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Cambodia signs world’s largest free trade pact

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Finance minister Aun Pornmoniroth during the virtual meeting on November 15. Finance Ministry

Cambodia signs world’s largest free trade pact

A visceral hit of merriment captured Cambodia’s trade and investment sector as the leaders of 15 Asia-Pacific nations signed the blockbuster Regional Comprehensive Economic Partnership (RCEP) trade pact on Sunday.

Insiders voiced their enthusiasm for the agreement which they say will allow the Kingdom to expand trade and attract more investment from signatory countries.

Leaders of the 10 ASEAN states, Australia, China, Japan, New Zealand and South Korea witnessed the signing of the RCEP agreement via video link following the conclusion of the 4th RCEP Summit on the same day.

Notably absent from the signing was India, which withdrew from negotiations in November last year.

Minister of Economy and Finance Aun Pornmoniroth delegated authority to Minister of Commerce Pan Sorasak to sign the accord.

Marking ASEAN’s largest free trade pact, the RCEP has a combined gross domestic product (GDP) to the tune of $26.2 trillion, or 30 per cent of global GDP, and engages 2.2 billion people, according to the ASEAN Secretariat.

ASEAN secretary-general Lim Jock Hoi said: “The signing of the RCEP Agreement is a historic event as it underpins ASEAN’s role in leading a multilateral trade agreement of this magnitude, despite global and regional challenges and eight years of negotiations.

“RCEP will give a much-needed boost for a swift and robust recovery for businesses and peoples in our region, particularly during the current Covid-19 pandemic crisis.”

Singapore’s Minister of Trade and Industry Chan Chun Sing told reporters following the signing that the pact will enter into force once six ASEAN countries and three non-ASEAN partners have ratified it, as reported by Bloomberg.

Cambodia’s commerce ministry lauded the deal as a historic regional achievement that will reinforce intellectual property and investor protection, promote globalisation, and support the rules-based multilateral trading system anchored in the World Trade Organisation.

“It is an indispensable prerequisite for the principles of free and fair trade, and an important driving force for sustainable socio-economic development.

“The RCEP agreement will be also an important catalyst in contributing to economic growth, improving the livelihoods of people in the region, and helping to restore regional economic development after the Covid-19 pandemic,” it said.

Royal Academy of Cambodia economics researcher Hong Vanak told The Post last month that RCEP is a platform for ASEAN that was years in the making.

He said the deal will re-orient the trade and investment landscape in the region, encourage commercial exchanges among members and serve as a vital driving engine for the manufacturing sector.

“This means that the countries in the region will enjoy more opportunities to promote exports to other members. At the same time, the RCEP will help to promote trade flow and attract more investments with members to the region,” Vanak said.

With RCEP negotiations as a base, the Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA) found that the deal would boost the Kingdom’s GDP an additional two per cent, increase exports by an extra 7.3 per cent and raise investment by an added 23.4 per cent.

The ASEAN Secretariat said: “The deal will improve market access with tariffs and quotas eliminated in over 65 per cent of goods traded and make business predictable with common rules of origin and transparent regulations, upon entry into force.

“This will encourage firms to invest more in the region, including building supply chains and services, and to generate jobs.”

It noted that the agreement comprises 20 chapters, 17 annexes and 54 schedules of commitments that cover market access, rules and disciplines, and economic and technical cooperation.

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