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What to expect from Cambodia-ROK FTA?

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Prime Minister Hun Sen and President Moon Jae-in shake hands during press conference on the occasion of President Moon’s state visit to Cambodia in March 2019. Supplied

The proposal to promote the Cambodia-ROK FTA was put forward by Prime Minister Hun Sen when ROK President Moon Jae-in state-visited the Kingdom in March 2019. After the two countries announced the beginning of the negotiation process in July this year, bilateral rounds of negotiations have seen a steady yet rapid progress. As of October, both sides are expecting to see the outline of the negotiation results by the end of this year.

Overall, the Cambodia-ROK FTA is expected to serve as an important opportunity to increase trade and investment between the two countries. It is anticipated to accelerate growth in bilateral trade volume, which has increased by an average of 15.3% annually from 54 million dollars in 1997 to 1.03 billion dollars in 2019. Considering that bilateral trade volume has increased significantly since the conclusion of ASEAN-ROK FTA in 2007, the Cambodian-ROK FTA that reflects both countries’ specific needs and interests is highly likely to create another momentum for promoting trade and investment.

From the point of view of Cambodian consumers, benefits will increase as they will be able to access Korean goods and services such as beverages, vehicles and even cosmetics at a more reasonable price. Korean consumers will also benefit from the bilateral FTA, as they will be able to purchase products imported from Cambodia at a better bargain. The FTA will do good for many Korean companies that are established in Cambodia by improving the export price competitiveness of their products when selling back to Korea.

The Cambodia-ROK FTA could also serve as an opportunity to discover new economic growth engines for Cambodia, not only by expanding exports of already-established trade items but also by increasing investment attraction for both sides. From the standpoint of Korea, FTA will provide an opportunity to actively invest in Cambodia, a country that is seeking its development into a new hub of production and trade in the ASEAN region. The FTA will greatly improve the accessibility of businessmen from both countries to the other’s markets, contributing to employment and mutual economic growth.

At a time when the global trade environment is uncertain due to trade disputes of major countries in the world, and when countries around the world are suffering from economic hardships caused by the impact from COVID-19 pandemic, the promotion of Cambodia-ROK FTA has all the more special meaning. Should the FTA go into effect earlier, it will be able to add strength to measures to recover the economy after COVID-19.

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