Cambodia, EU renew trade, investment vows
Cambodia, EU renew trade, investment vows
Cambodia and the EU have renewed their pledge to enhance bilateral trade and investment ties in spite of the lingering economic fallout from the Covid-19 pandemic.
This came during their 11th Joint Committee Meeting on March 10-11, which was co-chaired by Ministry of Foreign Affairs and International Cooperation secretary of state Luy David and Paola Pampaloni, deputy managing director for Asia and Pacific of the European External Action Service, according to a March 10 joint press release.
“The meeting also discussed economic recovery measures, bilateral trade and investment relations, including the temporary partial withdrawal of the EU trade preferences under the EBA [Everything But Arms] scheme,” the release said.
For context, the EU on August 12, 2020 partially withdrew the EBA scheme from Cambodia, in a suspension that affects one-fifth or €1 billion ($1.09 billion) of the Kingdom’s annual exports to the 27-nation bloc.
The release added that “technical cooperation, market access issues, and the ongoing efforts to further improve the business environment, including the new Law [on investment]”, and economic diversification were also on the meeting’s agenda.
“The two sides also committed to further strengthen cooperation to ensure that Cambodia’s investment climate remains open, well-facilitated, competitive, and conducive to sustainable socio-economic development.
“The sub-group on Trade and Investment reviewed Cambodia-EU bilateral trade and the investment climate in Cambodia. In 2020 and 2021, the bilateral trade between the two [stood] at €4.3 billion and €4.5 billion, respectively.
“The meeting also exchanged view[s] on regional and global trade development including updates on economic integration in ASEAN and across the wider Asia-Pacific region, EU-ASEAN regional trade relations and the updates on WTO [World Trade Organisation] reforms, among others,” it said.
Anthony Galliano, the CEO of financial services firm Cambodia Investment Management Co Ltd, put forward that Cambodia-EU trade in goods in 2020 could have been higher, given that the bloc is ranked as the Kingdom’s third biggest trading partner.
By contrast, as single country trading partners, the US (30.1 per cent of the global total), Singapore (14.8 per cent), China (6.1 per cent) and Japan (six per cent) are Cambodia’s largest, he said.
In continental rankings, he said, 40.1 per cent of the Kingdom’s exports by value were delivered to Asian countries while 34.7 per cent was sold to importers in North America, and 23.4 per cent worth of goods to Europe.
Trade with the US is surging, as exports to the North American market climb 27 per cent year-on-year, accounting for approximately 40 per cent of Cambodian exports this year, he said.
The EU was Cambodia’s largest trading partner in 2018, accounting for 45 per cent of the Kingdom’s exports that year, and 95.7 per cent of those entered the bloc under EBA tariff preferences, the European Commission (EC) reported. Overall, Cambodia was the second largest user of EBA preferences, behind only Bangladesh, it said.
Galliano said that given the partial EBA withdrawal, the expiration of the Generalised System of Preferences (GSP) status with the US in December last year, perceived human and political rights concerns, and calls for greater democracy are significantly influencing trade decisions and preferences.
“Rather than any relaxation of this position, I expect that it will only harden, consequently China’s influence will likely accelerate. There is work to do to improve the relationships with both the US and EU, as trade and investment will be impacted if these relationships deteriorate,” he said.
He suggested that given the current geopolitical crisis, the US and EU should embrace Cambodia which he said has “proven to be pivotal” in its relationship with China, and of growing importance and influence in the region.
"Global inflation is not far behind in challenging the global economy, and expanding unimpeded free trade with global partners would help alleviate the spiralling inflation problem.
“What may be a small gesture to the US and EU would greatly support Cambodia and improve the political relationship in a time where allies are really need[ed].
“Thus I would advocate renewal by the US of [the GSP] with Cambodia, and the EU restoring Cambodia’s access to the preferential [EBA] agreement," Galliano said.
