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.
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.
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
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.