The Cambodia-Korea Free Trade Agreement (CKFTA) was endorsed on October 26, to pave the way for the two countries to enhance bilateral trade and investment flows.
The trade deal was signed by Cambodian Minister of Commerce Pan Sorasak and South Korean Minister of Trade, Industry and Energy Yeo Han-koo via video link.
Under the CKFTA, coupled with the Regional Comprehensive Economic Partnership (RCEP), the Kingdom will lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, Yonhap News Agency reported on October 26 citing the South Korean trade ministry.
The signing comes two and a half years since Cambodia Prime Minister Hun Sen raised the idea of a bilateral free trade agreement (FTA) at a meeting with South Korean president Moon Jae-in in Phnom Penh in March 2019.
And on November 25, 2019, Sorasak and his then-counterpart Yoo Myung-hee announced a joint feasibility study following a meeting in the South Korean port city of Busan.
Appointed as the trade minister on August 9 this year, Yeo is a veteran negotiator who has played a key role in the bargaining processes for many of the FTAs struck by South Korea in the past two decades, including a deal with the EU, according to the Korea Herald.
At the signing ceremony, Yeo said the FTA, as a complement to existing agreements within the ASEAN framework, would give an added boost to a bilateral trade that has expanded year after year, and spur investment between the two Asian countries.
“I am very pleased this morning to sign the Cambodia-Korea FTA. Today, more than 340 Korean companies have a presence in Cambodia. The materialisation of our FTA will serve as an impetus to expand and deepen our supply chains” in both countries, he said.
Through the CKFTA, “we will see an increase in the bilateral trade of industrial products”, which has enjoyed a strong performance in recent memory, he added.
Calling for deeper bilateral cooperation in various areas, Yeo indicated that South Korea would provide the Kingdom with technical assistance and capacity building.
Sorasak emphasised that leaders of both countries held fast to their commitments, which he said led to the signing of the CKFTA, even as the Covid-19 pandemic dampened economic growth.
The government’s priority now is the optimisation and regional integration of both countries’ supply value chains in different sectors, in a mutually beneficial manner, as well as leveraging the FTA to further prop up bilateral trade and undergird economic partnerships between the two economies, he said.
“The CKFTA will create additional opportunities for businesses to grow and improve people’s welfare in both countries”, and ensure a faster recovery from the economic recession caused by Covid-19, the minister said.
“The signing of the CKFTA today is a significant event which shows that, even amid the pandemic-induced economic recession, [Cambodia and South Korea] are committed to working together for the prosperity of both of our countries, our people’s welfare, and to overcome any challenges,” he added.
On July 9, 2020, Cambodia and South Korea announced the launch of official talks for the CKFTA, which came to a close on February 3 this year with Sorasak and Yoo signing the agreed minutes on the conclusion of negotiations over the deal.
The CKFTA will enter into force 60 days after both sides have deposited their instrument of ratification.
Ministry spokesman Pen Sovicheat told The Post on September 20 that the FTA would provide more than 10,000 Cambodian goods duty-free access to South Korea.
Sovicheat said the FTA will create a pipeline of opportunities for agricultural and agro-industrial goods; finished textile-based products such as garments, footwear and travel bags; rubber; spare parts and electronic components; and light industrial products. It will also facilitate the import of electronics, pharmaceuticals and auto parts, as well as raw materials, machinery and other equipment needed for industry, he said.
Bilateral trade between Cambodia and South Korea in the first half of this year was worth more than $451.98 million, surging by 6.72 per cent from $423.51 million in the same period in 2020, according to data from the Korea International Trade Association (Kita).
In the January-June period, the Kingdom exported $159.40 million, down by 1.6 per cent year-on-year from $162.06 million, and imported $292.59 million, up by 11.9 per cent from $261.45 million a year earlier. This means that the trade deficit widened by 34.0 per cent from $99.4 million to $133.2 million.