China is the second most important export destination of Laos, and export growth to that market has far outpaced exports to Thailand, the leading export destination. One of the major drivers of this growth is the comprehensive ASEAN-China Free Trade Agreement (ACFTA) under which Lao benefits in trade of goods and services and in investment measures.

The ACFTA has a separate list for products on the normal and sensitive tracks. The Most Favored Nation (MFN) tariffs for products on the normal track are being progressively eliminated by 2015 on about 90% of all products. For the remaining products, tariffs are being eliminated based on a schedule for products on a so-called Sensitive List and another one called the Highly Sensitive List covering rice, sugar, plant oils, among others.

This guide shows how to determine (a) whether there are benefits to using ACFTA, and (b) whether a particular product being exported from Laos is eligible for a preferential rate. It is important to check these two conditions to avoid spending time and money in applying for the preferential rate if a product is already subject to a low customs duty outside ACFTA.