May, 4th 2006

1Workshop on Non-Tariff Measures in the Asia Pacific

Non-Tariff Measures Faced by Exporters: Experiences and Findings From Cambodia

Dourng Kakada, Economic Institute of Cambodia (EIC)

May 4th,2006 Krabi, Thailand

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Content

Cambodian Export ProfileMajor Non-Tariff Measures Faced by Cambodian ExportersCase StudyConclusion

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Cambodian Export Profile (1)

Source: EIC, Compiled from various government and international organisation primary data

1989 1999 2004 2005

Import of goods (%GDP)

24.3% 47.7% 61% 65.3%

Export of goods (%GDP)

6.4% 35.9% 48.3% 50.7%

Trade balance (%GDP)

-17.3% -11.8% -12.7% -14.6

%

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Cambodian Export Profile (2)

Cambodian merchandise exports are limited in terms of products……….

Profile of Cambodian Export Products in 2004 Other

Garment products

Agricultural products

Source: Custom and Excise Department

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Cambodian Export Profile (3)

…..And directions of exports

Profile of Cambodian Export Directions in 2004US

EUASEANOthers

Informal exports still large in agricultural products!

Sources: Custom and Excise Department and Ministry of Commerce

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Major NTMs Faced by Cambodian Exporters

Internal Constraints

Low standard and SPS infrastructureWeak institutional capacity to respond to new trade regulations

Major NTMs

StandardRule of OriginConformity AssessmentSanitary and Phytosanitary (SPS) Measures

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Case Study

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Garment Garment products suffer from the EU’s criteria of rule of origin attached with EBA (Part II:F)– Lack of textile industry in the country– Fabrics and accessories mostly imported from

China, Hong Kong, Taiwan and Korea which are not qualified for the rule

– Buyers’ nominations

EBA utilization rate: 63.3%Administrative hassles:– Cost: Official and Unofficial fees

• Unofficial fee for obtaining a certificate of origin equal to a salary of a garment worker/month

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Rubber (1)

Rubber not able to access to broader market access (Part III:B)– Cambodia is not a member of International

Rubber Association• Laboratory with qualified personnel and pre-

requisite equipments• Test participation in compliance with

international standards • Formation of Cambodian Rubber Association

Exported to transit country for further processing and accreditation

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Rubber (2)

Products suffers from price discount– Rubber export is about 45,000 tons/year– Rubber price on average by June 2005

(by French Development Agency): • Malaysia: US$1,343/ton • Cambodia: US$1,150/ton (at Vietnamese

border)

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RiceRice exports to China has been banned since end of 2004 (Part IV:B)– More required documents for risk analysis

and assessment

Local rice traders can not compete to buy and stockpile paddy rice at peak harvest time due to relatively high cost of capital (Part I:A)– Leading to informal exports to neighboring

countries

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Additional requirements imposed by China before export plants from

Cambodia1. Information about the plant and/or the product being tested

including general name, scientific name, variety and class.2. Information about the producing area of the product indicating the

province, city and area, showing the product location on the national map with associated acreage.

3. Information about field management, growing and harvest times.4. Information about pests and diseases involved including the

general and scientific names, distribution, plants with parasites, harm-stricken parts of the plant, harm season, the supervision and inspection system, an impact statement on economy and biology.

5. Information of plant protection such as the method and effect of protection adopted, the description and frequency of chemicals used for protection.

6. Risk management measures for harmful plants including import & export inspection and quarantine law, processes and standards.

7. Information of the organization system of Inspection and Quarantine Bureau from central administration to local government, as well as its responsibility; the institution which is used as the inspection and quarantine lab is included.

8. Information of ongoing procedures, organisation relating to the Issuance of Certificate of Inspection and Quarantine, and a copy of the Certificate.

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Fish ProductsFish product exports to the EU have been banned since 1997 by European Commission’s decision 97/296/EC (Part IV:C)– Compliance with EC legislation,– Sanitary conditions in the production of fish

products/live shellfish,– Hygienic conditions in production areas and in product

handling, and controls such as physical inspection, – Inspection of HACCP systems and laboratory checks

carried out by competent authorities

In 2004 the EU banned imports of tuna and swordfish since Cambodia failed to respect international conservation law

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Pharmaceutical products

Industry has been noticeably growing in recent yearsCurrently, one factory is exporting to a number of countries in AfricaUnable to access broader markets and to join international bids due to lack of:– Good Manufacturing Practices (GMP)– Bio-equivalent study

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Other agro-processing products (1)

Confirel products unable yet to access Chinese markets due to “Certificate of Approved Labels for Foods”

• Certificate of origin• Certificate of free sales• Production process (description and diagram)• Composition of formula• Certificate of registered trade mark• Certificate of free use of trade mark • Certificate of Analysis • Example of labels in Chinese

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Other agro-processing products (2)

Black pepper is not accessible to Japanese markets due to the requirement of a certificate of sterilisation

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Other agro-processing products (3)

Protein foods failed to export several times to the US and the EU due to lack of standard certificates such as ISO, GMP and HACCP

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Conclusion

Cambodian exports severely face NTMsNo systematic records of NTMs in the countryCareful consideration in FTA negotiation

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Thanks for Your Attention!