Free Trade Agreement Between Cambodia And China

The signing of the agreement implies the entry of the two countries into a new era of a partnership of comprehensive strategic cooperation, which the Sino-Cambodian community is building with a common future, and cooperation for the joint construction of the Silk Road Economic Belt and the 21st century Maritime Silk Road. At the signing ceremony, Cambodian Trade Minister Pan Sorasak said the agreement would ensure a strong economic partnership between the two countries by ensuring better market access for goods, services and investment. They also signed an agreement under which China will provide $149 million in aid, which will be used by Cambodia to build priority projects in 2020. As a result, the free trade agreement is unlikely to combine trade with Europe, and the International Monetary Fund has said that this could result in the loss of tens of thousands of jobs in the clothing sector alone. Bilateral trade between Cambodia and China reached more than $9 billion in 2019, although the trade balance is severely distorted. Economists questioned Cambodia`s ability to take full advantage of the free trade agreement, particularly in light of the COVID-19-induced economic contraction estimated for 2020. Cambodia had a trade deficit of more than $6 billion in 2018 compared to China, the world`s second-largest economy holding 46% of the country`s debt. China and Cambodia signed a free trade agreement between the two countries on October 5, 2020. The agreement was virtually in place between Cambodian Trade Minister Pan Sorasak and Chinese Trade Minister Zhong Shan.

Cambodian Prime Minister Samdech Techo Hun Sen and the Chinese State Council and Foreign Minister Wang Yi were also present to attend the signing. Prime Minister Hun Sen and Chinese Foreign Minister Wang Yi led the signing of the trade agreement at the Peace Palace in Phnom Penh, as well as grants for hospital renovation and sanitation in the coastal city of Sihanoukville. Hun Sen spoke a lot about the free trade agreement, the first such agreement between Cambodia and a foreign state, and said it was of great economic and political importance. He also expressed confidence in improving Cambodia`s development through friendly cooperation with China. “The EBA will one day be more or less lost. But this free trade agreement between Cambodia and China is here to stay with Cambodia forever,” said Eang Sophallet, citing Hun Sen. E.B.A Privileges are granted only to the least developed country and, given that Cambodia is a low-income country, it would have been withdrawn from the agreement by Cambodian EU politicians. First, they must encourage potential Chinese investors to contribute to local development and create local jobs. Second, key local products should be identified and supported to enable Cambodian producers to compete with Chinese companies. Cambodia will then experience not only the risks, but also the benefits of freer trade with China. The free trade agreement is Cambodia`s first bilateral trade agreement and was concluded in less than a year. The two governments have given very few details on the Free Trade Agreement, other than to say that it would be a bullet in the arm of the Cambodian agricultural sector and that it contains about 300 products, without the critical export of rice, which currently has an export quota of 200,000 tonnes.