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Logo of Phnom Penh Post newspaper Phnom Penh Post - After the Polls, Quo Vadis Cambodia?

After the Polls, Quo Vadis Cambodia?

Understandably, no responsible person in Cambodia has voiced their thoughts in public

on the country's future direction. All energies are directed to ensuring success

in the forthcoming elections or to the division of power thereafter.

However, within six months at least, there will be a newly elected government taking

over from UNTAC and the SNC. What will happen then? Faced by the joint tasks of re-building

a battered lop-sided economy and re-establishing links as a sovereign body with the

outside world, which way will Cambodia turn?

All ideas for change are affected by "recognition lags." That is, the time

necessary for an idea to be considered, debated, and chewed over before its supporters

judge the moment ripe for trying to implement it. This article's purpose is simple.

To pose the question: "Quo vadis, Cambodia" -or, "wither goes the

country?" And to put forward a practical suggestion for consideration by a new

government.

One obvious premise underlies the argument. Cambodia cannot raise the welfare of

its people without outside help. Here, one is not talking about multilateral financial

aid. What is at issue is the policy framework within which such assistance will operate.

This, only a new government can decide.

Two elements in the environment will determine whatever decision is taken. One is

external; the order, internal.

The vogue in the outside world is for countries to associate. To join rather than

try and make it alone. There are many illustrations from establishing "growth

triangles," creating economic hubs through setting up or participating in "economic

integration zones," to "regional free trade schemes," "trade

blocs," and the like. Asian, the Asia Free Trade Agreement, and the 3-year old

Asia-Pacific Economic Co-operation Forum, are examples for this part of the world.

For years to come, Cambodia will remain vulnerable and open to exploitation. Its

only safeguard: coming to terms with its neighbors. Equally, the country's small

market-size, poor natural resource-based potential and limited surplus capital, means

that sustained development can only be hoped for within a sub-regional context. Moreover,

only within such a grouping can Cambodia hope to survive as a viable small country.

How can it match the above two exigencies without running the risk of being swamped

or losing its economic sovereignty? If it does become part of a wider economic grouping,

how can it ensure that its voice will be given equal weight, that the commitments

it makes will be matched by its country partners? That it will not be taken for a

ride?

A Viable Policy Option

A tall order. Luckily a tried remedy is at hand. Joining G.A.T.T. (General Agreement

on Tariffs and Trade). An international multilateral organization with built-in devices

for safeguarding the interests of weak against strong countries.

The rest of this article focuses on three things. Why GATT should be of interest

to Cambodia. How, through GATT membership, Cambodia will have the means to protect

its fragile independence even in the context of a regional grouping. Finally, to

join such an organization.

The latter point is the most interesting. As will be shown, very few people know

that Cambodia has a history of GATT involvement. Because of the Pol Pot years, when

records were willfully destroyed and intellectuals done away with, the institutional

memory thereof has been wiped out. Today, only a tiny handful of officials in Geneva

and Phnom Penh are aware of what happened in the past and of the legally unique position

that Cambodia is in today.

What would GATT mean for Cambodia?

To start at the beginning. Although the GATT is frequently cited in the media these

days few, apart from trade and business experts knows what it really is. Briefly,

GATT is the watch dog for the open world trading system created since 1948. The letters

GATT stand for are what has become a binding contract between 105 governments which

together account for about 90 percent of world merchandise trade. The Organization

is currently in the throes of working through the mammoth seven year old 108-Nation

Uruguay Round of multilateral negotiations, the largest most critical event in trade

history.

Also little known is the fact that four-fifths of the participants are so-called

developing countries and 20 of them belong to the poorest category of "least

developed"-a group that Cambodia would fit into.

These points suggest that adhering to GATT will have particular advantages for the

Cambodia of today. First, it will confer a necessary degree of politico-economic

respectability. This is important. Although Cambodia has made major efforts to switch

from a Command-type system to a Market-oriented economy, a multitude of problems

remains. Among the most important are policy initiatives to encourage sustained foreign

investment.

GATT membership would be a vital signal to all those foreign investors who see a

country's participation in the Organization as a sort of guarantee of good intentions

regarding continued market-opening behavior. In other words, it is comparable to

being given a recognized credit rating.

While the GATT treaty is legally complex and the subject of scores of academic analyses,

experts generally agree as to its legal benefits for developing countries. As will

be seen, they are of particular relevance to a Cambodia about to re-emerge on the

world scene ( see box).

Given Cambodia's long diplomatic isolation and small number of officials with experience

in trade negotiations and country representation, membership in the GATT would arguably

present the easiest, fastest, and least costly way of getting on to a steep learning

curve.

An additional advantage of slightly longer term significance are GATT requirements

that have to be met in setting up or freshly joining a regional free trade or customs

union area. This is a safeguard for Cambodia, given the author's view that belonging

to a regional economic association is the only viable long-term option open to Cambodia.

In this connection, the fact that all the countries in the South Asia region are

GATT member-with the exception of Laos and Vietnam -is an added incentive to join

membership would enable Cambodia to invoke the "protective features" of

the General Agreement should it have problems with such countries. Something it could

not do it stood alone.

Thus, it Cambodia were to join a grouping under the unofficial leadership of, say,

Thailand, GATT would provide Cambodia with an additional arm-a multinational arm-for

defending its national interests and addressing any subsequent grievances (perhaps

the reason why Laos has made a formal request to accede to the GATT.).

Joining GATT

What can Cambodia do about joining the GATT? Countries accede to GATT in one of two

ways. In the case of ex-colonies it is simple and automatic. It the former colonial

power can demonstrate that GATT rules and obligations were applied throughout the

colony's territory right up to independence, then articles XXVI 5(c) of the GATT

treaty applies.

All that is necessary is for the Metropolitan power to so inform the Director General

of GATT of the situation for its former protege. The Director General must then issue

a Certificate stating that henceforth the newly independent country be deemed a GATT

member.

The more usual way is applying for accession under article XXXIII, which involves

a degrees of "horse trading". In essence, this article provides that aspiring

applicants must first negotiate with existing members of the "Club", ie

pay an entrance fee. In the past, demands on developing country newcomers following

this route were minimal. Nowadays, judging from recent accession proceedings, more

has been required-and conceded-by such as Bolivia, Costa Rica and El Salvador, to

name only those with a narrow resource-base like Cambodia.

Cambodia's Options

When I first researched the question in the archives of the GATT before coming to

Phnom Penh, I was surprised to find that Cambodia was in a very strong position!

The dusty historical record showed two things. When Cambodia was a French protectorate,

the GATT's provisions were applied throughout its territory. According to article

XXVI 5(c), France so informed GATT on its independence. Although Cambodia said, at

the time, that it did not wish to join this way, the option was never officially

rejected. That is why Cambodia's name still appears on the current list of 29 countries

maintaining de facto application of GATT pending final decisions as to their future

commercial policy.

Cambodia could, at least in theory, become a contracting party to GATT simply by

sending a formal letter to the Director General confirming that it would apply the

tariff concessions France had previously negotiated (actually on behalf of Indo-China,

as a whole, of which Cambodia was then a part).

More surprisingly for an ex-colony, Cambodia decided to take the difficult horse-trading

route by actually negotiating a protocol of accession under the provisions of article

XXXIII. This was in 1961 during the course of a GATT multilateral trade exercise

called the "Dillon Round". Like any other major country, tariff concession

were negotiated with the European Community (EC), Czechoslovakia and Norway, as part

of Cambodia's entry payment.

Recalling these countries is very important. On accession, existing GATT members

have the legal right (article XXXV) to deny the extension of their GATT benefits

to a newcomer that they not approve of for some reason (as was done in the case of

South Africa). But ,there is one vital proviso. Those who have negotiated with the

applicant during the accession process are debarred from so doing. As the EC is the

largest combined market in the world, this is of enormous potential significance

fro Cambodia.

This is where the story becomes interesting, because nothing happened. There was

a change of government in Cambodia and increasing concern at the way the war was

going in South Vietnam. Prince Sihanouk, who had accused the CIA of involvement in

a provincial right-wing plot to overthrow him in 1959, finally renounced US military

and economic aid and forced the closure of US aid missions in the country in 1963.

Events in Geneva took a back seat. The Cambodian delegation returned and the expected

signing of the protocol was postponed. But, in the meantime, 24 GATT contracting

parties had signed welcoming Cambodia's entrance to the Organization. And that is

where the situation remains to this day.

Oddly enough, under GATT rules, there was no time limit to the signing of a protocol

of accession; the United States proposed the need for such a limit in discussion

during the current Urugguay Round the suggestion was not pursued. Nowadays, probably

to avoid a repetition of the Cambodian situation, all new protocol of accession stipulate

a date by which the acceding country must sign.

But this does not alter Cambodia's case. Its protocol remains valid in international

law.

So, despite the passage of 32 years, Cambodia could become a member of the world's

most important trade body just 30 days after affixing its signature to the protocol.

This situation is unique and only handful of people know about it!

Cambodia has not had much luck in the last two decades. That an historical accident

should prove fortunate is an unexpected bonus.

Considering the range of problems that a newly elected government will inherit, an

important factor will be the number of viable options open to it. It is the contention

of this articles that GATT membership should become one of these options.

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