Cambodia and United States to Sign Investment Treaty

May Kunmakara / Khmer Times No Comments Share:

Cambodia expects to conclude a Bilateral Investment Treaty (BIT) with the United States within the next month that is set to expand trade and investment between the two countries.
The move follows a meeting between Catherine Novelli, US Under Secretary for Economic Growth, and Commerce Minister Sun Chanthol last week, according to a statement from the Ministry of Commerce.
“(Ms.) Novelli encouraged Cambodia to work towards the conclusion of the BIT between the US and Cambodia as soon as it is practical in order to promote more investment from the US to Cambodia,” the statement said.
Mr. Sun Chanthol informed Ms. Novelli that the team from the US and the Council for Development of Cambodia (CDC) led by Sok Chenda Sophea, Secretary General of the CDC, met recently in Cambodia to further review and analyze the treaty.
“The CDC sought more clarification from the US side and would respond to the US within one month after consultation with relevant ministries and agencies,” the statement said.
A BIT is an agreement establishing the terms and conditions for private investment by nationals and companies of one country to another, known as Foreign Direct Investment.
David Van, a senior adviser at the BowerGroupAsia business consultancy, told Khmer Times that most BITs grant investments made by a foreign investor a number of guarantees, which typically include fair and equitable treatment, protection from expropriation and full protection and security.
To date, 41 countries have signed up to BITs with the US with another seven pending ratification from their parliaments. But there are also 14 countries that do not have a BIT but a Free Trade Agreement (FTA) with the US with about another 17 in the negotiation process.
 “In the face of looming difficulties ahead, as our immediate neighbors are gaining similar and better market access privileges,” Mr. Van said.
“The Ministry of Commerce was requested by the prime minister to authorize resumption of TIFA talks. The Cambodian delegation made a preliminary trip to Washington in late November, followed by a third Joint Council Meeting on a Trade and Investment Framework Agreement (TIFA) recently held in early February  in Phnom Penh,” he said.
“US firms abide by stringent corporate governance conditions like the Foreign Corrupt Practices Act and value utmost the spirit of full transparency and level playing field for US investments. Legal institutions remain one of the major stumbling blocks to enact any fair treatment to US investors under the BIT context. That may be one of the reasons why Cambodia has been reluctant till today, as judicial reform remains difficult and complicated in the current local context.”
He said that the US had started two rounds of negotiations with Cambodia for TIFA back in 2007 while noting that Cambodia exports over 33 percent of its exports to the US. Since then, further negotiations have been suspended due to Cambodian government reticence on BIT.
TIFA is a trade pact establishing a framework for expanding trade and resolving outstanding disputes between countries. TIFAs are often seen as an important step towards establishing Free Trade Agreements.
According to the ministry statement, Mr. Sun Chanthol also encouraged the US government to lower or remove duties for Cambodian textiles, clothing and footwear. He also asked that duties for travel goods be reduced.
Ms. Novelli agreed to look into the request and indicated that she would travel to Cambodia this summer to further assess ways to expand trade and investment.
Cambodian exports reached more than $3 billion last year, up from $2.8 billion in 2014 – a rise of more than 9 percent, according to the Office of the United States Trade Representative.  
In 2013, Cambodia was the United States’ 70th largest trading partner with $3.0 billion in total trade and the 60th largest source of imports for the US.

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