No Free Meal with FTAs

KHMER TIMES
MAY KUNMAKARA

Containers at Sihanoukville Autonomous Port. The removal or reduction in custom duties is the rst step to promote the free ow of goods. KT/Chor Sokunthea

Free trade only works in practice when all countries are able to trade freely, with no regional restrictions or barriers, said a senior government official yesterday who also pointed out to Cambodia’s current exclusion from the US-led Trans-Pacific Partnership (TPP).

Sun Chanthol, the newly appointed Minister of Public Works and Transport, and the former Minister of Commerce, told attendees at the 37th Asean Ports Association working committee meeting in Phnom Penh that in many cases free trade agreements were used more as political tools for geopolitical control, than for any real attempt to liberalize global trade.

“Have we really practiced what we preach about free trade? Have we removed the non-tariff barriers and or non-tariff measures that are the key impediments to trade? If trade spurs economic growth and reduces poverty for the citizens of the world, why do we have so many trading blocks and agreements that include or exclude certain countries such as the Trans-Pacific Partnership?” Mr. Chanthol asked the audience.

Mr. Chanthol pointed out that the TPP had only four Asean countries, as opposed to the Regional Comprehensive Economic Partnership Agreement that included all 10 Asean countries.

The TPP is a trade agreement among 12 Pacific Rim countries signed this February in New Zealand, after seven years of negotiations. Implementing the TPP is one of the goals of US President Barrack Obama before he leaves office at the end of the year.

“If we want free trade to benefit the citizens of the world, we must double our efforts in reducing the NTBs [non-tariff barriers] and or NTMs [non-tariff measures]. Cross border transport procedures should be streamlined to facilitate trade. In addition, we should not use free trade agreements as a political tool to resolve geopolitical issues,” he stressed.

Hiroshi Suzuki, CEO and chief economist at the Business Research Institute for Cambodia, said that the removal or reduction in custom duties was the essential first step for reducing trade tariffs.

“So far, some countries have not yet abolished non-tariff barriers. The major issues of non-tariff barriers are import restrictions, import license requirements, inspections before shipping, certificates of origin and other technical requirements,” he wrote in an email to Khmer Times yesterday.

Mr. Suzuki pointed out that the Asean Economic Community (AEC) had established the Master Plan for Asean Connectivity (MPAC) in 2010. The MPAC will connect and improve the region’s infrastructure and aid in reducing policy and institutional barriers.

“The MPAC is yet to yield good results but the AEC is on-track to tackle non-tariff barriers,” he said.

Created in December, the AEC built a single market for the more than 630 million people living in Asean countries, with a combined GDP of $2.6 trillion and a trade volume worth more than $2.5 trillion annually.

Ear Sophal, associate professor of diplomacy and world affairs at Occidental College in Los Angeles, US, agreed that NTBs are widespread and detrimental, but said that not all blocks to trade were tariff related.

“One has to recognize that just because Cambodia wants to sell something to the rest of the world, and does not meet for example the Sanitary and Phytosanitary Standards (SPS), doesn’t mean it’s an NTB,” he wrote in an email yesterday.

“Cambodia has to ensure that what it exports complies with other countries' standards. Honestly, no one can trust what is sold inside Cambodia, with plastic rice, borax noodles, and poisoned fish. Why should a country let in anything it doesn’t deem to meet SPS, for example?” Mr. Sophal said.

The key to greater acceptance to world markets, he said, was to strengthen domestic monitoring of SPS.

“If it doesn’t, it will just be left behind. When Cambodia joined the WTO, it agreed to SPS, so too bad, that is what it signed.”