Negotiators from Japan and South Korea shook hands and drank champagne with government officials Tuesday after signing agreements for bilateral market access, propelling Cambodia closer to membership in the World Trade Organization.
Cambodia still needs to conclude bilateral negotiations with India, Panama and the US before it can join the WTO. The Commerce Ministry expects those negotiations to be settled within the week, paving the way for Cambodia to enter the WTO when member nations meet in Cancun, Mexico, in September.
“The accession of Cambodia is one of the few possible positive notes on the agenda and a face-saving issue for many WTO members,” Commerce Minister Cham Prasidh said. “I sincerely hope everybody understands now that time is of essence for the WTO to admit Cambodia.”
The deadline for concluding bilateral negotiations is July 22, when the WTO meets in Geneva to review a draft report containing the final details of Cambodia’s bilateral negotiations with all WTO members. While the Ministry of Commerce pushes for Cambodia’s accession to the WTO, critics say Cambodia is not ready to compete on a global scale.
Cambodia has now completed bilateral negotiations with six of the nine WTO members that requested them, including the European Union, Australia, Canada and Taiwan. If admitted to the WTO, Cambodia would become its first least-developed country.
“Many pledges were made to expedite and facilitate the accession of the LDCs into the WTO,” Cham Prasidh said. “For the case of Cambodia, it is now a question of days, not months anymore.”
While Cham Prasidh urged the remaining three countries “to clear their bilateral matters with Cambodia within the week,” Commerce Ministry Secretary of State Sok Siphana said the negotiations were very close to being finalized.
“The substance of negotiations with India, Panama and the US is complete,” Sok Siphana said. “All that is left is just pure paperwork and formality.”
Cambodia first applied to join the WTO in 1994. Bilateral negotiations between Cambodia and interested WTO members began in May 2001 when Cambodia held its first multilateral meeting. At the second multilateral meeting in February 2002, Cham Prasidh outlined Cambodia’s argument for joining the WTO.
“While the short-term implications of WTO membership will probably indicate a prevalence of costs over benefits, the long-term benefits stand to outweigh costs by far,” he said. “Not only does WTO membership provide smaller, more vulnerable economies like Cambodia with better protection, non-discriminatory [Most Favored Nation] treatment, and a recourse to the rule of law, but it also provides much better access to international markets, a boost to domestic reforms and economic development.”
Despite the optimism in the Commerce Ministry , some aid groups have raised concerns that Cambodian businesses cannot compete against those in countries such as China, India and Thailand.
“Joining the WTO will make it harder for the government and the Cambodian people,” said Raoul Jennar, a researcher with Oxfam Belgium who studies international trade. “The free market means competition. Cambodian businesses are not ready to compete internationally.”
Cambodia lacks legal security, a skilled work force and solid infrastructure, Jennar said. With the US garment quotas set to expire by 2005, Jennar said he believes some factory owners will leave Cambodia.
Sok Siphana, however, said Cambodia would retain its garment factories because the cost of relocation would offset cheaper labor costs. Also, since Cambodia agreed to follow US labor standards, Sok Siphana said big corporations will purchase orders from Cambodia enough to support the existing garment factories.
“Corporate citizens are conscious of their image,” he said. “They will always buy from China because it’s cheap, but they will also shift a percentage to Cambodia because it looks good to shareholders.”