday, July 11, 1997, to A.L. Singleton, Chief of 
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
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record or any written comments in response to a request for written 
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but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be typed in single space on legal-size paper and may not exceed a total 
of 10 pages including attachments. At the same time written statements 
are submitted to the Committee, witnesses are now requested to submit 
their statements on a 3.5-inch diskette in WordPerfect or ASCII format.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, full address, a telephone number where the witness or the 
designated representative may be reached and a topical outline or 
summary of the comments and recommendations in the full statement. This 
supplemental sheet will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press 
and the public during the course of a public hearing may be submitted 
in other forms.

      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://www.house.gov/ways--means/''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                

                                           AMONG Foundation
Congressman Philip M. Crane
Chairman, Subcommittee on Trade
Committee on Ways and Means
US House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

    Dear Representative Crane:

    We would like to convey our strong support for granting Mongolia 
permanent Most Favored Nation (MFN) status this summer. Granting 
Mongolia permanent MFN status is fully in line with the growing 
relationship between our two countries. Mongolia has made significant 
strides toward democracy and needs aid as well as encouragement to 
remain on this path. Permanent MFN status would give the Mongol a sense 
progress in their quest for economic independence and liberty among the 
worlds free lands.
    There is no doubt Mongolia plays a vary small economic part in the 
worlds economy. They have grown from $13 million in trade with the US 
in 1991 to $35 million in 1996. Mongolia has been operating with MFN 
status under a presidential waiver since January 23, 1991. On September 
4, 1996, the President found Mongolia to be in full compliance with the 
requirements contained in the Jackson-Vanick amendment to Title IV of 
the Trade Act of 1974.
    In 1996, Mongolia became a member of the World Trade Organization 
(WTO). However, because the United States has not extended 
unconditional MFN treatment to Mongolia, the US does not apply the WTO 
Agreements to them.
    We at Among operate Eagle TV as a beacon of freedom from the old 
Soviet system to the newly liberated people now in a democratic society 
with a Capitalist economy. At present, Mongolia continues to suffer 
from an economy dominated for 70+ years by the Soviet Union. Unless the 
newly elected Democratic coalition can begin to show some economic 
success, it is possible, no probable, that the people will become 
disillusioned with the attempt at Capitalism and revert to the 
Socialistic ways of the past. Although you and I know this will never 
work, the vote for a return to this devastating economic approach would 
come from a people desperate for stability in an environment currently 
in turmoil.
    Mongols know they must suffer through many changes in a Socialistic 
economy going to a Capitalistic economy with the freedoms and 
opportunities therein. The people are stoically attempting to do so. In 
our opinion, the granting of MFN status would give their current 
attempts a signal that we are concerned, and appreciate the many 
strides they have taken toward true freedom.
            Sincerely,
                                                Jon Mostrom
                                       Director of Humanitarian Aid

                                

                            Asia-Pacific Council of
                              American Chambers of Commerce
                                                      July 11, 1997
The Honorable Philip M. Crane
Chairman, Trade Subcommittee
US House of Representatives
233 Cannon House Office Building
Washington, DC 20515

RE: MFN for Laos and Mongolia

    Dear Mr. Chairman:

    The Asia-Pacific Council of American Chambers of Commerce (APCAC) 
membership includes the individual American Chambers of Commerce in the 
region. Combined, they represent more than 40,000 business leaders and 
6,500 companies in the world's most dynamic region.
    APCAC strongly supports the principle of free and fair trade in the 
region and has been an advocate for the extension of MFN trading status 
to China, Vietnam, and other countries in the region. We have done so 
because MFN represents the ``normal trading relationship'' between 
countries and advances the interests of the American business community 
in promoting the expansion of trade and investment worldwide.
    Although the presence of American business in Laos and Mongolia is 
now limited, we believe that extension of MFN status to these countries 
is desirable. Not only will it be consistent with the principle of 
promoting trade through the establishment of normal trading relations, 
it will also serve to encourage US companies to establish themselves in 
Asian markets.
    For these reasons, we welcome your support and that of your 
subcommittee in extending MFN treatment to both Laos and Mongolia.
            Sincerely,
                                               Ken Richeson
                                                           Chairman

                                

                                           Caterpillar Inc.
                                                      July 11, 1997
The Honorable Philip M. Crane
Chairman, Subcommittee on Trade
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

    Dear Representative Crane:

    I am writing to advise you of Caterpillar Inc.'s support for 
extension of unconditional most-favored-nation (MFN) treatment for 
Mongolia.
    A positive U.S. trade relationship with Mongolia is important to 
Caterpillar. Our sales in that country include U.S. exports involved in 
construction, mining, and power generation. Our business will continue 
to grow with the market, which certainly would be hurt without 
extension of U.S. MFN.
    Caterpillar previously provided direct sales and product support in 
Mongolia and maintained an office, parts and service tool warehouse, 
and service facility to support the growing fleet of our machines and 
engines there. In 1996 we assigned an independent dealership, which is 
affiliated with one of our most successful U.S. dealers, to represent 
us in Mongolia. Caterpillar's worldwide network of dealers is the 
backbone of our distribution and product support system, and our 
assigning an independent dealer in Mongolia marked our recognition of 
the growing importance of this market.
    Caterpillar products are doing work that helps improve the standard 
of living in Mongolia. Further contributions are made not only through 
employment opportunities provided by our dealer, but also through 
training programs that enhance the skills of dealer people and 
customers alike. At the same time, our exports to Mongolia support jobs 
in this country. This win-win relationship, we believe, can continue to 
grow if the United States extends unconditional most-favored-nation 
treatment to Mongolia.
            Sincerely,
                                             S. R. Ramseyer
                                                     Vice President

vy/le

                                

                               Forte Cashmere Company, Inc.
                                                       July 8, 1997
The Honorable Philip M. Crane
Chairman, Subcommittee on Trade of the
Committee on Ways and Means
U.S. House of Representatives
Washington, DC

    Dear Representative Crane,

    I am responding to the request for written comments on the 
extension of unconditional most-favored-nation treatment to Mongolia. I 
understand that on September 4, 1996, President Clinton found Mongolia 
to be in full compliance with the requirements contained in the 
Jackson-Vanik amendment. As a businessman who has done business with 
Mongolia since the 1970's, I can say first hand that I have witnessed 
the ongoing transition from the communist system to a country with a 
growing democracy and a market oriented economy. We are partners in a 
privately owned joint venture factory in Mongolia and I can honestly 
say the Mongolian Government has demonstrated a strong desire to 
cooperate with U.S. companies seeking to do business there. I believe 
that granting unconditional MFN status to Mongolia will strengthen the 
ties between the Mongolian and the U.S. and will also allow U.S. 
companies to avail themselves of the protections provided under the 
rules of GATT and the WTO.
    I appreciate your consideration of our views and if you or any 
member of the committee or your staff would like to discuss this issue 
further, I will be happy to do so.
            Sincerely
                                              James Coleman
                                                          President

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON TRADE

FOR IMMEDIATE RELEASE                    CONTACT: (202) 225-6649
June 19, 1997
No. TR-9

              Crane Announces Request for Written Comments
                   on the Extension of Unconditional
                 Most-Favored-Nation Treatment to Laos

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee is requesting written public comment for the record from 
all parties interested in the extension of unconditional most-favored-
nation (MFN) treatment to the products of Laos.
      

BACKGROUND:

      
    At present, Laos is listed in general note 3(b) of the Harmonized 
Tariff Schedule (HTS) among those countries that are denied MFN tariff 
treatment. As a result, Laotian products are subject to the higher 
tariff rates in column 2 of the HTS, generally as enacted by the Tariff 
Act of 1930. Legislation is required in order for MFN tariff treatment 
to be extended to the products of Laos.
      
    In 1996, U.S. imports from Laos were valued at $16,317,000 while 
U.S. exports to Laos totaled $3,380,000. Currently, the Administration 
is negotiating a bilateral trade agreement with Laos for the purpose of 
gaining reciprocal market access.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record should submit at least six (6) single space 
legal size copies of their statement, along with an IBM compatible 3.5-
inch diskette in ASCII DOS Text format only, with their name, address 
and comments date noted on label, by the close of business, Friday, 
July 11, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and 
Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be typed in single space on legal-size paper and may not exceed a total 
of 10 pages including attachments. At the same time written statements 
are submitted to the Committee, witnesses are now requested to submit 
their statements on an IBM compatible 3.5-inch diskette in ASCII DOS 
Text format.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, full address, a telephone number where the witness or the 
designated representative may be reached and a topical outline or 
summary of the comments and recommendations in the full statement. This 
supplemental sheet will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press 
and the public during the course of a public hearing may be submitted 
in other forms.

      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://www.house.gov/ways--means/''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                

                            Asia-Pacific Council of
                              American Chambers of Commerce
                                                      July 11, 1997
The Honorable Philip M. Crane
Chairman, Trade Subcommittee
US House of Representatives
233 Cannon House Office Building
Washington, DC 20515

RE: MFN for Laos and Mongolia

    Dear Mr. Chairman:

    The Asia-Pacific Council of American Chambers of Commerce (APCAC) 
membership includes the individual American Chambers of Commerce in the 
region. Combined, they represent more than 40,000 business leaders and 
6,500 companies in the world's most dynamic region.
    APCAC strongly supports the principle of free and fair trade in the 
region and has been an advocate for the extension of MFN trading status 
to China, Vietnam, and other countries in the region. We have done so 
because MFN represents the ``normal trading relationship'' between 
countries and advances the interests of the American business community 
in promoting the expansion of trade and investment worldwide.
    Although the presence of American business in Laos and Mongolia is 
now limited, we believe that extension of MFN status to these countries 
is desirable. Not only will it be consistent with the principle of 
promoting trade through the establishment of normal trading relations, 
it will also serve to encourage US companies to establish themselves in 
Asian markets.
    For these reasons, we welcome your support and that of your 
subcommittee in extending MFN treatment to both Laos and Mongolia.
            Sincerely,
                                               Ken Richeson
                                                           Chairman

                                

Statement of Jacquelyn Chagnon and Roger Rumpf

                          MFN for the Lao PDR

    Recommendations for approval for MFN to Lao PDR because it 
would:
     Help Transition Economy to a Free Market Economy
     Foster the Building of a Democratic Nation State
     Benefit Women and Minorities
     Increase Trade Markets which Relieve Poverty and 
Reduce Aid
    As Americans who have lived and worked in the Lao PDR for 
ten years, we appreciate this opportunity to comment on the 
Extension of Unconditional Most-Favored-Nation Treatment to the 
Lao PDR. The following points come out of our experience as 
International Development Specialists, mostly in the Lao PDR. 
In that capacity we have followed Lao social and economic 
development while working for the World Bank, UNICEF, the UN 
Development Program, the Asian Development Bank, and numerous 
private voluntary agencies. However, these remarks are our 
personal opinions, not those of the above institutions.

                The Transition to a Free Market Economy

    Since our first encounter in the Lao PDR in 1978, we have 
witnessed an exciting transition from a centralized closed 
economy to a decentralized free market one. Commendably, the 
country has made peaceful change, while increasing its annual 
growth rates, which recently average around 7 percent.
    Nevertheless, as pointed out by numerous respected 
international institutions,1 this transition towards 
an open market system has brought to the surface many critical 
needs. As industry began to develop in the early 1990's, the 
Lao PDR had to create for the first time labor, investment and 
property laws and their enforcement mechanisms. Furthermore, as 
the government downsized its civil service, it faced rising 
unemployment and underemployment problems, especially among 
youth. To address this, the Lao Government last year called 
upon their ministries and international assistance agencies to 
find viable solutions which would link education, vocational 
training and the job market.
---------------------------------------------------------------------------
    \1\ World Bank, 1995. Lao PDR Social Development Assessment and 
Strategy, Washington. Also, Asian Development Bank, 1996. Country 
Operational Strategy Study for the Lao People's Democratic Republic, 
Manila. United Nations Development Program 1995. Development 
Cooperation, Vientiane.
---------------------------------------------------------------------------
    It is now clear that the current Lao Government, led by a 
Communist Party, is striving to create a viable, growth-
oriented free market economy. As such, it behooves the US to 
facilitate that approach by offering MFN status to them. To do 
otherwise contradicts the very underpinnings of free market 
philosophy to which we aspire. In other words, it makes common 
sense.

                   Building a Democratic Nation State

    The transition to a free market economy is slowly loosening 
government controls, encouraging popular demands, and promoting 
democractic processes. Unlike dictatorships and oligarchies, 
the Lao Government has shown itself to be flexible and 
receptive to suggestions of change. Furthermore, it has moved 
rather quickly to develop appropriate mechanisms to facilitate 
free market developments. It has set forth its Constitution and 
a host of laws. It has also begun the arduous tasks of creating 
enforcement and jurisprudence systems to protect citizens' 
rights. 2
---------------------------------------------------------------------------
    \2\ Ibid.
---------------------------------------------------------------------------
    This is not to say that the course of building a nation and 
developing a free market economy has been flawless or easy. In 
many ways, the problems faced by the Lao PDR ressemble those of 
our nation in its early formation: broadening avenues for 
foreign trade; introducing industrialization into an agrarian 
society; unifying and stabilizing its financial instruments; 
transforming an unskilled, poorly educated populace into a 
skilled, marketable labor force; establishing and enforcing new 
systems of jurisprudence; and developing costly communication 
and transportation links over rough and sparsely populated 
terrain. Such efforts succeed only after much trial and error, 
as our own history taught us.
    It is here that the US can emphasize that with the 
privilege of MFN status comes the responsibility to enhance 
democratic processes, protect human rights and the environment, 
and an establish ethnical business atmosphere. If the Lao PDR 
fails to maintain those standards, the US will have the right 
to mention infractions to the Lao PDR, and if necessary suspend 
the privilege. At this time, we have littler diplomatic 
leverage to speak about such matters.
    For example, if in the future labor rights in the Lao PDR 
are not being protected, despite legal mandates, the US 
Government will be able to urge corrections. Our assumption is 
that the Lao PDR will likely take serious note of US concerns 
as it desires strongly MFN status. In such a case, the US 
Government, labor unions and non-governmental agencies could 
also offer assistance to the Lao Government with its 
development of ethnical business practices and labor protection 
mechanisms. Without the MFN privilege, the Lao Government would 
take less heed of such comments.

                   MFN Benefits Women and Minorities

    Usually, we associate MFN privileges with large industrial 
operations. However, in the Lao PDR, where skilled labor is 
still limited and much of the economy remains at the informal 
rural level, women and minorities have much to gain from the 
opening up of trade to the US.
    Women in the Lao PDR make up the largest segment of rural-
to-urban traders and informal and formal business 
entrepreneurs.\3\ They are labelled the ``economists of the 
family.'' There are numerous accounts of where village women, 
especially among the minorities (Hmong, Thai Dam, Thai Deng, 
Leu and Khmu) have boosted their family's income by selling 
their highly-prized crafts, such hand-woven textiles, baskets, 
silver jewelry and applique quilts. Many of these articles find 
their way to US markets, through informal channels set up 
largely by the Lao refugee community. \4\ If these talented, 
poor women can access the US formal trade market, which MFN 
will surely stimulate, they could raise their family's annual 
earnings substantially.
---------------------------------------------------------------------------
    \3\ UNICEF, 1996. Children and their Families in the Lao People's 
Democratic Republic, Vientiane.
    \4\ Cha, Dia and Jacquelyn Chagnon, 1993. `Farmer, War-wife, 
Refugee, Repatriate: A Needs Assessment of Women Repatriating to the 
Lao PDR', Washington.
---------------------------------------------------------------------------
    In the Lao PDR, that means a family could raise its income 
above the average of $350 per annum enough so that it can send 
children to school, get assess to medical assistance and and 
improve its housing. Here, MFN could promote the build-up of 
the middle class, a cornerstone for the development of 
democracy and free enterprise, which our government espouses. 
At the same time, it could convert what is largely an 
underground market into a legitimate full-scale formal trading 
between two nations.
    Besides raising incomes, there is an added bonus to opening 
US trade markets for women. Most minority women are the 
planters of opium, but not always the direct beneficiaries of 
their labors. Our personal research has found that most of the 
female opium growers would prefer to grow other crops (fruit, 
peanuts, corn, potatoes) or make their unique appliqued 
textiles, which fetch a handsome price in the US. \5\ If 
lucrative US markets were more easily available, these women 
would likely forsake their laborious opium growing tasks for 
other income-generating ventures. MFN would clearly complement 
the crop substitution efforts of the US Drug Enforcement Agency 
program in the Lao PDR.
---------------------------------------------------------------------------
    \5\ Ibid. See also UNICEF, op cit.
---------------------------------------------------------------------------

       Increased Trade Markets Can Relieve Poverty and Reduce Aid

    Many conservatives argue that increased trade opportunities 
rather than aid handouts will benefit the poorest nations, and 
thereby relieve poverty. From our experience, that is a 
reasonable argument if the government involved protects human 
rights, opens credit and capital access equitably, and provides 
equal education and medical care to all.
    Using that context, MFN status for the Lao PDR fits well 
into both conservative and liberal thinking. By opening up 
trade markets with the US, production, both formal and 
informal, are scaled up, and opportunities for jobs increase. 
At the same time, MFN's annual review can insure that humans 
rights and equal opportunity are maintain for all.
    The Lao PDR is one of the poorest of the poor nations. Yet, 
if it uses its natural resources well, its potentials for 
development and growth, especially since its reforms in the 
late 1980's, seem good. Manufacturing in Lao PDR is already 
absorbing the growing numbers of off-farm laborers, especially 
among the young. A small amount of trade with the US in 
textiles, gems, jewelry, wood furniture, and maybe oil or gas, 
could eventually reduce the Lao PDR's need for international 
assistance.
    In conclusion, we believe it is in the mutual interest of 
both the Lao PDR and the United States for the latter to extend 
MFN to the former.

                                

                    [BY PERMISSION OF THE CHAIRMAN]

Statement of H.E. Hiem PHOMMACHANH, Ambassador of the Lao People's 
Democratic Republic to the United States of America, Canada and Mexico

    On behalf of the Government and the people of the Lao 
People's Democratic Republic, I would like to express 
appreciation at being given the opportunity to submit comments 
to the U.S. House of Representatives Ways and Means 
Subcommittee on Trade regarding the extension of unconditional 
Most-Favored-Nation (MFN) status to Laos. We applaud the 
efforts of the United States to actively engage a relationship 
with Laos on a political and trade related basis. We are a 
nation that has struggled many years remaining one of the 
world's poorest countries, but a nation that is proud of its 
accomplishments and its plans for further achievements in the 
near future.
    The Lao PDR has set on a course to become a member of the 
international community. We have undertaken reforms and changes 
to move toward a market oriented society, to an educated 
populace, to an empowered citizenry, and to elevate the 
economic status of all Laotians. Our commitment to reaching our 
reform goals is evidenced by the recent enactment of our 
Constitution, establishing a New Economic Mechanism, 
developing, approving and implementing Socioeconomic plans, 
updating our systems and bringing them into conformity with 
requirements to join the Association of Southeast Asian Nations 
(ASEAN) and in actively negotiating with the United States to 
establish an agreement on trade based on the principal of 
reciprocal MFN trading status.
    All these changes are moving the Lao PDR in the desired 
direction. However, we believe it is essential that the global 
community recognize our efforts and assist us in becoming a 
more market oriented society. We believe the granting of MFN 
status to the Lao PDR by the United States is fundamental to 
further economic development and investment in Laos. Such 
trading status would encourage industrial development in our 
country and provide confidence to businesses in Laos.
    In order to provide you with confidence in the changes 
occurring in the Lao PDR and to support your decision to extend 
unconditional MFN status to Laos, I am including a brief 
overview of the most recent achievements of the Government of 
the Lao PDR in this statement.
    In 1986, the Fourth Party Congress adopted a package of 
reforms intended to transform its economic management from a 
central command system to one which is market-based and 
characterized by decentralized economic decision making, with 
the private sector playing an active role. The new economic 
management system emerging from the implementation of the 
economic reform package is referred to as the New Economic 
Mechanism (NEM) in the Lao People's Democratic Republic (PDR). 
Adoption of the NEM was confirmed by the Fifth Party Congress 
in 1991. Under the NEM, we have drastically reduced inflation, 
rationalized and stabilized the exchange rate, committed to 
privatize or make autonomous all the state owned enterprises 
except for those located in ``strategic sectors,'' eliminated 
consumption subsidies for public sector employees and have 
reformed the banking system. One example of our success is in 
the stabilization of the Lao kip vis-a-vis the U.S. dollar.
    The Constitution of the Lao PDR, adopted in August 1991, 
provides for the separation of legislative, executive and 
judicial powers. The people, with whom the political power 
ultimately resides according to the Constitution, exercise such 
power through an elected National Assembly. The members of the 
National Assembly were first directly elected by the people in 
December 1992 for a five-year term which began in 1993. Many 
human rights are also guaranteed in our Constitution
    The Lao PDR government has also restructured. This 
restructuring has affected the administrative arrangements for 
economic, financial and development management. Part of this 
reorganization resulted in the creation of the Committee for 
Planning and Cooperation (CPC) which, according to Prime 
Minister Decree No. 132 (issued August 30, 1993), is a high 
level Central Supervisory Council and also serves as the chief 
of staff for the Central Committee and the Government for the 
coordination, research, implementation and supervision of work 
on socioeconomic development, international cooperation and 
foreign investment. In February 1993, at the first session of 
the National Assembly, a framework outlining the country's 
development planning up to the year 2000 was presented. The 
actual plan was completed approximately two years later.
    These plans set forth the goals and objectives of the 
Government of the Lao PDR on an annual basis. Part of our 
success can be measured by examining the results of the plan as 
implemented for the 1995-1996 period.
    During the 1995-1996 year, the GDP increased an estimated 
7.5% compared with 1994-1995 period. The plan as approved and 
implemented by the Government had projected an increase in GDP 
of 7-8%. The population in mid-1996 totaled approximately 4.729 
million (an increase of 2.4% compared with 1995) and the 
average GDP per capita was about US$ 370/person. In the first 6 
months of 1996, 24 foreign investment projects were licensed at 
a registered capital of approximately US$ 1.200 million, of 
which 72.2% was invested in hydropower projects, 8.5% in hotel-
tourism, 6.6% in telecommunication and transport, 4.4% in 
mining and 8.3% in other sectors.
    During 1995-1996, the provinces selected their respective 
priority areas and detailed development projects, totaling 63 
focal areas in this year. Currently, over 800 projects are 
presently under implementation. Among such projects, over 70% 
are focusing on the development of infrastructure and 30% 
invest in the re-orientation of the population shifting from 
cultivation. As we move from an agrarian society to a market-
oriented society we must provide training and skills to our 
people in order for them to benefit from the changing society.
    On a regional basis, as outlined in the initial five year 
plan for each region, several projects have been implemented 
which include: major road improvement and construction 
projects, irrigation projects, hydropower projects, wood 
processing plants and other infrastructure development 
projects, which has allowed the regional economic structures to 
take form along the direction of linkage between agriculture-
forestry, processing industry and services.
    The value of circulated retail goods has increased 
approximately 27%. External trade still suffers from a high 
deficit, however, a portion of this is due to imported 
machinery and equipment for foreign investment projects. Such a 
deficit may impact on our financial-monetary stability in the 
near future, but will be beneficial in the long term for the 
establishment of firm national economic base.
    The 1995-1996 plan emphasized education. During this period 
education has been further improved in terms of quality, namely 
in formal education, which has increased the rate of enrollment 
among the children of 6-10 years age group at the primary level 
by 73%. Illiteracy was eradicated for 17,358 persons--of which 
9,533 were women in the 15-40 year-old age group. Non-formal 
education such as providing vocational training was introduced 
in combination with illiteracy eradication.
    During the 1995-1996 period, significant achievements and 
success were accomplished, however, there are still some 
weaknesses and pending issues in certain areas which must be 
addressed. Laos is therefore committed to following the 
socioeconomic plans as originally set forth through the year 
2000.
    Most recently, the Government of Laos has undertaken and 
adopted the ``1996-1997 Socioeconomic Development Plan'' to 
help build up our people and to actively participate in the 
global trading market. General tasks in the 1996-97 annual 
plans include the initial development of the Fifth Party 
Congress Resolution and implementation of the 5 year state 
plan, by: further ensuring consistent socioeconomic growth; 
widely expanding economic structures and market-oriented 
production; further upgrading the quality of material and 
cultural life for civil servants and the pluri-ethnic people; 
establishing a firm position and base to progress into the 21st 
century and national industrialization and modernization after 
the year 2000.
    To achieve the tasks and general guidelines the Government 
has outlined a number of 1996-1997 plan's targets as follows:
     Actively ensure financial-monetary stability by 
firmly promoting revenues and strictly managing expenditures.
     Actively manage import-export and circulation of 
goods.
     Firmly promote training, create a professional 
labor force, technical workers for supply to major programs in 
socioeconomic development and strive to create new employment 
for the Lao labor.

                      Sectoral Development Plans:

Food

    Food production must be firmly improved and ensured for 
poor families, namely in remote ethnic areas. The main emphasis 
will be placed on further implementing the priority programs of 
the Government which are: food production, commercial 
production and shifting cultivation stabilization.

 Communication, Transport, Post and Construction

    In 1996-1997, the Lao PDR pans call for the further 
improvement and building of national roads to the North of the 
country. Preparation will be made for the construction of 
strategic bridges and roads to create a strong communications 
network. We also plan to continue to build the navigation 
route, namely in the northern section of the country to meet 
acceptable standards of the international community. We will 
improve and build ports to accelerate transport services. 
Additionally, we will upgrade and improve air transport 
services to meet international standards. Our plan calls for 
the development of cargo and passenger air transport to 
neighboring and regional countries.
    The 1996-1997 State Planning Committee plan also calls for:
     Further improvement to guarantee and accelerate 
postal services--both local and outgoing. At the same time, 
concentrate on expanding postal network at the district level 
and in priority socioeconomic areas, expanding telephone 
centers and continuing to install the microwave system 
according to adopted plans.
     Bring solutions to sewerage systems, roads and 
construction in Vientiane Municipality and other main urban 
areas in view of progressively meeting the standards. In 1996-
1997, the state will make a total investment of Kip 89.47 
billion in the sector of communication, transport, post and 
construction, of which Kip 23.55 billion of domestic funds and 
Kip 65.92 billion of foreign funds.

Trade

    The Lao PDR plans to increase the supply of basic necessary 
consumption goods to the population. We are also preparing for 
accession to the ASEAN and eventually to the World Trade 
Organization (WTO). We also plan to improve our cooperation 
mechanisms with trading partners. For example, as previously 
mentioned, negotiating bilateral agreements with key global 
trading entities such as the trade agreement currently being 
negotiated between the United States and the Lao PDR.

Socio-cultural sector

    In the 1996-1997 year, further emphasis will be placed in 
three main areas: (1) on compulsory primary education to 
increase the primary school enrollment by 5% and net enrollment 
by 75%; (2) on the eradication of illiteracy among 60 thousand 
people within the target group (15-40 years of age); (3) on 
upgrading educational attainment at the primary level for 
30,000 people and to lower secondary level for 7,000 civil 
servants, and to upper secondary level for 2,000 persons.

Information and culture

    Our plans include the continued improvement and upgrading 
of quality in radio broadcast, television, press and 
newspapers, magazines to ensure a coverage of 100% throughout 
the country.

Labor and social welfare

    As the Lao PDR moves toward a more market-oriented economy 
we must improve the salary system, pension, policies towards 
public and private employees and improve the social security 
system in the Lao PDR. We plan to build housing for handicapped 
persons and a number of civil servants.
    In general, during the 1996-1997 socioeconomic plan we will 
strive to elevate the standard of living for our people, to 
open our economy, to become a global competitor, and to expand 
our efforts at becoming a market-oriented society. We will 
increase cooperation with ASEAN countries in view of preparing 
for membership and continue to cooperate with international 
organizations and international financial institutions.
    The challenges we face are not too great to be overcome and 
conquered. Our plans included many opportunities for American 
businesses. We rely on those who have gone before us in 
developing a sound economy in the global environment. We look 
to the United States for its assistance not only through 
monetary contributions and training, but through the granting 
of MFN status to the Lao PDR. Such status will enable us to 
represent our country on an even playing field with all of the 
U.S. trading partners except for five other countries. Our 
economic reforms and success will become a model for other 
nations in the region to emulate. The action of granting 
unconditional MFN to Laos will send a message to the people of 
Laos that the United States supports them in their endeavors to 
become a strong nation. It will put Laos on an even playing 
field with the rest of the world vis-a-vis trade with the 
United States. The active engagement of the Lao PDR will 
encourage the move toward a market-oriented economy. We believe 
that Laos is on the right path. We also believe that the United 
States should treat Laos with the same trading privileges it 
grants to almost all other nations. On behalf of my government 
and its people, I strongly encourage the U.S. Congress to 
expeditiously seek the granting of unconditional MFN to the Lao 
PDR.

Washington, DC., July 11, 1997

Hiem Phommachanh
Ambassador

                                

  National League of Families of American Prisoners
                              and Missing in Southeast Asia
                                                      June 27, 1997
The Honorable Philip M. Crane
Chairman, Subcommittee on Trade
Committee on Ways and Means
1104 Longworth Building
Washington, DC 20515

    Dear Mr. Chairman:

    I noted with interest that you have tabled the legislation 
regarding granting MFN to Laos, requesting comment from interested 
parties. The League's members have, perhaps, the greatest personal 
interest of any Americans in the economic and political relationship 
between the United States and Laos. As you know, we have sought and 
continue to seek the fullest possible accounting for the 455 Americans 
still missing in Laos from the Vietnam War.
    A League delegation in which I participated recently returned from 
a trip to Vietnam, Laos, and Cambodia. In Laos, we met with the Deputy 
Prime Minister, the Minister and Vice Minister of Foreign Affairs, and 
the Vice Ministers of Defense and Interior. In our view, the Lao 
Government is working hard within its limited capacity to support joint 
field operations. In relative terms, accounting results are greater 
from joint operations in Laos than in Vietnam.
    We urged Lao officials to develop a means of generating information 
through a viable oral history program and to locate and provide 
records, though believed by the U.S. to be limited in number and scope. 
The Lao need to work diligently to address these areas from which 
answers that would help account for our missing relatives are likely. 
We are pleased that U.S. Ambassador to Laos Wendy Chamberlin is 
actively engaged and encouraging Lao officials to pursue solutions to 
these more difficult and sensitive areas.
    The League has long been on record in support of further economic 
steps with the Lao, including MFN. We were also out front in supporting 
the upgrade to full Ambassador some years ago. Although there is room 
for improvement, U.S. efforts in Laos are encouraging.
    On the contrary, we oppose MFN for Vietnam until there is clear 
evidence that the Politburo has made the decision to re by the U.S. to 
be available.
    I have enclosed a copy of my testimony before the International 
Relations Committee's Subcommittee on Asian and Pacific Affairs, 
chaired by Representative Doug Bereuter on June 18th. It provides 
clearly stated reasons why the League has objected to the Clinton's 
Administration's rationale for each political and economic step taken 
to improve relations with Vietnam. In principle, we do not oppose 
improved political relations; however, we know that President Clinton 
and the bureaucracy which serves him has not used available leverage to 
achieve the stated priority objective of the fullest possible 
accounting for America's POW/MIAs.
    In view of your own long history with this issue, I was confident 
that you would appreciate receiving the League's views. As you proceed 
with deliberations on these questions, I hope that you will call if you 
have need for clarification. If you decide that a hearing is needed, I 
would be pleased to provide testimony regarding the League's positions 
on MFN for Laos and Vietnam.
    Best wishes to you, Arlene and your family.
            Respectfully,
                                        Ann Mills Griffiths
                                                 Executive Director

                                

Congressman Philip M. Crane
Chairman, Subcommittee on Trade
Committee on Ways and Means
c/o A.L. Singleton
Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515

Subject: Extension of Unconditional Most-Favored Nation Treatment for 
        Laos

    Dear Congressman Crane and Members of the Subcommittee:

    I am writing in support of extending unconditional most-favored 
nation (MFN) treatment to the products of Laos.
    I served as Resident Legal Advisor for the Harvard Law School/World 
Bank/UNDP Law Reform Project in Laos between January, 1991 and June, 
1992. The significant efforts on the part of many talented and 
dedicated Lao officials that I witnessed during my stay are strong 
arguments in favor of our government's extension of MFN treatment. 
During my eighteen-month assignment, our project worked closely with 
members of the Lao executive, judicial and legislative branches of 
government. The project worked under the supervision of the Lao 
government's New Mechanism Committee which, beginning in 1986, took 
significant measures to decentralize control of the economy. The 
Committee's goals included deregulation of the price system, free 
market exchange rate policy, state-enterprise self financing, increased 
freedom for the private sector; trade liberalization and tax and 
banking reform. In an effort to reach these goals, the Lao government 
instituted an impressive number of laws and decrees designed to begin 
developing a commercial legal system. For example, the (then) Supreme 
People's Assembly in 1988 enacted a foreign investment law. Over the 
next two years, Laos adopted a number of new laws dealing with: e.g., 
Contracts, Inheritance, Banks, Accounting, Civil Procedure and 
Property. Also, in November, 1989 and June, 1990 the Assembly President 
made official declarations of the country's need to strengthen its 
legal system.
    The level of discourse about the role of law was significantly 
raised by the diligent efforts of many Lao jurists during the early 
years of the project's activities: Approximately fifteen Lao jurists 
participated in foreign training missions to the United States; the 
government's arbitration/mediation authority received support from both 
the project and the Asia Foundation and successfully mediated more than 
fifty disputes. Even more significantly, the Lao government adopted a 
new constitution in August, 1991, which was the first constitution to 
be adopted since 1975. The constitution clearly established the 
supremacy of law in Laos, meaning that all private citizens, and 
government officials must act pursuant to the law. The particular 
sources and categories of laws, decrees and regulations were also 
clarified in the 1991 constitution. The Supreme People's Assembly was 
renamed the ``National Assembly'' and was vested with the power to make 
law and supervise the effective implementation of the constitution.
    Laos is a small country in what has been a difficult part of the 
world. Its leaders have worked hard to avoid the more extreme tragedy 
and suffering experienced by its neighbors. That they have managed 
their economy, politics and neighborly relationships with such care, 
and emerged with an increasing emphasis on law, warrants our respect. 
The unconditional extension of most favored nation treatment would be a 
good indication that we are sensitive to their efforts.
            Very Truly Yours,
                                           Theodore Parnall
                                                   Professor of Law
                                           University of New Mexico

                                

Comments from the U.S.-ASEAN Business Council pertaining to MFN status 
for the Lao Peoples' Democratic Republic

    The Lao Peoples' Democratic Republic began its economic 
liberalization program in 1986 which over the last decade has 
included simplifying its tariff structure, allowing the 
national currency to float, and establishing a foreign 
investment management committee. In addition, the country has 
taken steps toward political opening by adopting a new 
constitution in 1991 and establishing a national assembly in 
1992 to which several non-party representatives have been 
elected.
    In 1995, the country enjoyed GDP growth of 7.5 percent, 
although more than half of the population is still considered 
below the poverty line. The industrial sector of the country is 
performing most strongly, expanding over 11 percent. Expansion 
is concentrated in garment manufacturing, light industry, and 
handicrafts. The Lao economy has benefited from the migration 
of low-skill manufacturing jobs from neighboring Thailand and 
from South Korea. Approximately 90 percent of the 600 state-
owned enterprises in Laos have been privatized. Lao issued an 
IPR protection law in 1995
    Although still low compared to its neighbors, the level of 
Lao trade has increased steadily over the last few years. In 
1995, the country's exports totaled $348 million with almost 80 
percent of that amount comprised of electricity sales. During 
the same year, Laos imported $587 million.

                           U.S.-Lao Relations

    In recent years, the United States and the Lao Peoples' 
Democratic Republic have worked hard to build a mutually 
beneficial relationship. In addition to strong cooperation on 
POW/MIA issues and anti-drug trafficking exercises, the 
government of Laos has been forthcoming in the ongoing 
bilateral trade agreement negotiations with the United States. 
It has taken major steps to open the country's economy to 
foreign trade and investment and has been making the necessary 
economic changes to prepare for its admission to ASEAN. The Lao 
PDR signed an agreement with the U.S. Overseas Private 
Investment Corporation in 1995.
    In return, Laos seeks normal trading relations with the 
United States. Extension of MFN status would enable Laos to 
better develop its economy and strengthen the liberalization 
taking place. In addition, the granting of MFN status for Laos 
would signal the United States' continuing interest in the 
ASEAN grouping. Once Laos joins ASEAN, it will be part of a 
regional grouping with 500 million people, a $1 trillion GDP 
and two way trade with the US over $250 billion by the year 
2000.
    Currently, U.S.-Lao trade is at a relatively low level, 
with less than $20 million in U.S. exports and imports to and 
from the country in 1996 combined. Granting of MFN status would 
support expansion of such trade and would likely encourage 
others to take a closer look at ASEAN's newest member. Because 
the country is at such a different level of economic 
development than the United States, few U.S. industries would 
be immediately affected by the move. Conversely, as Laos 
becomes integrated with its regional neighbors, the country 
will provide a strong market for U.S. goods. MFN status for 
Laos will likely also contribute to higher standards of living 
for the Lao people. In short, the granting Laos MFN status 
would be a win-win situation for all concerned.
    The U.S.-ASEAN Business Council fully supports the granting 
of MFN status to the Lao PDR and will work to promote further 
normalization of commercial relations between our two 
countries.