Search form

Login - Register | FOLLOW US ON

Logo of Phnom Penh Post newspaper Phnom Penh Post - Comment: Law of the jungle: Cambodia's accession to the WTO

Comment: Law of the jungle: Cambodia's accession to the WTO

The following is an edited extract of Oxfam International's analysis of Cambodia's

World Trade Organisation accession.

Oxfam does not oppose the decision of the Royal Government of Cambodia to join the

World Trade Organisation (WTO); clearly this is a decision for Cambodia and Cambodians.

However, we wish to expose this example of double standards in the Cambodian Accession

Treaty, in which Cambodia has been asked to go much further than current WTO members

in pulling down market protections. Once again it seems that there is one rule for

the rich and another for the rest of the world.

At the Cancun ministerial conference, Cambodia will be the first Least Developed

Country (LDC) to accede to the WTO since it was created in 1995.

This will be hailed by developed countries as the proof that the WTO can deliver

for one of the world's poorest countries. It will also be presented as a satisfactory

outcome to the long-standing demand by LDC members (which automatically acceded when

the WTO was created) that accession procedures for LDCs be simplified and streamlined.

Unfortunately, this rosy picture is far from the truth.

HE Mr Cham Prasidh, Minister of Commerce, has said: "This is a package of concessions

and commitments that goes far beyond what is commensurate with the level of development

of an LDC like Cambodia. Nonetheless, we do accept the challenges, because we see

the benefits of joining the world trading system."

In reality, Cambodia was pressured by members of the WTO into making concessions

that go far beyond the level of commitments made by LDCs that are already members

of the WTO.

For instance, Cambodia has been forced into immediately halting the licensing of

affordable generic versions of new medicines, even though the Doha declaration allows

LDCs to wait until at least 2016 to implement this complicated and far-reaching agreement.

Moreover, some of the requirements put upon Cambodia go far beyond what the United

States and the European Union are willing to commit to in the present round of negotiations.

Tariff peaks are a case in point. Cambodia, a country where 80 percent of the population

is employed in the agricultural sector, has been asked to provide less protection

to its sensitive agricultural sectors (60 percent maximum tariff) than the US, EU

and Canada. The EU's highest tariff peak on agriculture is 252 percent. In the case

of the United States and Canada, it is 121 percent and 120 percent respectively.

There is a very real risk that Cambodia's accession will serve as a template model

for the accession of other LDCs and developing countries. Another 26 countries are

also in the process of negotiation to become members of the WTO, including nine LDCs.

The establishment of a precedent would confirm the trend of demanding increasing

levels of commitments of those countries that have not yet entered the WTO.

Development needs

Cambodia is one of the world's poorest countries. Under a succession of International

Monetary Fund (IMF) programs, Cambodia has embarked on a rapid trade-liberalization

exercise. Average tariff rates have been halved since 1996, to 15 percent.

Under the terms of two memoranda signed between the IMF and Cambodia in 2001, further

reforms were introduced, including a sharp reduction in maximum tariff levels.

In addition to the shock caused by such rapid reform, the decrease in applied tariff

rates demanded by the IMF and the World Bank weakened the bargaining position of

Cambodia during the WTO accession process.

Economic growth has been dependent on garment exports-85 percent of all exports.

Cutthroat competition in this sector and continued protectionism makes small countries'

market access extremely vulnerable.

Unfortunately, Cambodia is about to lose the preferential access it previously enjoyed

through quotas because of the dismantling of the WTO textile agreement in December


For Cambodia, entering the WTO will not necessarily mean expanded market access in

this area due to additional competition from highly competitive suppliers like China

and India. Lower textile exports could be disastrous for Cambodia, given its already

high balance of payments deficit (9.4 percent of GDP in 2001).

Rural poverty has fallen very slowly, at only 0.3 percent per year. Rural areas,

where 80 percent of the workforce is still employed in agriculture, continue to suffer

from poor infrastructure and a lack of essential services.

The protection of sectors that are vital to food security and rural livelihoods should

continue at least until other employment opportunities are available for those currently

employed in agriculture.

Facts about accession

Not only must a country abide by all WTO rules to enter the WTO, but individual members

are allowed to ask for further concessions from applicants in return for existing

members' support for their application.

Without the support of key WTO members, there is no chance that any country would

enter the WTO. Thus, acceding countries are forced to negotiate bilateral agreements

with all key players.

"WTO officials are fond of saying that the multilateral trading system is a

rule-based system," wrote trade analysts Grynberg and Joy in The Journal of

World Trade in 2000. "Yet the accession process has no rules, except precedent

and power... More importantly, the applicant cannot inflict any marginal cost on

the WTO members when they demand progressively more trade concessions."

In short, the big players call the shots.

The Doha ministerial conference pledged to facilitate LDC accession to the WTO, and

to exercise restraint in seeking concessions and commitments on trade in goods and

services from LDCs.

Unfortunately these pro-development principles were not respected when it came to

the crunch of the Cambodian accession negotiations.

Cambodia's accession

In the case of a poor country like Cambodia, accession is seen as a necessary means

to achieve economic growth.

"In a time of harsh and fierce global competition, the survival of our country

depends on our ability to capture the right opportunities and at the right time.

We believe the entry to the WTO is such a case," Cham Prasidh said in July.

WTO is seen as an additional step towards breaking away from Cambodia's image as

a poor, war-stricken country, isolated from the international community. According

to one Cambodian official, Cambodia does not want only to be seen as "a country

with killing fields".

But will Cambodia really benefit from entering the WTO?

It is worthwhile looking at the situation of the 30 LDC members of the WTO. Despite

their membership, they have been unable to secure trade opportunities commensurate

with their development needs.

Low-income countries account for 40 percent of the world's population but only 3

percent of world trade. During the period 1997-2000, non-oil-exporting LDCs have

actually seen their value of exports decrease because of the absence of any WTO or

other international measure to address falling commodity prices.

In the current negotiations, despite promises made at the United Nations by WTO members,

LDCs have still not received any insurance that they will obtain bound, duty-free

and quota-free market access to developed countries, one of their long-standing demands.

In fact, the current round will probably erode the trade preferences that they currently

enjoy, marginalizing them even further. In the case of the dispute settlement costs,

lack of technical capacity and political pressures have prevented LDCs from defending

their rights.

None of them has made any claims at the dispute settlement body so far. Technical

assistance remains a drop in the ocean, with just $22 million in 2002 to be distributed

among 104 developing country members.

Flexibility-or lack of it

When asked what constituted special and differential treatment in Cambodia's accession

deal, a WTO official said that Cambodia has secured longer implementation periods

for the following agreements: Technical Barriers to Trade (2008); Sanitary and Phytosanitary

Measures (2008); Customs Valuation (2009); Trade Related aspects of Intellectual

Property (TRIPS) (2007).

This is an extremely poor example of an SDT package. Not only is Cambodia unlikely

to be significantly more developed by 2009-the close of the longest implementation

period-but it has no recourse to exemptions from the rules of the agreements or any

elements of positive discrimination.

Implementing all these agreements within four years will be extremely burdensome

for a country like Cambodia where the national budget is under stress and already

unable to cover essential social expenditures in the areas of health and education.

According to available estimates, the cost of implementation of such agreements is

around $100 million. One might wonder whether using any resources for the implementation

of these agreements is a reasonable use of public funding in such a poor country.

Pressure from members

The Malaysian representative in Cambodia's Working Party, a group of interested WTO

members, said in July that, "[We feel] deep regret [because of the] onerous

demands made by members to acceding countries like Cambodia".

Despite the fact that Cambodia is unlikely to become a major trading nation there

are several areas where there is clear evidence of pressure from WTO members in the

accession deal. While there is reluctance among Working Group members to "name

and shame" the key demandeurs, it is widely known that the US takes the lead.

The Cambodian negotiator's demands for technical assistance in the implementation

of the four agreements (TRIPS, customs valuation, TBT, SPS) were rejected outright

by the US.

Due to the pressure of other members, Cambodia had to revise substantially its first

offer on market access in agriculture and industrial products in April 2003. This

is in complete contradiction to the pledge made by WTO members to exercise due restraint

in demanding further market access concessions from acceding LDCs.

Overall, this means that the bound average tariffs of Cambodia have decreased from

the initial offer by 25 percent to a level of 22.13 percent, which is extraordinary

low for an LDC.

Reportedly, during the negotiations on the accession package the Cambodian delegation

had requested a reference be made to the Doha Declaration regarding access to medicines.

Some WTO members opposed this, hence it was dropped.

The draft report of the working party shows that Cambodia had then asked for a 2009

deadline for TRIPS compliance, including pharmaceuticals, but they were eventually

bargained down to 2007.

According to the WTO Secretariat, the 2007 deadline is generous given that Cambodia

already has some intellectual property laws in place.

However, the truth is that Cambodia has recently passed and promulgated a law excluding

pharmaceutical patenting altogether until the 2016 deadline agreed in the Doha Declaration.

It would be a global scandal if the WTO accession now requires the Cambodian government

to overturn this law.

The Cambodian government and the public will have to pay the cost of this early deadline

in terms of higher prices for drugs. As a result many people will be deprived of

access to the medicines they badly need.

Furthermore, to secure support from key players, Cambodian delegates had to negotiate

bilateral deals with the US, EU and Australia. The content of such bilateral treaties

has not been fully disclosed.

It is not known at this stage if other bilateral agreements were concluded.


Given the harsh experience of Cambodia, the following reform of the WTO accession

process must take place.

- Fundamental reform of the accession process which would set clear benchmarks regarding

rights and obligations of new members based on development indicators.

- Cambodia and future LDC entrants should be enabled to use all flexibilities granted

to existing LDC members.

- A panel of experts should be established to decide whether an applicant's trade

regime is already in conformity with existing WTO rules in order to counter the proliferation

of "WTO-plus" demands.

- New entrants should be exempt from further market access commitments in the current

negotiations, given the high level of concessions they have already made.



Please, login or register to post a comment

Latest Video

Turkish Embassy calls for closure of Zaman schools

With an attempted coup against the government of President Recep Erdogan quashed only days ago and more than 7,000 alleged conspirators now under arrest, the Turkish ambassador to Cambodia yesterday pressed the govern

CNRP lawmakers beaten

Two opposition lawmakers, Nhay Chamroeun and Kong Sakphea were beaten unconscious during protests in Phnom Penh, as over a thousand protesters descended upon the National Assembly.

Student authors discuss "The Cambodian Economy"

Student authors discuss "The Cambodian Economy"

Students at Phnom Penh's Liger Learning Center have written and published a new book, "The Cambodian Economy".