36821 CAMBODIA No. 6 A Summary of Cambodia's WTO Agreement 1 The Kingdom of Cambodia became a member of the World Trade Organization (WTO) on October 13, 2004 after nearly nine years of negotiations with other WTO members. While debates still persist about the potential costs and benefits of Cambodia's WTO membership, Cambodian entrepreneurs know comparatively little about the potential opportunities and risks of Cambodia becoming a member of WTO. In light of this information gap, MPDF, in cooperation with the Ministry of Commerce, has prepared a guide for Cambodian businesses to explain what WTO accession means for the major business sectors. The following is a summary of the Guide that briefly describes WTO, the major commitments made by Cambodia, and provides a preliminary assessment of the implications of WTO membership for Cambodia's trading environment. I. What is the WTO The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. These rules are formed by the "WTO's agreements, negotiated and signed by a majority of the world's trading nations, and ratified in their parliaments."2 Essentially, WTO contracts are legally binding contracts between member countries that set out commitments and rules relating to access to markets. These contracts are enforced through a dispute settlement system that has considerable legal and commercial authority. Although the WTO legal system is extremely complex, its principles are simple. They include: non-discrimination among members, transparency of trade laws and regulations, special treatment for developing countries, the use of only tariffs only The "Business Issues Bulletin" provides for protecting markets, and progressive market liberalization. those interested in business issues with a short summary and analysis of a particular topic affecting the business environment in By joining WTO, Cambodia gains an enforceable, Cambodia, and exposure to different contractual relationship with almost every other nation opinions held by various stakeholders on the topic. significantly engaged in trade. It offers firm and predictable This bulletin is published with support from treatment for Cambodia's products and services in the the Mekong Private Sector Development markets of all other members. The terms of the contract are Facility (MPDF), a multi-donor funded initiative managed by the International briefly examined below. Finance Corporation (IFC), the private- sector arm of the World Bank Group. The statements and opinions presented 1Unless otherwise noted, the information provided in this Bulletin including here are only meant to provide additional statistics, conclusions and recommendations is drawn from the Ministry of reference material and do not reflect the Commerce and MPDF's Cambodia and WTO: A Guide for Business (2005). official opinion of the Mekong Private It can be obtained free of charge. Sector Development Facility or of IFC. 2Word Trade Organization (WTO), (www.wto.org). Accessed on January 30, 2005. Cambodia sought rapid accession to WTO. The need for I heard about WTO from the news media and political rapid accession was driven mainly by the 1 leaders. There were debates about why Cambodia, as a January 2005 deadline facing the garment industry, as least developed country, should join WTO. I've heard the international quota regime governing trade in two opposing views: one argues that WTO membership garments ended on that date. After that date, all WTO provides opportunities for our country to grow and the members, in principle, would have unrestrained and other that we are not ready for WTO because we cannot unrestricted access to the markets of other members. Being compete at Cambodia's present stage of development. My outside the WTO would mean that Cambodian garment opinion is that Cambodia is not yet able to benefit from exporters risked continued quotas on their WTO membership as we are still very weak exports, something that would have had a strongly economically. We don't have many things to sell, since negative impact on foreign direct investment (FDI) in the we are still an agriculture-based economy. I don't feel industry. that we can compete at the moment. Apart from access to the world garment market on "most- Mr. Laing Ly, General Director Medical Supply, Co. Ltd favored nation" (MFN) terms, other expected benefits include access to the international rules based system of II. THE CONTRACT: What concessions trade with MFN terms for all goods extended as a did Cambodia make? right; an improved domestic investment climate due to liberalization in the trade of goods and services; and The WTO contract that Cambodia has entered access to low-cost drugs through the WTO declaration on into is far reaching. It will influence Cambodia's the easing of patents for least developed countries. laws and regulations and that will, in turn, shape H.E. Sok Siphana, Secretary of State of the Ministry of Commerce the way Cambodian businesses operate. The four areas of law and regulation that the WTO Personally, I see two major reasons for joining the WTO. agreement will affect are: the general business First, WTO membership means that Cambodia's environment, the trade in goods and services, and interests could be protected. Acting on behalf of its the protection of intellectual property. private sector, the Royal Government of Cambodia has the right to bring issues and concerns to the various 2.1 General Business Regulations mechanisms of the WTO for assistance and resolution. Cambodia has committed to enact a number of This can be done in two ways: if Cambodia feels that general laws to conform to the WTO rules. Among certain trade practices are unfair, it can lodge the others, the key laws concern commercial arbitra- complaint officially and expect to be provided with a trans- tion, commercial contracts, establishing a parent hearing; and more importantly Cambodia can commercial court, insolvency, and competition. protect its interests by helping to shape the future "rules Many of these laws are supposed to be in place by of the game" in its favor. early 2006. Second, for Cambodian reformists, the process of joining 2.1.1 Regulating Trade in Goods the WTO and the subsequent period, has offered and The first thing that comes to mind when people will offer Cambodia a new window of opportunity for talk about trade, is trade in goods. There are many comprehensive national reforms. This is the chance to provisions in the WTO affecting cross-border push through unpopular but necessary reform trade in merchandise. Some are important for initiatives in all areas to ensure that Cambodia can grow Cambodian exporters, while others concern economically, politically and socially alongside other importers. Three provisions will have an impact on countries in the Asian region and beyond. The Prime import practices at the border: customs Minister, Samdech Hun Sen, has fully understood this valuation, import licensing, and pre-shipment and seized the opportunity to step up concerted efforts to inspection (PSI). PSI will not be discussed try to pull Cambodia out of the vicious cycle of because eventually the government will have to poverty. phase this out when the capacity of the Customs Mr. Keo Rottanak, Director of the Cabinet of the Minister of Industry, Mines and Energy Department improves. 2 (a) Customs Valuation Product Bound rate* Applied rate* Cambodia is committed to implementing the WTO Customs Valuation Agreement by Rice 40% 7% January 1, 2009. The WTO Customs Valuation Cashew nuts 40% 7% Agreement requires that valuation should be Mangoes 40% 7% the transaction value (the price paid by Rubber 15% 10% importers) that is listed on the invoice as opposed Fish 15% - 40% 15% or 35% to other artificial values, as practiced today. * excluding VAT rate of 10%. Although Customs are entitled to add certain costs Sources: Cambodia and WTO: A Guide for Businesses. MoC or charges to the invoice price, the process will and MPDF (2005). have to be transparent and predictable. Cambodia's Good Schedules (http://www.wto.org/english/ thewto_e/countries_e/cambodia_e.htm) Moreover, importers are entitled to the right to Ministry of Economy and Finance, Kingdom of Cambodia (2004). appeal a customs valuation without fear of Customs Tariff of Cambodia. penalty. While some other countries such as India have The Department of Customs operates two valuation bound less than 75% of their tariffs, Cambodia schemes in the calculation of dutiable values for import committed to binding all of its tariffs when it and export of goods. The first scheme refers to fair joined the WTO. This means that importers will market value (FMV), whereby the valuator (Societe know in advance what the maximum tariff rates General de Surveillances) under the Pre-Shipment could be for any products they want to import Inspection (PSI) agreement uses international prices to into Cambodia. Cambodia's tariff structure is determine the dutiable value. The second scheme involves bound at four bands or levels: 0, 7, 15, and 35 the Ministry of Economy and Finance (MEF) percent. setting, minimum, or fixed dutiable values for certain products to be used by SGS and customs. Customs Cambodia chose to opt for a relatively liberal regime and duties, excises and VAT are calculated based on these shortly before the negotiations with WTO began, administered prices. For some products, SGS is required Cambodia undertook a reform of its import tariffs. This to use the pre-determined minimum value in cases reduced the number of tariff bands from 12 to 4, so where the pre-determined value is greater than the actual that after the reform, most goods were charged a duty of SGS valuation based on FMV or cost, insurance, either 0, 7, 15, or 35 per cent. In the process, Cambodia and freight (c.i.f) value. For a small number of other eliminated most of the higher tariff rates that had products such as petroleum, fixed dutiable values are used previously been applied. Sensitive items are subject to high irrespective of the value. The purpose of this scheme is to tariffs or "tariff peaks", which provide support either for circumvent under-valuation of imported items and ensure nascent industries or those in need of transitional support that customs officials and importers duly perform their while they restructure. respective obligations. H.E. Hang Chuon Naron, Secretary General, Ministry of Cambodia agreed to implement its tariffs upon Economy and Finance accession. It bound 100% of tariff lines, which effectively set ceilings on the tariff rates of all imported Relevant to customs valuation are tariffs applied products. The agreed levels of the binding were, in all on imported goods. There are two types of tariff cases, equal to or greater than the level of tariffs that rates: 1) bound tariff rates, which are the maximum were actually applied in 2003. Thus, no significant rates that Cambodia can legally apply if it wants reductions in tariffs below those set in the unilateral trade to under the WTO agreement; and 2) applied rates, reform were required because of WTO membership. which are the rates that Cambodia actually levies H.E. Sok Siphana, Secretary of State, Ministry of Commerce on imported goods. (b) Import License In general, the differences between applied and Import licensing is permitted under the WTO, but bound rates in Cambodia are small, with the only under tightly drawn conditions. Cambodia exception of the few products shown in Table 1. reserves the right to issue import licenses for five 3 4 ecremmoC fo yrtsiniM ,etatS fo yraterceS ,anahpiS koS .E.H aidobmaC fo etutitsnI cimonocE eht forotceriD,hcaH koS.rM .htlaeh cilbup ni stnemevorpmi ot .sremusnoc reroop rof elbadroffa erom meht ekam etubirtnoc dluoc seitivitca eseht ni ecneserp ngierof a taht dna sgurd fo ecirp eht ecuder dluohs edis ylppus eht no sdnuorg eht no ,secivres egarewes dna esufer ,noitatinas esaercni sihT .yrtsudni lacituecamrahp eht ni tnemtsevni fo noisivorp eht ni dna erac htlaeh ni stnemevorpmi erom tcartta dna ygolonhcet fo refsnart eht etatilicaf osla ot etubirtnoc dluow tlef ti saera ni stnemtimmoc kootrednu aidobmaC ,oslA .secivres noitacude tluda nac snoisivorp SPIRT eht ,noitidda nI .htlaeh cilbup dna noitacude rehgih edivorp ot smrif ngierof gniwolla ot no stceffe evitisop eveihca pleh lliw OTW ,tekram lacol dettimmoc si ti ,suhT .ymonoce evititepmoc ,nredom a eht no enicidem tiefretnuoc fo tnuoma eht ecuder lliw siht rof dedeen slliks eht poleved snaidobmaC pleh lliw taht ecniS .ytreporp lautcelletni gnitcepser llits elihw ,edart ot saera ni stnemtimmoc kootrednu aidobmaC ,noitidda evicudnoc si taht tnemnorivne wen a etaerc lliw tnemnrevog nI .tropsnart dna snoitacinummocelet ,gnitlusnoc naidobmaC eht ,ylreporp detnemelpmi era swal eseht tnemeganam ,gniknab ,gnipeekkoob ,gnitidua ,gni fI .tnemeergA SPIRT eht ot mrofnoc taht swal ytreporp -tnuocca ,)snoitpecxe emos htiw( secivres lagel fo saera lautcelletni dessap sah aidobmaC ,OTW yb deriuqer sA eht ni etarepo ot smrif ngierof wolla ot flesti dettimmoc aidobmaC ,elpmaxe roF .ssenisub yb deriuqer secivres .smrofer larutcurts citsemod esoht gnivorpmi yb etamilc tnemtsevni eht ot tsom mret-gnol no dneped ylegral lliw htworg sti dna ,tnecsan etubirtnoc dluow taht saera no desucof maet gnitaitogen sniamer hcihw yrtsudni lacituecamrahp eht ralucitrap ni ehT .denetaerht eb thgim sevitaitini lacol erehw ,tnempoleved lairtsudni s'aidobmaC tcapmi lliw SPIRT saera fo rebmun detimil yrev a ni tpecxe tnemevlovni ngierof gnimoclew ,ecnats larebil yllareneg a detpoda .7002 ,1 yraunaJ yb SPIRT tnemelpmi ylluf ot flesti aidobmaC ,secivres rof ssecca tekram fo smret nI dettimmoc aidobmaC .srehto dna ,noitamrofni ssenisub desolcsidnu ,stiucric lairtsudni rof sngised .dennab era stupni ,sngised lairtsudni ,skramedart ,sthgirypoc ,stnetap lacol fo esu egaruocne taht sevitnecni tnemtsevni fo noitcetorp eht rof sdradnats lanoitanretni ,elpmaxe roF .noititepmoc trotsid yllaitnetop dluoc taht secitcarp noitomorp tnemtsevni muminim teem srebmem taht seriuqer stibihorp sihT .)sMIRT( serusaeM tnemtsevnI )SPIRT( sthgiR ytreporP lautcelletnI fo stcepsA detaleR edarT no tnemeergA s'OTW eht rednu detaleR-edarT no tnemeerga OTW ehT .sthgir )selur( senilpicsid eht evresbo ot sdeen aidobmaC ytreporp lautcelletni dellac dna wal yb detcetorp era ,tnemtsevni tuoba yltnanimoderp si STAG eht sA sthgir esehT .meht morf gnitifeneb morf srehto tneverp nac dna snoitnevni rieht morf tifeneb .secivres fo sredivorp ngierof fo tnemtaert yrot ot thgir eht nevig era yeht ,srotnevni egaruocne -animircsid-non dna secivres fo noitaluger eht ni oT .ytiunegni namuh dna saedi fo noitaerc eht era ycnerapsnart erusne tsum seirtnuoc taht seriuqer dlrow eht ni secivres dna sdoog dedart ,ylgnisaercnI STAG eht ,selpicnirp OTW htiw gnipeek nI noitcetorP ytreporP lautcelletnI fo noitalugeR 2.1.2 .srotces-bus suoirav ot ylppa snoitidnoc cificeps dna snoitavreser .meht morf edam selcitra lareneg hguohtla ,nepo ylegral si rotces ecivres dna senots suoicerp ,revlis ,dlog dna ;sesoprup s'aidobmaC ,sselehtreveN .tnemtsevni ot pu nepo yratilim rof yrenihcam rehto dna ,staob dna ot gnilliw era yeht secivres eht ni dna ,ot hsiw ,spihs ,strap dna tfarcria ,selcihev ;noitinumma yeht taht snoitagilbo esoht ylno no ekat seirtnuoc dna sevisolpxe ,snopaew era sessalc rehto ehT ,trap tsom eht roF .tpecca tsum srebmem .5002 ,1 enuJ yb stupni larutlucirga detropmi lla taht snoitagilbo wef era erehT .tnemtsevni no snoitcirtser evitatitnauq etanimile ot dettimmoc tuoba yleritne tsomla si )STAG( secivreS ni ,revewoh ,sah aidobmaC .stupni larutlucirga dna edarT no tnemeergA lareneG s'OTW ,tceffe nI slairetam lacidem dna lacituecamrahp era ymonoce secivreS ni edarT gnitalugeR 3.1.2 eht rof tseretni ralucitrap fO .stcudorp fo sessalc 5 .puorg eht fo edistuo srentrap gnidart ot gnipuorg ot 21 morf sdnab ffirat fo rebmun eht dna %5.61 edart lanoiger a fo srebmem yb dereffo setar ro ,setar deilppa ,setar ot %4.71 morf seitud tropmi fo level egareva ffirat dnuob OTW rehtie era hcihw ,setar NFM sreffo tnemtaert NFM 3 eht htob decuder smrofer esoht ,evoba detats ,yllanoitiddA .seirtnuoc depoleved tsael ot ssecca sA .erutcurts ffirat sti demrofer aidobmaC ,OTW eerf-atouq dna eerf-ytud edivorp hcihw ,emehcs eht gninioj fo ssecorp eht gniruD .pihsrebmem ")ABE( smrA tub gnihtyrevE" s'noinU naeporuE OTW fo tluser tcerid a sa hcum yfisnetni eht dna emehcs )PSG( secnereferP fo metsyS ton yam tekram citsemod eht ni noititepmoC dezilareneG eht edulcni semehcs ssecca laitnereferp stropmI morf serusserP evititepmoC 1.3 esehT .tnemtaert )NFM( "noitan derovaf 3 .deeccus dna etepmoc ot redro ni -tsom" syojne ti ,ssecca laitnereferp yojne ton seod ot tpada ot evah lliw sessenisub naidobmaC taht aidobmaC erehw seirtnuoc roF .seirtnuoc ynam tnemnorivne gnidart wen a etaerc stnemtimmoc htiw spihsnoitaler edart elbarovaf morf stifeneb eseht ,rehtegoT .rebmem a gnimoceb retfa ssenisub ydaerla ,yrtnuoc depoleved-tsael a sa ,aidobmaC seod aidobmaC woh tceffa lliw stnemtimmoc ,tcaf nI .sretropxe naidobmaC rof ssecca tekram gnidart dna ,tnemtsevni ,yrotaluger esehT esaercni yltnacifingis ton lliw noissecca OTW seinapmoC naidobmaC tnemnorivnE gnidarT weN ehT .III rof seitinutroppO sseccA tekraM 2.3 aidobmaC fo knaB lanoitaN eht fo tnemtrapeD noitaicossA ssenisuB hcraeseR cimonocE eht fo rotceriD ytupeD ,niraS kaeN .rM yrtsudnI muideM dna llamS eht fo rotceriD ,gnaeH gneH .rM .sessenisub yb .yrtsudni gnissecorp xat fo tnemyap dna hsac fo noitatropsnart eht etatilicaf egareveb dna doof eht ni era %07 mohw fo ,srebmem ot seitilapicinum dna secnivorp eht ni sehcnarb CBN ruo tifeneb ton seod noitpmexe siht tub ,noitcudorp fo tnemhsilbatse eht si yltnecer tnemeveihca rehtonA lacol rof detropmi slairetam war 854 no seitud smotsuc decuder sah ecnaniF dna ymonocE fo yrtsiniM eht .tnempiuqe dna yrenihcam ,yltneceR .yrenihcam dna slairetam war fo noitatropmi rof deen yeht gnicnanif eht teg ot sesirpretne muidem no noitpmexe ytud smotsuc dna srerutcafunam dna llams rof elbissop ti ekam ot redro ni )BDA( knaB lacol tcetorp ot redro ni stcudorp detropmi no tnempoleveD naisA eht fo troppus eht htiw wal gnisael a seitud smotsuc rehgih fo noitisopmi sa hcus snoitutitsni gnipoleved osla era eW .sknab rof sdradnats gnitnuocca fo cilbup morf noitnevretni erom deen eW .evititepmoc tnempoleved eht ni detapicitrap dna rotces gniknab eht ot erom emoceb ot ygolonhcet dna gnicnanif ,secruoser tnaveler snoitaluger dna swal decrofne dna snoitagitsevni namuh eht kcal taht sessenisub lacol tcapmi lliw siht detcudnoc sah CBN eht ,secivres gniknab nehtgnerts ot dna tekram citsemod eht ot noititepmoc gnirb lliw OTW stroffe eht htiw gnolA .snoitca evitcetorp ro yrotanimircsid yna gnisopmi tuohtiw yrtsudni gniknab eht dezilarebil .smrifcitsemodgnimraherastropmitahtevorptsum ylbaredisnoc sah aidobmaC fo knaB lanoitaN ehT tnemnrevog eht ,ralucitrap nI .ylluferac deilppa eb tsum selur eht dna ,tcirts era noitcetorp lagel hcus .tnemnorivne evititepmoc rof snoitidnoc eht ,revewoH .serusaem draugefas a ni seitluciffid meht esuac lliw sihT .tnemnorivne dna ,seidisbus ,seitud gnipmuditna sedulcni evititepmoc a dna latipac dna yticapac kcal yeht esuaceb sihT .tnemeerga OTW eht rednu dewolla si sknab lacol rof noititepmoc gnirb lliw OTW ,sselehtenoN srecudorp citsemod tih-drah pleh ot esruocer emoS .ygetarts noitaziralloded .sworg ymonoce naidobmaC sti ezilaer ot aidobmaC fo tnemnrevoG layoR eht sa worg noititepmoc fo erusserp eht leef eht pleh lliw ecnedifnoc sihT .ycnerruc leiR dna rotces lliw smrif ynam ,revewoH .sraey ynam fo esruoc gniknab eht ni ecnedifnoc cilbup esaercni pleh lliw OTW eht revo smrif citsemod yb tlef neeb ydaerla evah ,noitidda nI .noitcuder ytrevop rof ygetarts s'tnemnrevog fo mrofer ffirat fo stceffe evititepmoc ehT .laminim trap si hcihw htworg PDG ot etubirtnoc dna setaudarg saw sffirat no noissecca fo tcapmi etaidemmi eht ytisrevinu rof sboj etaerc ,seitivitca gniknab nehtgnerts ,eroferehT .meht evoba ro slevel eseht ta rehtie era pleh ot secivres laicnanif wen ni gnirb ,rotces gniknab eht aidobmaC yb edam stnemtimmoc ffirat ehT .ruof ni tnemtsevni ngierof dnapxe pleh lliw noissecca OTW 6 .ecremmoC fo yrtsiniM eht fo tnemtrapeD hguone deen uoY .tropxe ot ysae ton s'tI .emit sraey noitomorP tropxE eht morf deniatbo eb nac eerht ni lliw I ebyaM .yaw laitnatsbus yna ni stcudorp eussi siht no noitamrofni eroM .egnellahc a eb lacituecamrahp ym tropxe t'nod I ,tnemom eht tA nac nigiro fo selur gniyfsitas ,stupni sti fo ynam stropmi aidobmaC sA .aidobmaC ni decruos era ecremmoC stupni fo egatnecrep niatrec a taht eriuqer esehT fo rebmahC naidobmaC ,lareneG rotceriD ,yhtoS gnaN ahnkO .tropxe rof esab noitcudorp .stekram emos ni reirrab a eb nac nigiro fo seluR eht dnapxe lliw taht tnemtsevni tcerid ngierof dna latipac .ytilibapac erom tcartta ot redro ni tnemecrofne sa llew sa snoitaluger lacinhcet fo egats tnerruc s'aidobmaC ta tluciffid dna swal evorpmi ot eunitnoc tsum tnemnrevog eht yrev stekram eseht ot stcudorp hsif dna hsif tuB .ssenevititepmoc ot sreirrab decuder dna serudecorp fo tropxe gnikam ,xelpmoc dna tnegnirts era UE denilmaerts sah tnemnrevog eht taht devresbo evah I dna SU eht ni snoitaluger SPS .tluciffid ylemertxe .stropxe eb nac stekram eseht ni snoitaluger htlaeh etatilicaf ot sdaor dna strop sa hcus erutcurtsarfni etauqeda dna lacinhcet gniteem ,revewoH .ecuas/setsap hsif evah ton seod aidobmaC ,noitidda nI .sdradnats ytilauq dna ,snoitaraperp hsif ,hsif naidobmaC rof ssecca tekram eerf-ytud reffo lla adanaC dna ,SU ,UE eveihca sessenisub pleh ot retnec lortnoc ytilauq a pu ehT .stcudorp hsif dna hsif era tnemtaert ffirat tes ot tey sah tnemnrevog ehT .stekram ngierof ni selas elbarovaf gniyojne elihw sdradnats ytefas doof ecnahne pleh dluoc hcihw smetsys lortnoc ytilauq pu tes ton tnegnirts ecaf ot evah taht stcudorp fo selpmaxE evah yehT .serusaem )SPS( yratinasotyhp dna yratinas dna sdradnats ytilauq fo gnidnatsrednu detimil evah .ecremmoC sessenisub naidobmaC .sdradnats ytilauq tcudorp teem fo yrtsiniM eht fo tnemtrapeD lortnocmaC ot tnemeriuqer eht dna noititepmoc sa hcus segnellahc era eht morf deniatbo eb nac srebmem OTW rehto ereht ,ssecca tekram siht htiw gnolA .stekram ngierof ot fo sdradnats no noitamrofni deliateD .sdradnats ssecca evah lliw sessenisub naidobmaC ,OTW hguorhT esoht teem stcudorp naidobmaC taht erusne dna ,tekram hcihw ot ylppa sdradnats lacinhcet tahw .anihC dnatsrednu ot era segnellahc eht ,ecneH .stnalp ni setar ffirat orez ecaf stun wehsac naidobmaC ro ,slamina ,snamuh fo ytefas eht rof noitcetorp ,evitaitini "tsevrah-ylrae" anihC-NAESA eht fo slevel rehgih tes ot dewolla era seirtnuoC rednU .stekram esoht ni noititepmoc tcerid on .cificeps tekram eb nac sdradnats ytefas doof si ereht esuaceb yliramirp ,)ailartsuA dna ,adanaC ,srebmem OTW lla rof yllasrevinu ylppa sreirrab ,napaJ ,UE ,SU( stekram rojam tsom ot eerf lacinhcet gninrecnoc snoitaluger OTW elihW -ytud stun wehsac tropxe nac aidobmaC ,ylralimiS .sdradnats .orez si sognam naidobmaC laicos dna latnemnorivne teem ot sretropxe rof etar ffirat s'noinU naeporuE eht ,emehcs ABE eriuqer osla lliw stekram ynam ,noitidda nI .nigiro eht rednU .tnemtaert laitnereferp morf stifeneb fo selur dna sdradnats ytefas doof edulcni esehT taht tcudorp a fo elpmaxe na si ognam ehT .stekram ngierof retne nac stcudorp rieht erofeb emocrevo ot evah lliw sretropxe naidobmaC .OTW fo rebmem taht sreirrab lacinhcet ynam era ereht ,citsimitpo a gnimoceb erofeb neve ,seirtnuoc rehto ynam eb ot nosaer sruenerpertne naidobmaC evig morf tnemtaert NFM morf detifeneb aidobmaC seod stekram ynam ni tnemtaert laitnereferp elihW ,eromrehtruF .orez era setar ffirat ,sevitaitini sreirraB ffiraT-noN htiw gnilaeD 3.3 eseht yb derevoc stcudorp tsom roF .sffirat elbarovaf yrev reffo sevitaitini esehT .dnaliahT .dtL .oC ,ylppuS lacideM fo rotceriD lareneG ,yL gniaL .rM dna ,aeroK htuoS yb dereffo osla era stnemtaert .evititepmoc laitnereferp laretaliB .evitaitini "tsevrah ylrae" era ytilauq dna secirp ruo sa stcudorp ym rof tekram a anihC-NAESA eht dna ,)TPEC( ffiraT laitnereferP si erehT .)sdnamed teem ot redro ni stupni fo esahcrup evitceffE nommoC s'ATFA ylralucitrap ,noiger dna tiderc selas rof htob( wolf hsac revoc ot yenom eht ni stnemtaert laitnereferp syojne aidobmaC Meeting such standards alone, however, will not meet international standards in the "organic" niche ensure success. Cambodian products have to be market. competitive relative to those of other countries. Mr. Banh Leng, Director, Khmer Agricultural Products Import This encompasses capitalizing on Cambodia's Export Co., Ltd reputation as a country where international labor There are an increasing number of consumers, standards are observed, differentiating Cambodian particularly in the EU, US, and Japan who want to food products as grown with little or no consume "organic food." They are willing to pay commercial fertilizers or pesticides, and reducing more for food that does not contain toxic residues. transaction costs. Many Cambodian food products such as rice, The success that the Cambodian garment sector peppers, and others could sell in the niche market has had in creating a niche market for itself by for organic food. What is needed is a facility for ensuring high labor standards is commendable. certification. This approach could be expanded to other sectors of the economy to further enhance Cambodia's This strategy of selling to niche markets can be reputation as country committed to high labor successful as long as the prices of Cambodian standards. products are competitive. At present, this is not necessarily the case as Cambodian businesses face Our entrepreneurs do not have the capacity to access high costs of doing business, especially those foreign markets due to quality control issues. Our brought about by bureaucracy. The extent of the organization has endeavored to encourage all members to costs vary according to sector and size of company. improve quality in order to gain the confidence of In general, however, the sectors that export their consumers. This could help us compete with foreign products incur the highest transaction costs when products. The government should establish a product dealing with public officials. This makes certification center in partnership with relevant foreign Cambodian products less competitive. organizations. Currently, Cambodia has few products for export, but I Mr. Heng Heang, Director of Small and Medium Industry Business Association have observed that Cambodia produces a number of products which are not available in other countries. These I feel that WTO membership will affect Cambodian products include handicrafts, fruits and palm products SMEs substantially as they cannot compete solely such as crystallized palm seeds. Our winning of IFC- based on price in the new trading environment. MPDF's Corporate Citizenship Award in the area of Cambodian businesses face high costs for fuel, electricity environmental stewardship has made our products more and transportation. saleable to customers in overseas markets. Difficulties in competition don't come from Cambodia's The government should negotiate with other WTO membership in the WTO. But rather come from member countries for trade preferences such as tax neighboring countries that are not members of WTO and exemption or lower tax rates for Cambodian products. It have little regard for the laws of Cambodia. Vietnamese should also remove barriers to competitiveness such as traders buy raw cashew nuts without paying any taxes high costs for licensing. Cambodia is classified by the while I have to pay 1% turnover tax. If I sell cashew EU as a least developed country and will benefit from a nuts domestically, I am subject to another 10% VAT. low or even no import tax for products if they are made If they compete on an equal playing field, I am ready to in Cambodia. To gain this advantage, we need to get a compete. But, the authorities take no action to address certificate of origin (C/O) from the Ministry of these problems. Hence it is very difficult for us to Commerce, but we must pay a fee for every export and compete domestically when they again re-import to customs clearance. This increases the costs of our Cambodia without paying customs duties. Internationally, products and makes us less competitive. I have noticed my strategy has been to compete based on the quality of that the government has improved the C/O process and my products. I provide high quality cashew nuts that reduced import-export procedures to help the private 7 sector, but more concrete actions are needed from the Under the leadership of the Prime Minister, the government to improve the business environment such as government has embarked on a wide range of reforms to establishment of a real "one-stop shop" for export. build the capacity of both private and public Mr. Ly Aun Hay, Director of Confirel institutions and meet regularly with the private sector to solve problems and understand the needs of the private The opportunities for organic foods in many countries sector. The Government has also introduced a series of such as the European Union, Hong Kong (China) and reforms and new legislation relating to the protection of Australia were open before Cambodia joined WTO. The innovation and creativity (trademarks, copyright, issue is that Cambodia does not have enough foreign direct patents etc.). investment in agro-industry which could lead to development in this sector. I believe that the WTO is The most important thing the Government has to do is good since it will help the government to attract more ensure that its reform initiatives will be implemented in FDI, in particular to agro-industry. full. Among these are administrative, legal and Mr. Adisorn Chieu, Manging Director of Angkor Kasekam judiciary reform and institution building. Institution Rongroeung building is not the building of one institution that happens to be at the forefront of a particular initiative. Above all, it is important for Cambodians to know This reform must be seen in its totality by trying to that Cambodia has some exportable products, address issues as a system. especially agriculture products, which can Mr. Keo Rottanak, Director of the Cabinet of the Minister of command premium prices. What is needed are Industry, Mines and Energy strategic and systematic approaches to ensure that products are competitive and meet the specific That the government needs to improve the trading demands of their markets. environment has been discussed, time and again, by the government. So, there is nothing new. However, I feel In my view, the Government will have to do whatever it that there are necessary conditions for a growing private can to build the capacity of its young private sector. New sector that must be met. These include: monetary and fiscal incentives must be provided, along with eliminating the cumbersome administrative burdens · Public administration reform so that public administration is more transparent and effective; on the private sector. The Government has to be more · Fight corruption - this will depend on the pro-active and aggressive in defending the effectiveness of the first reform. Reducing interests of the private sector. To be able to do this, the corruption will lower the costs of doing business; Government must first help build itself and its · Provide affordable credit for businesses. institutions. This is very critical as a weak government Mr. Banh Leng, Director, Khmer Agricultural Products Import is always a real liability for the private sector. Export Co., Ltd. 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