Cambodia Seeks FTAs To Counter Loss Of Duty-Free Access To EU

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FTA negotiations with China expected to be completed by end of the year, while negotiations to commence soon with South Korea.

Following the conclusion of the third round of free trade agreement (FTA) negotiations between Cambodia and China, it is expected that such a treaty will be ratified before the end of the year.

According to Cambodia’s Ministry of Commerce (MOC), the latest talks focussed on market access with regards to goods and services, investment protocols and greater economic/ technical/regulatory alignment.

The next stage requires the Agreement Text and the Market Access Proposal to be officially approved by both governments. Once this has been secured, the negotiations phase will be declared officially over, and pave way for the actual signing of the agreement.

The signing of the FTA would be particularly timely for Cambodia as it looks to up its exports to China in a bid to mitigate the impact of its partial loss of duty-free export access to the European Union (EU), the country’s largest export market, which is scheduled to take effect from 12 August. In 2019, trade between Cambodia and China was valued at US$ 9.42 billion, a figure the two are now committed to raise beyond US$ 10 billion by 2023.

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In terms of benefits to China, it is expected to ease the way for mainland companies looking to relocate production resources to Cambodia as a means of ameliorating the impact of the punitive US import tariffs on goods of Chinese origin.

Cambodia to soon start FTA negotiations with South Korea
Negotiations for a FTA between Cambodia and South Korea are set to commence next month, according to Cambodia’s Ministry of Economy & Finance. The announcement follows the conclusion of a Cambodia South Korea joint FTA feasibility study initiated last November. Earlier this month, South Korea also completed the public consultative period that is a mandatory domestic requirement prior to entering into any such agreement.

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On South Korea’s part, the deal would help the country secure alternative export destinations as part of its bid to diversify its trade dependence on its two largest export markets- China & the US-both of which have been compromised by their ongoing trade dispute. Inevitably, the negative impact of this year’s coronavirus outbreak has acted as an added incentive for the country to diversify its available supply chains. Last year, South Korea concluded its FTA negotiations with Indonesia and is currently in talks with both the Philippines and Malaysia with regard to putting similar arrangements in place.

Last year, Cambodia’s exports to South Korea totalled US$ 335 million, a massive increase on the US$ 18 million recorded back in 2009.

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Over the same period, the country’s imports from South Korea also increased, growing from US$ 294 million 10 years ago to US$ 696 million last year. Cambodia’s primary exports to South Korea include clothing, footwear, electronics, rubber and travel accessories, while its primary imports include knitted textiles, preowned freight trucks, electronics, cosmetics and beverages.

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