Tariff Pact Delayed Amid Trade Concerns

The effects of a 2002 agreement between China and Asean to re­duce tariffs, which had been sche­duled to start here in Jan­uary, will be delayed because the agreement has not been ratified by the Na­tional Assembly, officials said Tues­day.

The delay will likely have little ef­­fect on Cambodian producers as there are so few, experts said.

When the treaty is implemented, experts said, there could in fact be great risk for Cambodia in the form of a flood of cheap Chi­nese im­ports.

“The new tariff lines cannot be im­plemented because the framework agreement has not been ratified,” said Huy Sambath, the di­rector of the Department of Eco­no­­mic Integration and Asean at the Ministry of Finance.

He added that King Norodom Si­hamoni must sign the agreement before its implementation can proceed.

“Cambodia’s exports to China are not much,” Huy Sambath said. “The Chinese are very eager to have this agreement imple­men­ted because it benefits Chi­nese interests.”

On Nov 4, 2002, Prime Min­ister Hun Sen signed the framework agree­­ment, which commits Asean na­tions to reducing tariffs on each other’s goods to between zero and 5-percent by 2015.

According to the treaty, by Jan­uary 2006, Cambodia and China must reduce tariffs on a first wave of “Early Harvest” products to be­tween zero and 20 percent. By 2010 tariffs on all these products are supposed to stand at zero.

“Early Harvest” refers to 2,000 pro­­ducts specified in the treaty, most of which are agricultural, but rice included.

A later provision of the treaty co­vers an additional 10,000 industrial goods, which are expected to get tariff reductions by 2015, if the agreement is ratified.

Huy Sambath said Cambodia is stu­dying how to export rice into Chi­na.

“There are many regulations im­­posed on the export of rice,” he said, adding that palm oil, another Cam­­bodian product with export po­ten­tial, is also not an “Early Har­vest” product.

Although the agreement has not been ratified, China has al­ready lowered tariffs on 297 products such as sesame oil and shellfish, Huy Sambath said.

Neak Samsen, a trade re­search­er at the Economic In­sti­tute of Cam­­­bo­dia, also said the im­ple­men­ta­tion of the agreement with China could jeopardize local pro­ducers with a flood of Chinese im­ports.

But he added that the promise of being able to export goods to Chi­na with little or no tariffs could en­­courage local people to invest in ag­ro-industry.

Bahn Lean, the managing di­rec­tor of Kompong Cham-based Ca­shew Nuts Cambodia, said he is a long way from being able to ship his products to China, re­gard­less of tariff agreements.

“We can’t sell with a low price in Chi­na, because we have to contend with our cashews being smug­­­gled through Vietnam,” he said.

Thon Virak, the deputy director of the Commerce Ministry’s For­eign Trade Department, said Cam­bo­dia is not yet ready to benefit from access to China, be­cause there are not yet enough large scale farms.

China’s “market needs thousands of tons of beans, but we don’t have enough for them,” he said, adding that small producers can­­not profit from shipping goods to China because they don’t produce enough goods to fill containers at the port.

To make transportation easier, Chi­­na and Asean have agreed to de­­velop a rail link from Singapore to Kunming, in order to facilitate trade.

Neak Samsen said that for max­i­mum benefit, rice should be in­cluded in the treaty.

Dourng Kakada, another EIC re­­searcher, said China has ban­ned all rice imports from Cam­bo­dia for purely protectionist reasons.

“It is a sensitive product,” he said.

 

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