UAE trade deal gauged by finance policy officials
UAE trade deal gauged by finance policy officials
The Cambodia-United Arab Emirates Comprehensive Economic Partnership Agreement (CAM-UAE CEPA) – largely expected to be signed later this year – will provide a major impetus for the Kingdom’s export diversification efforts and rope in more foreign businesspeople and investors.
Minister of Commerce Pan Sorasak made the remark on April 18 at a closed-door meeting of the Economic and Financial Policy Committee (EFPC) at the Ministry of Economy and Finance, which was also attended by the inter-ministerial working group on CAM-UAE CEPA negotiations, according to a commerce ministry statement issued on the night of April 19.
The meeting was led by Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth, who is also chairman of the EFPC, which is under the finance ministry, the statement noted.
A CEPA is a type of free trade agreement (FTA) that is generally designed for a more holistic coverage beyond just commodities, and can contain provisions for services, investments, dispute resolution, intellectual property rights, government procurement, and additional forms of specialised economic cooperation.
Sorasak shared with the meeting some of the background and main takeaways of the CAM-UAE CEPA talks, which formally concluded on March 16.
He presented the deal as a welcome addition to the Regional Comprehensive Economic Partnership (RCEP) and Cambodia’s bilateral FTAs with China (CCFTA) and South Korea (CKFTA), and a move towards “sustainable, inclusive and resilient economic development”, on top of greater regional and global economic integration and cooperation.
The three rounds of formal negotiations for the CAM-UAE CEPA were respectively held on October 24-26 in Abu Dhabi, December 19-21 in Phnom Penh, and February 20-22 in Dubai. No official date has been given for the signing of the deal.
According to the commerce ministry, the agreement will comprise 18 chapters and 284 articles covering: trade in goods; trade in services; investment; rules of origin; trade facilitation; technical barriers to trade; electronic commerce; intellectual property; trade remedies; and economic and technical cooperation.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng commented to The Post on April 20 that the CAM-UAE CEPA will boost the investment appeal of the Cambodian market for players from the Arab world and increase the Kingdom’s exports to the seven-emirate union and broader region.
The number of foreign investors entering the Cambodian market will keep growing, thanks to the Kingdom’s recent achievements, he enthused.
“Establishing more bilateral or multilateral trade deals is ideal, they’ll act as a type of substitute for the preferential tariffs that Cambodia enjoys – such as the EU’s ‘Everything But Arms’ [EBA] scheme and the US’ Generalised System of Preferences [GSP] – which may be lost in the near future, given the myriad of positive signs shown by the Cambodian economy,” Heng said.
For context, many preferential trade arrangements, offered by a range of jurisdictions, grant duty- and quota-free access exclusively to the least developed countries (LDC), a grouping which Cambodia would need to exit to achieve its vision of becoming an “upper-middle income” economy by 2030 and a “high-income” one by 2050, as defined by the World Bank.
According to Heng, the CAM-UAE CEPA will trigger a material rise in certain Cambodian exports to the Arab world, including: milled rice, vegetables, bananas, cashew nuts, mangoes, corn, peppercorn, halal foods, electronic components, “electric vehicles” (EV), travel bags, footwear and garments.
Cambodia can also learn from the UAE’s experiences in service sector development, including in construction, engineering and environment-related fields, as well as other professional and business areas, he suggested.
In January, Penn Sovicheat, ministry spokesman and deputy chairman of the working group, had affirmed to The Post that both negotiation teams were keen to sign the CAM-UAE CEPA this year.
“We hope that this agreement will open new channels for Cambodian goods. Some agricultural products could make their way throughout the Middle East and Africa via the UAE,” he said, calling for local producers to keep their wares up to par in terms of quality and hygiene requirements.
When asked about the expected short duration of the talks as compared to those for the CCFTA and CKFTA, Sovicheat explained that the UAE has experience with CEPAs, having already entered into such agreements with India, Indonesia and Israel.
The UAE has since signed CEPAs with Turkiye and Georgia on March 3 and 17, respectively.
The commerce ministry earlier reported that Cambodia-UAE trade totalled $105 million in 2022, down by 28.57 per cent from $147 million in 2021. Cambodian exports to and imports from the UAE were to the tune of $70 million and $35 million, respectively, up 34 per cent and down 63 per cent on a yearly basis.
And according to Trading Economics, annual bilateral trade between the two countries increased nearly 48 per cent from $99.7 million in 2020 to $147.1 million in 2021, and had remained tilted in Cambodia’s favour in 2013-2019, until the UAE rebalanced the scales.
Cambodian exports to and imports from the UAE in 2021 were to the tune of $52.12 million and $94.94 million, respectively, rising by 18 per cent and 70.8 per cent over the 2020 figures, the statistics website indicated.
In 2021, “articles of apparel, knit or crocheted” accounted for the largest share of Cambodia’s exports, at 66 per cent or $34.47 million (down 7.2 per cent over 2019), while “mineral fuels, oils, distillation products” made up 79 per cent or $74.86 million (up 18.5-fold over 2019) of the Kingdom’s imports.
The two categories respectively correspond to chapters 61 and 27 of the Harmonised System (HS) of Tariff Nomenclature.
