National workshop on a new trade policy and aid for trade support programme for Cambodia after LDC graduation

Cambodia met the least developed country (LDC) graduation criteria for the first time in 2021 and could graduate as early as 2027 depending on the country’s assessment by the Committee for Development Policy (CDP) in 2024. The loss of LDC trade preferences for Cambodia upon graduation may hurt competitiveness and export performance as major exports, essentially garments, but also bicycles and shoes are placed in global value chains sensible to profit margins. Hence, how to manage trade preferences, trade contingency measures and rules of origin are crucial issues for Cambodia. The country has recently promulgated a new law on rules of origin and has made substantial steps to maintain viable the utilization of trade preferences in the European Union for its growing bicycle industry.

This workshop will provide an opportunity to make further reflections on the complex trade and investment scenario given the expansion of the trade agenda to new areas such as e-commerce and digital services as outlined in the Asian Development Bank (ADB) Aid for Trade Report of 2022. The services commitments and provisions on e-commerce under the Regional Comprehensive Economic Partnership (RCEP) may be expected to give fresh momentum to accelerating digital services trade in the region if implementation is taken seriously. However, the persisting digital divide among ASEAN countries may lead to varying degrees of liberalization and uneven distribution of digital trade gains.

The report also contains suggestions on developing a forward-looking, tailored research and capacity building program specifically addressed to Cambodia’s needs. It has been the experience that participation to multilateral and regional trade initiatives geared towards liberalizing trade and investments require a capacity to evaluate proposals and draft legislation related to domestic regulatory framework which LDCs may not adequately possess. Thus, limited human and resource capacity may be an obstacle to Cambodia's full participation in the global economy.

Starting from the new Cambodian Law on Rules of Origin, the workshop aims to outline the modalities to progressively develop such capacity at national level. The main objective of the workshop is to continue and expand the policy dialogue among supporting institutions such as ADB and UNCTAD and the trade policy makers and regulators of Cambodia to identify the trade policy options and related Aid for Trade assistance to address the challenges faced by Cambodia. Specifically, the workshop aims to identify new Aid for Trade needs to orient research and capacity-building assistance required to support Cambodia in:

• Implementing their commitment under RCEP and other free trade agreements (FTAs) and increase their utilization rates;
• Efficiently negotiating new FTAs or updating commitments under existing ones; and
• Identifying trade policy strategies to maintain and improve market access in main preference-giving countries after their graduation and seeking alternative markets.