Negotiations for a free trade agreement between Cambodia and China, the second-biggest economy in the world, will begin next month, the Chinese Embassy in Phnom Penh announced yesterday.
Following directions from the countries’ heads of state, China and Cambodia will launch the first official consultation on a bilateral FTA in Beijing on Dec 3, the embassy said.
“This comes as a special arrangement in light of the friendly relations between China and Cambodia,” it said. “The ministries of commerce of the two countries have previously established a contact mechanism at the working level and maintained close communication.”
Sok Sopheak, secretary of state at the Ministry of Commerce, confirmed the beginning of negotiations to Khmer Times yesterday.
He pointed out that the only free trade agreement in place with China is at the multilateral level. The existing Asean-China FTA, however, is not enough to meet the trade potential between the countries, he said.
Mr Sopheak noted that bilateral FTAs are a common occurrence in the region, with Japan, for example, having signed such deals with Indonesia, the Philippines, and Singapore.
“A free trade deal will give us more opportunities and market access beyond what can be achieved through the Asean-China FTA,” Mr Sopheak said.
“China does not want a bilateral agreement with Thailand or Vietnam because these countries are big producers of agricultural products and could flood the Chinese market. Cambodia, on the other hand, has fewer agriculture products, so the impact on the Chinese market would be smaller,” he said.
Mr Sopheak said the FTA is in both countries’ best interest. “China is also facing issues in trade with the US, so Chinese companies are looking for investment opportunities in Cambodia and Vietnam. The goal is to manufacture in these countries and then export to the US.”
Ek Tha, spokesman for the Council of Ministers, welcomed the news. With a population of 1.4 billion, China has huge potential for Cambodian exporters, he said.
“In general, any free trade deal of this kind will be beneficial for the countries involved,” Mr Tha said.
Lim Heng, vice president of Cambodia Chamber of Commerce, told Khmer Times that the private sector wants an FTA with China as soon as possible, particularly taking into consideration that the Kingdom is likely to lose the trade benefits it enjoys under the US’ Generalized System of Privileges (GSP) in the near future as its economy develops.
“Signing this FTA will be great. It will give us access to China’s population of 1.4 billion people,” Mr Heng said.
“It will benefit both parties. Cambodia will be able to export a wider range of products.”
Trade between Cambodia and China reached $7.4 billion in 2018. The Kingdom exported $1.3 billion worth of goods to the Chinese market, an increase of 37 percent.
The countries aim to reach $10 billion in trade a year by 2023.