Cambodia and South Korea on February 3 concluded talks for a bilateral free trade agreement (FTA), which Minister of Commerce Pan Sorasak and his Korean counterpart Yoo Myung-hee plan to sign in mid-2021, setting zero tariffs for a broad range of goods, according to a joint press statement.
The two ministers signed the agreed minutes on the conclusion of negotiations over the Cambodia-Korea Free Trade Agreement (CKFTA) via video link.
The statement said the CKFTA aims to liberalise bilateral trade and further strengthen the economic partnership between the two economies by delivering mutual benefits and welfare for businesspeople and the general public in both countries to ensure their prosperity.
It said the two countries are optimistic that the pact will undergird a swift economic recovery on both sides during and after the Covid-19 pandemic.
Sorasak told reporters at the event that the CKFTA would be the second FTA that Cambodia has made bilaterally with a major trade partner, after the Cambodia-China Free Trade Agreement, which was inked on October 12.
He said CKFTA would expand market liberalisation beyond the provisions of existing FTAs that involve the two countries, such as the ASEAN-Korea Free Trade Agreement (AKFTA) and the recently-signed Regional Comprehensive Economic Partnership (RCEP).
“The CKFTA will provide trade preferences for five per cent of tariff lines over existing agreements,” Sorasak said, without elaborating further.
The deal will buoy exports of, inter alia, garments and textiles, footwear, travel bags, spare parts, electronic equipment, as well as agricultural products such as rubber, peppercorn, cashewnuts and cassava, according to the minister.
Notable imports that stand to benefit from the FTA include automobiles, electronics accessories, domestic appliances, beverages, pharmaceuticals and plastic products, he said.
“We’ll be able to export to the Korean market at zero tariffs on processed goods, which will be advantageous for both sides,” Sorasak said.
Under the CKFTA, coupled with the RCEP, the Kingdom will lift tariffs on 93.8 per cent of goods traded, with South Korea scrapping duties on 95.6 per cent, according to Yonhap News Agency.
Cambodia Rice Federation (CRF) president Song Saran told reporters at the event that milled rice will not receive preferential tariff treatment under the CKFTA, but he stressed that the trade body would make every effort to pore over the Korean market’s quality requirements and recognised standards and expand the presence of Cambodian rice in the booming East Asian economy.
“Lots of Cambodian migrant workers are toiling away in [South] Korea and most of them prefer to eat Cambodian rice. We want to secure the market for them, and they in turn will boost the rice market in this country,” he said.
“We will find a way to get tariff breaks in the Korean market through measures such as quotas,” he said, adding that the Kingdom directly exported just 20 tonnes of milled rice to South Korea last year.
The statement said the CKFTA’s chapters and annexes cover the following topics – trade in goods; technical regulations, standards and conformity assessment procedures; sanitary and phytosanitary measures; trade remedies; rules of origin; customs procedures and trade facilitation; economic cooperation; transparency; dispute settlement; exceptions; institutional arrangements; and final provisions.
According to Sorasak, the two sides plan to sign the deal in June. “I believe the agreement will come into force by the end of this year and will ramp up bilateral trade volumes.”
Cambodian-South Korean trade was worth $884.88 million last year, marking a 17.77 per cent drop from the $1.032 billion posted in 2019, according to the Korea International Trade Association (KITA).
Statistics show that the Kingdom exported more than $317 million worth of goods to South Korea last year, down 5.4 per cent, and imported more than $567 million, down 18.6 per cent from the $696 million logged in the previous year.