BUSINESS NEWS — The Cambodia’s exports to the European Union (EU) markets rose by 53% in the first five months of 2011; making the figure doubled increased comparing to the corresponding period last year, in responding to the more relaxed and simpler trade regime offered by EU since January 2011, according the Cambodian Ministry of Commerce’s report.
The new Generalized System of Preference (GPS) called ‘Everything but Arms’ access scheme (EPA) is the more comfortable rules of origin offered by EU to encourage Cambodian producers, exporters, to bring their goods entering EU market conveniently for almost everything except ammunitions.
Under the new rules of origin ‘Everything but Arms’ (EBA), Cambodia can expand the exports to EU by absorbing more raw materials of foreign originations up to 70%, manufacturing final goods in the country then identify them as Cambodian origin; finally export to EU markets with duties-free and quota-free basis the same.
It should be highlighted that to further boost Cambodia’s exports to the EU and contribute to their economic growth, on January, 1, 2011, EU introduced simpler and more “relaxed” rules of origin under its preferential scheme. As a result, only after six months since this introduction, Cambodia’s exports to the EU have doubled compared to the first half of 2010.
“With the new EBA trade preferences, Cambodia can import more and export more,” said Mr. Rafael Dochao Moreno, Charge D’ affaires a.i. of the Delegation of the European Union to the Kingdom of Cambodia at a full-day trade seminar on August, 1 to help Cambodian exporters overcome the challenges that prevent them benefiting from the EU preferential trade arrangements.
“I believe Cambodia can export to EU about US$1.5-1.6 billions at the end of 2011 is not an unattainable figure, “The EU’s Charge D’ affairs a.i. expected the positive soaring trading, while Cambodia, in 2010, already exported to EU markets amounted US$930 million.
Mr. Dochao mentions that Cambodian should have earned prosperously from some potential agro-products which are in high demand to produce and export to enter EU markets rather than resort to send the fortune to Vietnam in stead such as pepper, Cashew nut, sugar, rice, cassava, and so on. “Cambodia should be capable for the prime transformations of her own products.”
He anyway, admits that European Union’ Foreign Direct Investment (FDI) to Cambodia is still low, but predicts [due to the new trade regime] EU will… pour more capital in years to come.
“Trade is the prioritized work for the EU delegation to Cambodia, but we want the trade links to sustainable development for this country as well, “he emphasizes. Secretary of State, Ministry of Commerce H.E. Mao Thora, says millions of Cambodians have benefited from the EU’s EBA condition so as the national economy as a whole since its operation in 2011.
So far, there are 260 factories with around 400,000 workers and 1,700 worker unions which resulted from the EU’s EBA while textile and garment industries amounted only 180 factories during 10 years a go before EU’s EBA was granted to the Kingdom. According to him, EBA affects agriculture bigger than the industry sector. “The EU’s EBA encourages millions of Cambodian farmers to plant rice, and various necessary crops that are in high demand at EU hoping to bring their products there.” Anyway, Mr. Dochao added that to boom Cambodian agro-product cultivations to supply EU’s demand has projected US$20 millions to run two projects in agricultural development as well.
The Secretary of State, however, expresses his concern over the foreign businesspeople to access their products with free duties basis to reach EU markets by exploiting the EBA trade preferences that EU granted to Cambodia.
To encourage Cambodia’s exports to the EU, this community has recently provided Cambodia the ‘ASEAN Cumulation’ condition mean Cambodia can enjoy the opportunities to absorb more raw materials from the nine ASEAN countries than made the final products from domestic manufacturers and selling it to EU with tariff –free and duties-free basis the same. But In order to increase the export to EU, he requests the delegation to consider for the future step to offer Cambodia the ASEAN+3 Cumulation basis simply mean the Kingdom can expand the input absorptions from Korea, Japan, and especially China where supplies most foreign raw materials to feed Cambodian industries.
To fully inspect the EBA implication, the Ministry of commerce has cooperated with ILO, and few other agencies to verify the EBA basis in Cambodia, he says. It should be remarked that Cambodia is among the 49 Least Developed Countries (LDCs) that receive EU trade preferences under a special Generalized System of Preferences (GSP) called ‘Everything but Arms’ scheme which provides duty-free and quota-free access to EU markets for all products, except arms and ammunition.
Mr. Dochao, finally alerts that EU will decide for the ending of its EBA’s trade assistances to Cambodia only when this country can jump out of the LDCs’ list and claim not to need EU’s EBA anymore.
The EU is Cambodia’ second trade destination, buying 27% of its total exports, at the moment mostly garments (80%) and shoes, and probably bicycles. Almost 75% of these exports enter EU markets without paying any duties whatsoever, as Cambodian products have duty-free access to the EU under the ‘Everything but Arms’ preferential market access scheme (EBA). The EBA gives the 49 LDCs duty-free access to the EU for 99.7% of all trade-able products: i.e. everything except arms and ammunition. The EU is also one of the biggest providers of trade-related assistances to Cambodia.
- By VUTHA TIM
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Category: Business News