Linkages between trade, development and poverty reduction (TDP)


WTO Benefits Slow in Coming, Farmers Should Look Elsewhere

The Cambodia Daily, December 25, 2006

By Neak Samsen

With Cambodia’s accession to the World Trade Organisation (WTO) in October 2004, export gains were expected with Cambodia ranked as a Least Developed Country (LDC). As an LDC, Cambodia receives trade incentives, which include duty-free, quota-free market access, tariff concessions and liberalisation concessions for exported products allowing Cambodia to gain a possible foothold in the markets of developed countries. Cambodia saw its WTO accession as a step towards global economic integration in addition to increased benefits.

However, a booming trade in Cambodian exports, especially its agricultural products, has not yet materialised. Cambodian goods are confronted with various barriers imposed by developed countries. The so-called European Union and US agricultural subsidies have harmed Cambodian farmers to some extent. The health and safety standard barriers have hampered agricultural exports too. Negotiations to eliminate these barriers missed their deadline once again in April 2006. Three months later the negotiation was announced suspended by WTO General Council in July 2006 following a recommendation from WTO Chief Pascal Lamy.

Doha agenda talks were resumed following pressure from members in November 2006. Yet, these talks are being held informally (as recommended by Pascal Lamy) through which chairs of each negotiation group arrange talks by themselves. In addition, the WTO has not set any timeframes or deadlines. There is much speculation that it will take years to conclude the Doha trade pact.

For Cambodia, Cambodian farmers cannot wait years for this development agenda to be finalised and then receive benefits from this trade negotiation. They need to improve their livelihoods through other possible channels of export. Thus with little possibility, at least in the short run, in conquering developed markets, countries such as Cambodia need to look elsewhere and trade more fervently with other developing countries in the region.

Currently, Cambodia exports mainly unprocessed rice, corn and soya as well as fish to Thailand and Vietnam. A potential alternative to Cambodian agricultural products is to export processed goods to regional developing countries such as China, South Korea, Taiwan, Malaysia and Indonesia. Exporting to these regional partners allows Cambodia to diversify its destinations which may lead to higher prices than supplying neighbouring markets.

All in all, WTO is good for the long-term prospects of Cambodia’s agricultural exports. As Cambodian farmers cannot wait for this long-term benefit, regional lucrative markets in East Asia are an option.