Though the Regional Comprehensive Economic Partnership (RCEP) may bring only modest short-run economic benefits to Cambodia, the long-run outlook looks positive. Through ASEAN free trade agreements (FTAs) with non-ASEAN partners, Cambodia has already benefited from extensive tariff reductions and preferential trade treatment. For example, over 70 per cent of intra-ASEAN trade is conducted with zero tariffs.
The European Union and United States are not direct participants to RCEP, yet they are Cambodia’s first and second largest importers respectively, jointly accounting for 70 per cent of Cambodia’s exports. This includes 76 per cent of Cambodia’s garment and footwear exports. By contrast, RCEP countries are modest consumers of Cambodia’s products. Japan consumes 8 per cent of Cambodia’s exports, China and India 6 per cent, Australia, New Zealand and South Korea 3 per cent and ASEAN countries make up 9 per cent.
Cambodia’s existing preferential trade arrangements and narrow production and export base indicate that RECP might not substantially boost Cambodia’s market access, at least directly and immediately. Instead, RCEP could become a net competitor to Cambodia rather than expanding export market access.
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