New UK trade rules to profit exporters

Content image - Phnom Penh Post
Bilateral trade between the UK and Cambodia amounted to £737 million ($1 billion) in 2020. Heng Chivoan

The UK government on July 19 launched a consultation on new trading rules designed to stimulate commercial transactions with lower-income nations, including Cambodia.

And the Royal Government of Cambodia is keen to seize the initiative and develop deeper trade ties with the UK.

 

UK embassy in Phnom Penh said in a press release on July 19: “The UK Developing Countries Trading Scheme [DCTS] is a major opportunity to grow free and fair trade with developing nations.

“The proposed scheme would apply to 70 qualifying countries currently and include improvements such as lower tariffs and simpler rules of origin requirements for countries exporting to the UK, allowing countries to diversify their exports and grow their economies,” it said.

British ambassador to Cambodia Tina Redshaw said: “The proposed DCTS scheme signals the UK’s appetite to promote global free and fair trade, as well as demonstrating our commitment to Cambodia, by enabling Cambodia’s businesses to access the UK market more easily.

“I encourage people here in Cambodia to contribute to this important consultation, which is open to all,” she said.

Ministry of Commerce undersecretary of state Pen Sovicheat told The Post that Cambodia welcomes any preferential trade system that could benefit market expansion and provide opportunities and greater access for Cambodian goods to the UK.

“If the new preferential system is easier to implement under the existing British GSP [General Scheme of Preferences], we welcome it based on the conviction that we will have more opportunities to expand our market presence in the UK,” he said.

 

Cambodia currently receives preferential trade treatment under the GSP, which the UK provides to the Least Developed Countries (LDC), he said, adding that the facility is essentially equivalent to the EU’s ‘Everything But Arms’ (EBA) scheme.

On August 12, the European Commission – the EU’s executive arm – partially withdrew the EBA scheme from Cambodia. The suspension affects one-fifth or €1 billion ($1.2 billion) of the Kingdom’s annual exports to the EU’s 27-nation bloc.

Sovicheat noted that Cambodia-UK trade logged steady growth over the first five months of this year, reaching a total of $258.45 million during the period, with Cambodian exports and imports to the tune of $239.73 million and $18.17 million, respectively.

The export and import figures add up to $257.90 million, which is $0.55 million short of the trade total provided by the commerce official.

Sovicheat added: “This is a testament to the close and prosperous trade ties between Cambodia and the UK, and there will be more opportunities to expand this market, and trade volume.”

Last year, bilateral trade between the UK and Cambodia amounted to £737 million ($1 billion) and “there is room for growth”, according to the UK ambassador.

The UK embassy added: “The UK government intends its new scheme to be best in class, and has studied programmes in Canada, the US, Japan and the EU, before constructing an approach that takes some of the strongest elements of each and builds on them.

“The consultation on the UK’s new scheme runs for eight weeks and seeks the view of all sectors of society, including businesses, the public, civil society groups, consumers, associations, partner governments and any other interested stakeholders.

“Views will also be sought from businesses and stakeholders with an interest across the globe.

“The UK Developing countries Trading Scheme will apply to 47 countries in the Least Developed Country Framework [LDCF] and 23 additional countries classified by the World Bank as low-income and lower-middle-income countries.

“Other low-income and lower-middle-income countries are not included in the scheme because they benefit from preferential terms offered by free trade agreements with the UK,” it said.

UK foreign secretary Dominic Raab said: "Cutting tariffs for poorer countries enables them to trade their way to genuine independence – and I'm proud we lead the world in offering that opportunity."

Following the result of a referendum held in 2016, the UK’s divorce from the EU on January 31, 2020 – commonly known as Brexit – gave Britain the freedom to set an independent trade policy.

The UK government has since committed to increase access to UK markets for developing countries, as Cambodian agricultural products gain more support and market share.