More than five months after a comprehensive trade agreement with Vietnam expired, Commerce Minister Cham Prasidh is set to renew the deal at the end of this month, reducing tariffs on about a dozen items, officials said yesterday.
The agreement will come as a relief to tobacco farmers along the banks of the Mekong river who saw prices drop by around 50 percent as talks on the duty-free export quota stalled prior to the May tobacco harvest, causing demand to dry up in Vietnam.
The agreement, which was first signed between the two countries in 2007, will include 3,000 tons of duty-free dry tobacco leaves and 250,000 tons of milled rice to Vietnam, said Sok Sopheak, director-general of the Commerce Ministry’s department of international trade.
“The minister will sign the agreement when he visits Vietnam” on Oct 25, he said, adding that the deal would be in place for a year.
Le Bien Cuong, commercial counselor at the Vietnamese Embassy in Phnom Penh, said the agreement had been finalized and contained no major changes from the last agreement signed in 2009.
“It’s done. We’re just waiting for the superiors to sign it,” he said.
Details on other items included under the agreement were not available yesterday.
The quota on tobacco will amount to about 30 percent of Cambodia’s 10,000-ton harvest. In total there are about 14,000 hectares of land in Kandal, Kompong Cham and Kratie provinces being used for tobacco cultivation.
Kun Lim, head of corporate and regulatory affairs at British American Tobacco, said that tobacco was currently selling for about $1.5 per kilogram, almost double the amount of three years ago, but less than the high of $3 per kilogram in 2009.
The buying season for tobacco ended in May, so only those with the ability to store stock would be able to keep selling, he said.
How farmers have coped with meager profits over the course of the year is still unclear. “It is one of those complicated things. It is very hard for me to understand at this time,” Mr Lim said.