The US last week signed a bilateral trade and investment framework agreement (TIFA) with Laos, paving the way for the two countries to expand their trade and economic ties.

The TIFA initially creates a forum to engage on issues such as intellectual property, labour, environment, and capacity building; as well as to coordinate on multilateral and regional issues, including those related to the Association of Southeast Asian Nations (ASEAN), of which Laos is a member.   

Two-way goods trade between the US and Laos has grown five-fold in the past ten years to $70m, with apparel trade representing $9.1m of that value. However, apparel imports fell 9.6% in value terms last year, while volumes tumbled 18.8% to 1.995m SME (square metre equivalents), from 2.46m SME the year before.

The small, landlocked Southeast Asian nation is bordered by Vietnam, Thailand and Myanmar and, along with Cambodia, is likely to lose out in global supply chains once the 12-nation Trans-Pacific Partnership (TPP) trade deal – which includes the US and Vietnam – comes into effect.

As a LDC (least developed country) Laos benefits from low labour costs and duty-free access to the European Union (EU) under the Generalized System of Preferences (GSP).

But, as reported on just-style two years ago, while order books are full and overseas demand on the rise, problems finding and retaining workers could prove to be major stumbling block to Laos's ambitions to grow its garment exports.

Laos export potential stifled by worker shortages