The UK’s newly-launched Developing Countries Trading Scheme (DCTS) will provide Cambodia with duty-free, quota-free market access to the four-nation union as well as simpler procedures and rules of origin (ROO) requirements, thereby driving up Cambodia’s exports to the second-largest European economy and offering a host of other benefits to the former.
This was brought up by Ministry of Commerce secretary of state Samheng Bora at the March 28 official ceremony marking the launch of the DCTS in Cambodia.
Despite Brexit, the UK remains one of Cambodia’s key trading partners and will continue to offer the Kingdom a variety of preferential trade arrangements, he said.
He also alluded to the fact that the DCTS allows Cambodia and other beneficiary jurisdictions to take part in value chains involving materials from 95 nations and still export finished products to the UK duty-free.
“I strongly believe that the new preferential trade system will materially boost bilateral trade and increase the quality of goods from Cambodia to the UK market,” Bora said.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng told The Post on March 29 that, despite Brexit, the UK remains a top buyer of Cambodian goods each year, mostly garments, footwear, travel goods and bicycles.
The DCTS and similar arrangements with the UK will mean a greater market presence of Cambodian merchandise there, as well as in other European countries, he said, underscoring that UK buyers place orders for Cambodian goods because the quality aligns with their requirements.
“Preferential tariffs are very important to help make Cambodian products more competitive with goods from other countries,” he said, listing alcohol and beverages, vehicles and machinery as notable Cambodian imports from the UK.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia, highlighted the value of opening more local factories that produce goods for export to the UK, given the country’s large population and economy as well as Cambodia’s large labour pool and beneficial investment laws.
“The preferential system [DCTS] will help attract more players to invest in Cambodia,” he stated.
In 2022, the UK emerged as Cambodia’s 11th largest trading partner, with the merchandise trade reaching $977.439 million, up by 23.9 per cent over a year earlier, as shown by provisional Customs (GDCE) data.
Cambodia’s exports to the UK came to $886.424 million, increasing by 21.1 per cent over 2021, while imports stood at $91.016 million, up by 60.2 per cent.
Cambodia’s trade surplus with the four-nation union grew by 17.8 per cent, from $675.033 million in 2021 to $795.408 million in 2022.
In a policy paper on the DCTS published on August 16, British trade minister Anne-Marie Trevelyan said the UK was launching the scheme to “harness the power of trade to help developing countries grow and prosper”.
“The new scheme offers developing countries one of the most generous sets of trading preferences of any country in the world. The scheme demonstrates the UK’s commitment to building long term, mutually beneficial relationships with emerging economies that are home to more than 3.3 billion people.
“The [DCTS] applies to 65 countries, offering lower tariffs and simpler rules of origin requirements for exporting to the UK.
“The public has helped to shape the [scheme], with 300 consultation responses from individuals, businesses and developing countries. The consultation demonstrated the UK’s resolve to improve on our market access offer to developing countries. We are using our status as an independent trading nation to go beyond what is offered by the [EU],” she said.
Trevelyan said the DCTS aims to enable “the world’s poorest countries to export to the UK and play a more active part in fast growing global supply chains.
“It also helps lower costs for UK businesses, leading to lower prices for consumers across a range of everyday products, by reducing tariffs on imports from low income and lower-middle income countries. Increasing trade and decreasing tariffs is another way the government is supporting businesses and individuals with cost-of-living increases,” she added.