Laos: Background and U.S. Relations

Laos: Background and U.S. Relations

Order Code RS20931
Updated February 5, 2007
Laos: Background and U.S. Relations
Thomas Lum
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Summary
For several years, U.S.-Laos relations were dominated by the debate over whether
to grant normal trade relations status to Laos. On November 19, 2004, Congress
approved legislation that granted nondiscriminatory treatment to the products of Laos.
The Lao government’s alleged poor treatment of former CIA-trained Hmong guerillas
was a key factor in the debate and remains a 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.
Congressional Interests
For several years, U.S.-Laos relations were largely shaped by the U.S. debate over
whether to grant Laos normal trade relations (NTR) treatment. Since 1997, when the
United States and the Lao People’s Democratic Republic (LPDR) concluded a bilateral
trade agreement (BTA), legislation to extend NTR status to Laos faced opposition from
many Members of Congress concerned about human rights conditions in Laos and the
plight of the Hmong Lao minority.1 Some prominent Hmong-American organizations
strongly opposed enacting the trade agreement, although the Laotian-American
community as a whole reportedly was split on the issue.2 On November 19, 2004,
Congress passed the Miscellaneous Trade and Technical Corrections Act of 2004, which
extended nondiscriminatory treatment to the products of Laos (signed into law as P.L.
1 Before Laos was granted NTR status in November 2004, the LPDR was one of only three
countries (Cuba, Laos, and North Korea) that did not have normal trade relations with the United
States.
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
Community,” Associated Press, May 6, 2003.

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108-429). Congressional concerns about human rights conditions and former Hmong
guerillas in Laos have persisted, as reflected in legislation in the 109th Congress.3
Significant areas of bilateral
cooperation include the recovery of
Laos in Brief
Americans missing in action
(MIAs),4 counter-narcotics efforts,
Chief of State: President Gen. Choummaly
and the removal of land mines. In
Sayasone (2006)
October 2005, the United States
Prime Minister: Bouasone Bouphavanh (2006)
signed a cooperation agreement with
Population: 6.2 million
Lao officials in which it pledged
Per Capita Income: $390 or $1,900 (purchasing
power parity)
$3.4 million to the LPDR for
Life Expectancy: 55 years
controlling outbreaks of avian flu.
Literacy: 66%
Policy options for Congress include
Religious Affiliations: Buddhist — 60%;
pressuring the Lao government to
Animist — 30%; Christian — 1.5%.
accept international monitoring of
Ethnic Groups: Lao (lowland and upland) —
the resettlement of former Hmong
90%; Highland (Hmong and Yao) — 9%;
militia members and their
Vietnamese and Chinese (1%).
c o m m u n i t i es , ap p r o p r i a t i n g
Economic Support Funds (ESF) for
Sources: CIA World Factbook; Economist
Intelligence Unit.
judicial and economic reforms,
granting trade preferences to least
developed countries, including Laos,
and supporting International Military and Education Training (IMET) for English
language programs for Lao citizens involved in joint MIA accounting efforts.
U.S. foreign assistance to Laos remains relatively limited and channeled through
NGOs rather to the government of Laos due to strained bilateral relations and to the
country’s status as a Tier 3 country on the U.S. State Department’s 2006 Trafficking in
Persons Report.5 U.S. foreign assistance to Laos focuses on counter-narcotics and de-
mining programs. Total U.S. assistance to Laos in FY2006 was estimated to be $4.3
million compared to $4.5 million in 2005, reflecting an increase in de-mining funds offset
by a decrease in counter-narcotics assistance. Opium production and use reportedly
dropped dramatically between 1998 and 2005. However, the loss of the crop reportedly
has resulted in greater poverty in some areas, the possibility of farmers reverting to opium
production remains high, and the drug is still available via Burma and China.
3 On November 19, 2004, the Senate agreed to S.Res. 475, “A Resolution to Condemn Human
Rights Abuses in Laos.” Other related legislation in the 109th Congress, which did not make it
out of committee, would honor Lao and Hmong veterans from the Vietnam War (H.Res. 317) and
would amend the Hmong Veterans’ Naturalization Act of 2000 to eliminate application deadlines
(H.R. 3018).
4 Since 1985, the United States and Laos have conducted 102 joint field searches to locate U.S.
soldiers’ remains. “Laos Repatriates U.S. Soldiers’ Remains,” Organization of Asia-Pacific
News Agencies, December 5, 2006.
5 Under the Trafficking Victims Protection Act of 2000, countries in Tier 3 may face U.S.
sanctions or withholding of non-humanitarian assistance. See Department of State, Office to
Monitor and Combat Trafficking in Persons, Trafficking in Persons Report, 2006.

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Furthermore, methamphetamine use has risen among Lao youth.6 The LPDR also
receives assistance through the Leahy War Victims Fund ($917,000 in 2004-2007) to
assist victims of unexploded ordnance from the Vietnam War.7 The largest providers of
bilateral development assistance to Laos are Japan, Germany, Sweden, France, and
Australia.
Political and Economic Situation in Laos
Politics. The Lao People’s Revolutionary Party (LPRP), a secretive, Leninist
political organization, has sole authority over the government and society of Laos.
According to many experts, its hold on power remains firm. Despite the existence of
factions, the Party appears to be united against fundamental political change or
democratization.
Anti-government activities, such as public protests and bombings, have subsided
since the 1999-2004 period. During that time, university students and teachers staged two
demonstrations for democratic reforms. Rebel militias operating out of Thailand carried
out several attacks on Lao border posts. Anti-government groups detonated over a dozen
small bombs in the capital, Vientiane, and other cities, killing several people. Several
ambushes of highway buses and other vehicles, in which over 40 people were killed, were
reported. These isolated attacks, which
the Lao government either downplayed or
for which it blamed Hmong insurgents,
did not spark widespread anti-
government activity.
Foreign Relations. According to
some analysts, Vietnam and China are
competing to exploit the LPDR’s
strategic and economic assets. Vietnam’s
influence on Laos remains strong,
particularly in political and military
affairs and among the Revolutionary
Party’s old guard, although China’s
influence is growing. Since the late
1990s, China has provided Laos with
critical grants, low-interest loans,
technical assistance, foreign investment, and high profile development projects. Laos also
maintains important economic ties with Thailand, participates in regional organizations,
6 “More Work Needed in Opium Eradication,” Organization of Asia-Pacific News Agencies,
October 18, 2006; Songrit PhonNgern, “Laos Admits Increase in Use of Methamphetamine
Among Lao Use,” VOA, October 26, 2006.
7 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. Unexploded
ordnance causes an average of 120 deaths per year (and over 11,000 casualties, including nearly
4,000 deaths, since 1975). UXO also takes a significant economic toll on rural areas. United
Nations Development Program, Laos PDR E-Update (August 2006); Paul Wiseman, “30-Year-
Old Bombs Still Very Deadly in Laos,” USA Today, December 12, 2003.

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and depends upon Japan and European countries for foreign aid and trade. 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. 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 bilateral relations.
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 133rd on the United
Nations Development Program’s 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.

The Lao economy experienced a relatively brief period of collectivization (1975-
1985). In 1986, the LPDR government began a policy of economic reform — disbanding
collective farms, legalizing private ownership of land, allowing market forces to
determine prices, and encouraging private enterprise in all but some key industries and
sectors. Between 1988 and 2004, the country’s economy grew by a healthy 6% per year,
with the exception of 1997-1998 due to the Asian financial crisis. GDP grew by roughly
7% in 2005-2006 and is expected to expand by 6.7% in 2006-2007.8 Tourism has become
the country’s single biggest earner of foreign exchange. Hydroelectric power and textiles
account for over two-thirds of country’s exports. Coffee is also a major export item.
Chinese and Vietnamese companies have entered the mining sector, investing in the
exploration and manufacture of iron ore, cooper, zinc and other minerals and precious
metals. However, the country reportedly has made slow progress toward meeting
requirements under the U.S.-Laos BTA and in preparing for accession to the World Trade
Organization (WTO).
The LPDR’s principal trading partners are Thailand, Vietnam, and China. Vietnam,
China, and Australia are major investors. In 2005, Laos exported $4.1 million worth of
goods to the United States, about two-thirds of which were garments. In 2006, exports
to the United States were nearly double that of the previous year.9 By contrast, the EU,
the LPDR’s largest export market, imported $180 million worth of Laotian merchandise
in 2005 — mostly apparel and accessories. Laos is a member of the ASEAN Free Trade
Area (AFTA), implemented in 2003, and the ASEAN-China FTA (ACFTA), which is to
go into effect in 2010 for most member states.10 With the help of foreign investment, the
LPDR has built several large hydroelectric projects since the late 1990s. In 2005,
construction began on the $1.2 billion Nam Theun II Dam, with loans from the World
Bank and Asian Development Bank and investment from France and Thailand. Many
8 “Country Outlook: Laos,” The Economist Intelligence Unit (October 2006).
9 United States International Trade Commission.
10 Laos is required to meet tariff reduction goals by 2008 for the AFTA and 2015 for the ACFTA.
ASEAN’s newest and least developed members — Cambodia, Laos, Myanmar (Burma), and
Vietnam — are allowed additional time in which to reduce tariffs. ASEAN’s six original
members are Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand.

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environmental and human rights groups had opposed the project because of its potential
adverse impact on the environment and livelihoods and the displacement of roughly 5,000
people.
Human Rights Issues
Following the assumption of power by the Lao communists (Pathet Lao) 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 “reeducation centers.” Nearly all remaining
political prisoners reportedly were released by the late 1980s. According to the U.S.
Department of State, the LPDR’s human rights record remains “poor” with continued
serious abuses. 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 an unknown number
of political detainees, there were five known political prisoners as of March 2006.11
According to former prisoners, extremely harsh conditions and the use of torture in Lao
jails are common. The LPDR has signed but not ratified the U.N. International Covenants
on Civil and Political Rights (ICCPR) and Economic, Social, and Cultural Rights
(ICESC).
Religious Freedom. According to most experts, the LPDR does not engage in
widespread persecution of religious groups. However, non-mainstream religious
activities, particularly among ethnic minorities, often have experienced repression at the
local level. In 2006, the U.S. State Department reported that “in most parts of the country
officials generally respected the constitutionally guaranteed rights of members of most
faiths to worship;” however, in some rural areas, forced renunciations of faith, detentions,
and arrests of Christians, especially evangelicals, or destruction of their property have
occurred. In many cases, conflicts reportedly have arisen as officials and Christian groups
clashed over local resources, officials felt politically threatened, or they overzealously
applied communist orthodoxy.12 From 2000 through 2003, the United States Commission
on International Religious Freedom (USCIRF) recommended that the U.S. State
Department designate Laos as a “country of particular concern” (CPC) for systematic and
egregious violations of religious freedom.13 In 2004, the Lao government and the U.S.
Embassy in Vientiane conducted a joint seminar on religious freedom issues, and the
USCIRF upgraded Laos to its “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.
11 Department of State, Bureau of Democracy, Human Rights, and Labor, Country Reports on
Human Rights Practices - 2005: Laos (March 8, 2006).
12 U.S. Department of State, Bureau of Democracy, Human Rights, and Labor, International
Religious Freedom Report 2006 — Laos (September 15, 2006); U.S. Commission on
International Religious Freedom, Annual Report (May 2006).
13 Since the U.S. State Department began submitting annual reports to Congress on religious
freedom pursuant to Section 102(b) of the International Religious Freedom Act of 1998, it has
highlighted violations of religious freedom in Laos but has never designated the LPDR as a CPC.

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The Hmong Minority. 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 communists took power in 1975, Lao and Vietnamese
troops crushed most of the Hmong army.14 The Lao army then allegedly carried out a war
of attrition in the northern mountains against remaining Hmong militias and communities
that resisted cooperation with the government, and who currently number an estimated
one thousand to a few thousand persons divided into approximately one dozen groups.15
Some human rights organizations claim that the Lao military has committed atrocities
against the Hmong. In April 2006, 26 unarmed Hmong, most of them children, reportedly
were killed in a military attack, which the government denies16 LPDR officials state that
they have begun a process of voluntary resettlement of former Hmong insurgents and their
families. According to reports, in 2006, from several hundred to over one thousand
lightly-armed Hmong, many of them malnourished, surrendered to Lao authorities and
registered for resettlement. However, critics maintain that the Lao government has
allowed some foreign assistance for Hmong resettlement but has barred international
groups from monitoring the process to confirm that former militia members are not being
mistreated.17
Following the communist takeover, up to one-third of the Hmong minority, which
totaled 350,000 in 1974 by some estimates, fled to Thailand. Between 1975 and 1998,
nearly 130,000 Hmong refugees were admitted to the United States.18 In the 1990s, about
29,000 Hmong Lao were repatriated from camps in Thailand to Laos. In 2004-2006, the
United States accepted 15,000 Hmong refugees who were living at the Wat Tham Krabok
temple in central Thailand. In May 2005, Thailand closed its last camp for Hmong
refugees. In December 2006, Bangkok announced that it would deport about 6,500 recent
Hmong Lao migrants under the supervision of the United Nations High Commissioner
for Refugees (UNHCR).19 Some returning Hmong claim that they face persecution in
Laos. Many observers argue that although societal discrimination likely persists, the Lao
government does not engage in systematic persecution of the Hmong minority, and that
Hmong returnees have largely reintegrated into society.
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.
16 “U.S. Calls on Laos to Investigate Alleged Massacre of Hmong Civilians,” VOA News, June
2, 2006.
17 [http://www.factfinding.org/mission.html]; “Hill Tribe Surrenders to Laotian Government after
Three Decades,” The Vancouver Sun, June 6, 2005.
18 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. See also Donna
Kennedy, “Between Two Worlds,” The Press — Enterprise (Riverside, CA), July 9, 2000.
19 “Thailand to Deport over 6,500 Ethnic Hmongs to Laos,” BBC Monitoring Asia Pacific,
December 19, 2006.