Experts yesterday welcomed recent moves by ASEAN members to agree to cut 90 percent of tariffs in the Regional Comprehensive Economic Partnership (RCEP) for between 5,000 to 6,000 kinds of products over the next 15 years, saying it would fully benefit Cambodia after the cancellation of the US-backed Trans-Pacific Partnership (TPP).
Hiroshi Suzuki, CEO and chief economist for the Business Research Institute for Cambodia, said the commitment made at the ASEAN Economic Ministers Retreat in Manila last week indicated good progress for the region and Cambodia.
“Cambodia depends on exports and free trade among major Asian countries is indispensable for the country’s economy,” said Suzuki. “The benefit of free trade would be much bigger than the income from customs duties,” he added.
“With RCEP, Cambodia will get a much better chance to export to member countries. RCEP includes not only free trade of goods, but also service trade, investment, financial and technical cooperation.”
According to the Bangkok Post, Thailand’s Commerce Minister Apiradi Tantraporn, will raise the issue of the tariff cuts for further discussions with ASEAN’s dialogue partners later this month, so that a pact can be signed at the 31st ASEAN Summit in November.
“Although the RCEP talks are yet to be completed, all ASEAN members have reaffirmed the push for tariff reductions covering not fewer than 90 percent of all products, as well the conclusion of talks late this year,” Apiradi told the Bangkok Post.
David Marshall, managing partner for research firm Mekong Strategic Partners, also agreed the ASEAN move was good for Cambodia.
“It may enhance export opportunities for Cambodian companies. Cambodia is heavily reliant on imports and presumably lower taxation would reduce prices.
“However, this would mean lower tax collection for the government. We can expect enhanced tax collection to fill gaps in budgets because of lower customs duties,” he said.
The RCEP is a regional economic agreement being negotiated between the 10 ASEAN governments and their six free trade agreement partners – Australia, China, India, Japan, New Zealand and South Korea.
Many experts see RCEP replacing the TPP, after US President Donald Trump signed an executive order in January pulling the United States out of the partnership.
“ASEAN and its six main trading partners are currently in the progress of negotiating the RCEP. That is the trend of the shift in economic growth engines and trade agreements,” wrote Lili Yan Ing, a senior economist at Economic Research Institute for ASEAN and East Asia, in The Jakarta Post.
David Van, managing director in Cambodia for Bower Group Asia, told Khmer Times many ASEAN signatories were already shifting their support to the larger RCEP. “It emphasises the fact that in this 21st century, trade growth is increasingly driven by intra-Asian trade flow,” said Van.
However, he pointed out that under the ASEAN Free Trade Agreement (AFTA) rules, all ASEAN member states must slash their customs duties to zero. “CLMV countries have been given additional time to implement the reduced tariff rates,” added Van.
Van said ASEAN had to work a lot harder to convince its private sector that its member states are “committed” to increasing intra-ASEAN trade.