Cambodia looks to secure multiple FTA deals

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The Royal Cambodian Government is looking to secure a number of FTA (Free Trade Agreements) with China, India and Korea.

Cambodia – China FTA

Cambodia China FTA 2020
Photo Credit: Khmer Times (Cambodia’s PM Hun Sen and China’s President Xi Jinping)

The Free Trade Agreement between Cambodia and China is scheduled to be signed on August 12th 2020 in Beijing, China, with Prime Minister Hun Sen scheduled to lead a delegation of high ranking officials to sign the Cambodia-China Free Trade Agreement (FTA).

In June 2020, “technical working groups from the two countries completed the third round of FTA negotiations, solving the remaining issues in the agreement text and approved in principle the market access of goods and services” reports Bilaterals.Org

Some of the potential benefits for Cambodia include:

  • Increased exports from Cambodia are expected to grow. The average annual growth rate has been 20 per cent from 2017 – 2019.
  • Increased Foreign direct investment (FDI).
  • More jobs for Cambodians.

Anthony Galliano, the CEO of Cambodia Investment Management Co Ltd, said: “Cambodia will benefit by playing a significant role in China’s expansion plans and influence in the region, primarily through infrastructure investment, expansion of special economic zones, and by building Cambodia’s manufacturing production base as an export hub to the US and the rest of the world.”

The FTA with China is expected to boost bilateral trade to $10 billion by 2023. The bilateral trade volume between the two countries reached $7.4 billion in 2018, a 22% increase compared to 2017’s $6.04 billion, according to data from the Cambodian Commerce Ministry.

Cambodia – India FTA

Cambodia India FTA 2020
Photo Credit: Phnom Penh Post (Minister of Commerce Pan Sorasak (third left) during a working lunch meeting with Indian ambassador to Cambodia Manika Jain (second left) and other officials during the special meeting.)

Cambodia is currently studying the possibility of establishing a bilateral free trade agreement (FTA) with India to open a new market with the second-largest regional economy reported several media outlets this past week.

A potential FTA with India was raised in a meeting between Cambodian Minister of Commerce Pan Sorasak and Indian ambassador to Cambodia Manika Jain. The

A FTA negotiation group will meet to discuss the possibility of developing an agreement but a Cambodia-India Joint Trade and Investment Working Group to facilitate trade and investment between the two countries was set up.

Cambodian Ministry of Commerce spokesman Seang Thay said that “We have already set up a negotiating team and they will discuss with India the possibility of a trade agreement and whether it will be profitable. They will report the findings to the minister. If we see the benefits, both sides will start negotiating, but we do not know when that will happen.”

The Indian embassy in Cambodia reports the trade volume between the two countries reached US$249.92 million in 2019, up 10.24 per cent compared to 2018’s US$226.69 million.

Cambodia also exported goods to India worth US$82.09 million in 2019, representing an increase of 69.43 per cent from 2018. Cambodian imports reached US$167.83 million in 2019, a 5.8 per cent drop.

Indian investment in the Kingdom is worth US$19.8 million which makes it one of the top 10 foreign investors in Cambodia. The main investments are in:

  • machinery
  • agriculture
  • energy
  • construction
  • mining

Cambodia – Korea FTA

Cambodia - Korea FTA 2020
Photo Credit: The Korea Herald (South Korea’s Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki)

On July 12th, Cambodia and South Korea agreed to launch official negotiations for a bilateral free trade agreement (FTA) between the two Asian nations. Negotiations could be resolved before the end of 2020 reports the Phnom Penh Post.

This follows a feasibility study which was carried out between November and May 2019. South Korean Minister of Trade, Industry and Energy Yoo Myung-hee said if the agreement goes ahead, it could mean Cambodia “can potentially rise as the new hub of production and trade in ASEAN.”

Bilateral trade volume between the two countries hit $1 billion in 2019, a six per cent rise on 2018, reports the Korea International Trade Association (Kita). Cambodia exported $336 million worth of goods to South Korea in 2019 and imported $697 million.

South Korean exports to Cambodia mostly comprised of clothes, shoes, travel goods products, beverage, components for electronic equipment, rubber, medical and agricultural products.

Cambodia mainly imported vehicles, beverages, electronic equipment, home appliances, medical and plastic products from South Korea.

Eurasian Economic Union (EAEU)

Cambodia has also been seeking Russian’s help for a Eurasian Economic Union (EAEU) free trade agreement to expand trade volume and economic cooperation between Cambodia and the bloc.

The EAEU is home to 183 million people and represents a combined GDP of about $5 trillion. The bloc has five member states: Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.

In May 2020, the Ministry of Commerce said it had established eight different groups to be in charge of the trade negotiations with each potential partner. These including working groups in charge of trade talks with:

  • China
  • The Republic of Korea
  • United Kingdom
  • EAUE
  • US
  • Japan
  • Mongolia
  • India

Cambodia has been actively seeking to pursue new trade agreements with the imminent partial suspension of the  ‘Everything But Arms’ (EBA) trade privileges in 2020. The withdrawal will amount to a loss of about one billion Euros (US$1.12 billion) from Cambodia’s annual exports to the EU.

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