Order Code RS20931
Updated October 19, 2005
CRS Report for Congress
Received through the CRS Web
Laos: Background and U.S. Relations
Thomas Lum
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Summary
On November 19, 2004, Congress passed the Miscellaneous Trade and Technical
Corrections Act of 2004 (P.L. 108-429), which granted nondiscriminatory treatment to
the products of Laos after several years of debate. Laos was one of only three countries
in the world that did not have normal trade relations (NTR) with the United States. The
Lao government’s treatment of former CIA-trained Hmong guerillas remains a key
problem for U.S. policy toward Laos and point of contention between the two countries.
The United States and Laos cooperate in important areas, including recovering remains
of Americans missing in action (MIAs) from the Vietnam War, counter-narcotics and
de-mining efforts. Laos successfully hosted the 10th Summit of the Association of
Southeast Asian Nations (ASEAN) in November 2004. In 2005, the United States
Commission on International Religious Freedom removed Laos from its watch list,
citing improvements in human rights conditions for religious followers.
Congressional Interests
Since 1997, when the United States and the Lao People’s Democratic Republic
(LPDR) concluded a bilateral trade agreement, legislation to extend normal trade relations
(NTR) treatment to the LPDR faced opposition from many Members of Congress
concerned about human rights conditions in Laos and the plight of the Hmong minority.
Until November 2004, when Laos was granted NTR status, the LPDR was one of only
three countries that did not have normal trade relations with the United States, and the
only country with normal diplomatic relations that was denied NTR treatment.1 Some
prominent Hmong-American organizations opposed enacting the trade agreement,
although the Laotian-American community as a whole was reportedly split on the issue.2
1 In 2004, the three countries that did not have NTR status with the United States were Cuba,
Laos, and North Korea.
2 Vaudine England, “Laotians Are Divided over U.S. Trade,” Wall Street Journal, September 1,
2004; Daniel Lovering, “Former Enemies Wage Battle over U.S. Trade with Laos,” Associated
Press
, January 12, 2004; Frederic J. Frommer, “Free Trade Deal for Laos Splits Hmong
(continued...)
Congressional Research Service ˜ The Library of Congress

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On November 19, 2004, Congress passed the Miscellaneous Trade and Technical
Corrections Act of 2004 (P.L. 108-429), which extended nondiscriminatory treatment to
the products of Laos. The President signed the bill into law on December 3, 2004. On
November 19, 2004, the Senate also agreed to S.Res. 475, “A Resolution to Condemn
Human Rights Abuses in Laos.”
U.S. foreign assistance to Laos
Laos in Brief
focuses on de-mining and counter-
narcotics programs3 as well as joint
Chief of State: President Gen. Khamtai
efforts to account for Americans
Siphandon
missing in action (MIAs) from the
Population: 6.2 million
Vietnam War. Total U.S. assistance
Per Capita Income: $390 or $1,900 (purchasing
to Laos in FY2005 is estimated to be
power parity)
Life Expectancy: 55 years
$4.5 million compared to $3.9
Literacy: 66%
million in 2004, with most of the
Religious Affiliations: Buddhist — 60%;
increase going to de-mining
Animist — 30%; Christian — 1.5%.
activities.4 In 2003, the largest
Ethnic Groups: Lao (lowland and upland) —
providers of bilateral development
90%; Highland (Hmong and Yao) — 9%;
assistance were Japan ($86 million),
Vietnamese and Chinese (1%).
Sweden ($22.7 million), France
Major Industries: hydroelectric power, tin and
($18.5 million), and Germany ($15.9
gypsum mining, timber, agricultural processing,
million).5
coffee production, garments, and construction.
Largest Export Markets: Vietnam, Thailand,
France
Political and Economic
Sources: CIA World Factbook; Economist
Situation in Laos
Intelligence Unit.
Political Situation. The Lao
People’s Revolutionary Party (LPRP), a secretive, Leninist political organization, has sole
authority over the government and society of Laos. Despite the existence of factions, the
Party appears to be united against fundamental political change or democratization. The
main factions in the LPRP reportedly represent economic reformers, economic
2 (...continued)
Community,” Associated Press, May 6, 2003.
3 Poppy production in Laos, once the world’s third-largest producer of opium, reportedly has
declined by 73% in the past five years (some experts estimate that Laos is now the 5th largest
source of the drug). However, the often forced reduction in opium farming reportedly has
resulted in a marked increase in poverty, malnutrition, and related health problems among former
poppy farmers. See “Laos Politics: Vicious Triangle,” EIU Newswire, August 15, 2005.
4 The United States dropped more than 2.5 million tons of ordnance on Laos during the Vietnam
War, more than the total used against Germany and Japan in World War II. An estimated 10
million unexploded submunitions or “bomblets” (UXO) remain scattered across the country,
killing approximately 200 Laotians per year (an estimated 5,700 killed and 5,600 injured since
1973). UXO also takes a significant economic toll on rural areas. Paul Wiseman, “30-Year-Old
Bombs Still Very Deadly in Laos,” USA Today, December 12, 2003; Ellen Nakashima, “U.S.
Search Teams Scour Old Battlefields: More than 1,800 Are Still Missing in Vietnam Alone,”
Washington Post, May 4, 2004.
5 The Economist Intelligence Unit, “Country Profile 2005.”

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conservatives, the military, regional and provincial interests, pro-China and pro-Vietnam
leanings, and younger and older cohorts.
Since 1999, the LPRP has faced intermittent, sometimes violent incidents of political
opposition. In October 1999 and November 2000, university students and teachers staged
two demonstrations for democratic reforms, resulting in dozens of arrests. Since 2000,
rebel militias operating out of Thailand have staged several attacks on Lao border posts
and anti-government groups have detonated over a dozen small bombs in the capital,
Vientiane, and other cities, killing several people. At least two groups, the Free
Democratic People’s Government of Laos and the Committee for Independence and
Democracy in Laos, reportedly have claimed responsibility for the explosions. Between
February and August 2003, seven ambushes of highway buses and other vehicles were
reported, in which over 40 people were killed, including two Swiss tourists. The Lao
government has both attempted to downplay the attacks and occasionally blamed Hmong
insurgents. So far, these isolated attacks have not sparked widespread anti-government
activity and, according to analysts, the regime’s hold on power remains firm.
Foreign Relations. The LPDR’s socialist government makes the country a natural
friend of Vietnam and China. However, Laos maintains important economic ties with
Thailand, participates in regional organizations, and depends upon European countries
and Japan for foreign aid and trade. Vientiane has made some efforts to heed U.S.
pressure on human rights, particularly regarding religious freedom, and welcomed NTR
status as a step toward better U.S.-Lao relations.
Vietnam’s influence remains strong, particularly in political and military affairs,
although China’s influence is growing. China provided the LPDR with critical economic
assistance during the Asian financial crisis of the late 1990s. In addition, in the past
several years, China has extended foreign aid in the form of grants, low-interest loans,
technical assistance, investment, and agreements between Laos and Chinese firms for high
profile development projects, such as a rubber plantation, cement factory, electricity
network, fiber optic cable, university construction, and monumental park in Vientiane.
In a display of growing maturity as a member of the Association of Southeast Asian
Nations (since 1997), Laos successfully hosted the 10th ASEAN Summit in November
2004 and the ASEAN Ministerial Meeting in July 2005.
Economic Conditions and Trade. Laos is a small, mountainous, landlocked
country bordering Burma, Cambodia, China, Thailand, and Vietnam. One of the poorest
countries in Asia, with a per capita annual income of $390, Laos ranks 133th on the United
Nations Development Program Human Development Index, which measures life
expectancy, education, literacy, and gross domestic product (GDP) per capita. The
country’s road and communications systems are underdeveloped. Subsistence agriculture
accounts for about half of GDP and involves over 80% of the country’s labor force.
About 18% of GDP comes from manufacturing.6

In 1986, the LPDR government began a policy of economic reform: disbanding
collective farms, allowing market forces to determine prices, legalizing private ownership
of land, and encouraging private enterprise in all but some key industries and sectors.
6 Bertil Lintner, “Stalled Reforms,” Far Eastern Economic Review, November 7, 2002.

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Between 1988 and 1996, the country’s economy grew by 7% per year. It faltered in 1997
due to effects of the Asian financial crisis, a drop in exports to Thailand, and the re-
imposition of central controls. The economy began to stabilize in 2000. Real growth
averaged 6.1% in 1999-2003. GDP grew by 5.5% in 2004 and is expected to expand by
6.5% in 2005-2006.7 Tourism is expanding, with nearly 900,000 foreign visitors in 2004,
although security concerns have hindered growth.
The ASEAN Free Trade Area (AFTA), enacted in 2003, has lowered tariffs on most
goods traded among the six original members.8 The four least developed ASEAN
countries (Vietnam, Laos, Myanmar [Burma], and Cambodia) are granted longer time
frames in which to implement full tariff reductions. The LPDR’s principal trading
partners are Thailand, Vietnam, and China.9 Vietnam, China, and Australia are major
investors. The European Union (EU) is an important market for Lao textiles and
garments. In 2004, Laos exported $3.3 million worth of goods to the United States, down
from $4.1 million in 2003 — mostly apparel, wood products, and coffee.10 By contrast,
the EU imported $164 million worth of Laotian merchandise in 2004 — mostly apparel
and accessories — up from $135 million the previous year. In October 2004, Laos
formally began the accession process to join the World Trade Organization.
With the help of foreign investment, the LPDR has built several large dams since the
late 1990s and has begun exporting electricity to Thailand and Vietnam. In 2005, the
World Bank and Asian Development Bank approved up to $270 million and $120 million
in loans and risk guarantees, respectively, for the 1,070 megawatt Nam Theun 2
Hydropower Project, following nearly a decade of negotiations. Many international
environmental and human rights groups opposed the project because of its potential
adverse impact on ecosystems and livelihoods and the displacement of roughly 5,000
people. The sale of hydroelectric power already makes up nearly one-third of the
country’s exports, followed closely by garments.
Human Rights Issues
Following the communist assumption of power in 1975, the Lao government dealt
harshly with its perceived political opponents, including Royal Lao Government and
Army officials, the royal family, and U.S.-trained Hmong guerrilla fighters, sending
30,000-50,000 of them to “seminar camps” (also called “reeducation centers”). Nearly
all remaining political prisoners reportedly were released by the late 1980s.11 According
7 “Country Outlook: Laos,” The Economist Intelligence Unit (May 2005).
8 ASEAN’s six original members were Brunei, Indonesia, Malaysia, Philippines, Singapore, and
Thailand.
9 Some observers estimate that unofficial trade and investment between Laos and China is much
higher than official figures.
10 United States International Trade Commission.
11 Over 300,000 Laotians, mostly Hmong, fled Laos after the communist takeover, mostly to
Thailand and then to other countries. Mike Fahey, “Laotians Face Death If Sent Home, Activist
Says,” Madison Capital Times, December 16, 1999.

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to the U.S. Department of State, the LPDR’s human rights record remains “poor.”12 The
government does not allow the independent organization of political, religious, or labor
groups, severely curtails free speech and association, controls the country’s judiciary, and
regularly denies due process. In addition to hundreds of short- and long-term political
detainees, there were eight known political prisoners in 2004. According to former
prisoners, extremely harsh conditions and the use of torture in Laotian jails are common.
Religious Freedom. The U.S. State Department characterized Laos as a
“totalitarian or authoritarian regime” for six consecutive years (1999-2004). It never
designated Laos as a “country of particular concern” (CPC) for systemic and egregious
violations of religious freedom, despite the United States Commission on International
Religious Freedom’s (USCIRF) recommendation that Laos be placed on the CPC list
from 2000 through 2003, mostly for persecution of the Christian minority. In February
2004, the Lao government and the U.S. Embassy in Laos jointly conducted a seminar on
religious freedom issues. In 2004, the USCIRF did not recommend that Laos be
designated as a CPC, and instead placed the country on a “watch list.” In 2005, the
USCIRF removed Laos from the watch list, citing the re-opening of most of its closed
churches, release of almost all religious prisoners, and official denunciation of campaigns
to force renunciations of faith. Many violations of religious freedom have occurred in
rural areas, where local government officials reportedly suppressed Christian activities for
allegedly having foreign influences, disrupting local customs and practices, competing for
village resources, or challenging local authority.13
The Hmong Minority. Many observers have argued that although societal
discrimination likely persists, the LPDR government does not currently engage in
systematic persecution of the Hmong minority. However, others have attested that the
Lao government has committed atrocities against defiant Hmong communities living in
remote mountain areas. During the Vietnam War, the United States Central Intelligence
Agency (CIA) trained and armed an estimated 60,000 Hmong guerillas to fight the
Vietcong. After the Lao communist government took power in 1975, Lao and
Vietnamese troops crushed most of the Hmong army.14 The Lao government allegedly
has carried out a 25-year war of attrition against remaining Hmong militias and their
families, who number an estimated several thousand persons divided into about 20
groups. The LPDR has been accused of conducting military campaigns against Hmong
hill tribes, starving them, and forcing them to surrender.15 LPDR officials claim that the
government has begun a process of voluntary resettlement of former Hmong rebels. The
12 Department of State, Bureau of Democracy, Human Rights, and Labor, Country Reports on
Human Rights Practices 2004 — Laos
(February 28, 2005).
13 U.S. Department of State, Bureau of Democracy, Human Rights, and Labor, International
Religious Freedom Report 2004 — Laos
(September 15, 2004); U.S. Commission on
International Religious Freedom, Annual Report 2004 (May 2005).
14 Jane Hamilton-Merritt, Tragic Mountains: The Hmong, the Americans, and the Secret Wars
for Laos, 1942-1992
(Bloomington: Indiana University Press, 1992). Hamilton-Merritt suggests
that as many as 30,000 Hmong soldiers and civilians died as a result of their involvement in the
Vietnam War.
15 Andrew Perrin, “Welcome to the Jungle,” Time Asia, May 5, 2003; Amnesty International
Public Statement, No. 224, September 13, 2004.

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California-based Fact Finding Commission, which has attempted to gather information
and publicize the plight of the Hmong, reported that the Lao government has blocked
international assistance and human rights monitoring for those who have surrendered.16
Although U.S. officials in Laos have been unable to independently verify claims of severe
human rights abuses, the lack of openness and cooperation by the LPDR regarding the
Hmong has been a key stumbling block to better U.S.-Lao relations.
Between 1975 and 1998, nearly 130,000 Hmong refugees were admitted to the
United States.17 In the 1990s, about 29,000 Hmong were repatriated from camps in
Thailand to Laos. Some returning Hmong claimed that they faced discrimination or lack
of economic opportunities, while United Nations human rights observers found that the
former refugees were “successfully reintegrated.”18 An estimated 60,000 Hmong remain
in Thailand; many have integrated into local Thai society. In January 2004, the Bush
Administration announced that the approximately 15,000 Hmong living at the Wat Tham
Krabok temple in central Thailand would be eligible to apply for resettlement in the
United States. In May 2005, Thailand closed its last camp for Hmong refugees, and
reportedly threatened to deport about 6,500 Hmong back to Laos.
Avian Flu
An outbreak of avian influenza (H5N1) in poultry was confirmed in Laos in early
2004, but as of October 2005, the LPDR has reported no cases in humans, according to
the World Health Organization. Some experts argue that there is an urgent need for
foreign health organizations to focus upon and assist Laos, given its proximity to other
countries with the disease and weak government capacity. The central and local
governments face severe limitations in collecting and disseminating information,
monitoring avian populations, and conducting laboratory analysis to confirm cases of the
virus. In addition, according to a U.S. government assessment team that visited Laos, the
country’s health care system would be “quickly overwhelmed” in the event of a large-
scale human outbreak.19 Laos is expected to receive a portion of the $25 million that the
U.S. Congress appropriated in May 2005 for the prevention and control of bird flu in
Asia.20
16 [http://www.factfinding.org/mission.html]; “Hill Tribe Surrenders to Laotian Government after
Three Decades,” The Vancouver Sun, June 6, 2005.
17 According to some estimates, the U.S. Hmong -Lao population totals approximately 250,000
persons and constitutes slightly over half of the U.S. Laotian population.
18 Department of State, Bureau of Democracy, Human Rights, and Labor, “Country Reports on
Human Rights Practices 2003 — Laos,” February 25, 2004.
19 “WHO Urges Laos to Prepare for Deadly Human Version of Bird Flu,” Agence France Presse,
August 27, 2005; “U.S. Government Emergency Response to Avian Influenza: A Plan for
Vietnam, Laos and Cambodia: Report from Country Planning Visits,” July 2005.
20 Emergency Supplemental Appropriations Act, 2005 (P.L. 109-13).