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Russia pledges duty-free trade

Farmers plant rice in Kampong Cham
Farmers plant rice in Kampong Cham. Russia has agreed in principle to duty- and quota-free imports on thousands of agricultural products from Cambodia. Hong Menea

Russia pledges duty-free trade

Russia is set to approve duty- and quota-free imports for up to 3,000 Cambodian agricultural products, according to local government officials.

A statement issued by Cambodia’s Ministry of Commerce on Friday states that Russia’s Minister for Economic Development, Alexey Ulyukaev, agreed in principal to increase the number of Cambodian products eligible for duty-free import status.

Ulyukaev made the pledge during out-of-session talks with Cambodia’s Commerce Minister Sun Chanthol at last week’s 46th ASEAN Economic Ministers Meeting in Myanmar.

“We are working on listing down the potential of agricultural products for Russia to review and we will be able to sign [a memorandum of understanding] soon after that,” spokesman for the ministry Ken Ratha said, without detailing how long it might take for an official MoU to be signed.

Ratha added that Russia was pushing for an MoU agreement to be signed and made official “as soon as possible”, and that rice, cassava, corn and rubber were just a few of the products that the list will focus on boosting.

According to Ratha, the Cambodian government in 2007 requested Russia to reassess the Kingdom’s duty-free import status. At that time, Russia reportedly agreed to increase Cambodian imports once it became an official member of the World Trade Organisation (WTO). Russia officially became a member of the WTO in August 2012.

“We have the agreement, but we never made it into a reality,” Ratha said.

Srey Chanthy, an independent economic analyst, welcomed the trade agreement, but questioned whether Cambodia could even produce enough product to satisfy Russia’s market while remaining faithful to existing export markets.

“It will be a good chance for Cambodia to promote its brand and quality of products to Russian consumers,” he said. “Even if we cannot produce and export the large number needed by Russia, at least we can produce quality products and slowly gain recognition so hopefully they will keep ordering from us even if their political and economic situation changes,” he said.

The deal comes as Russia moves to diversify its trade partners while it continues to impose a food import ban from last month that shuts the door on all foodstuffs imported from Western nations in response to sanctions imposed by European nations and the US over Russian involvement in the Ukrainian conflict.

Natalia Rogozhina, Southeast Asia expert and lead researcher at the Institute of World Economy and International Relations in Moscow, said that despite the new opportunities, high transport costs between ASEAN and Russia is still a major barrier for trade.

“But new opportunities have opened and exporters of the ASEAN countries may try to use them,” she said.

“Russians will be excited about finding new products in stores from ASEAN countries, but it is clear the cessation of imports of dairy products from Finland and Germany will shift the source of their purchases to New Zealand and not ASEAN countries.”

Rogozhina added that Russia is focused on expanding its presence in Southeast Asia.

“Both the political and economic position of Russia in the ASEAN region is much weaker compared with the United States, the European Union and China,” she said.

According to the Russian Embassy in Cambodia, bilateral trade between the two countries reached $133.2 million last year, up from $10.8 million in 2006.

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