Value chain upkeep for EVFTA

Content image - Phnom Penh Post
Monday’s meeting between commerce ministry secretary of state Sok Sopheak and his Vietnamese counterpart Tran Quoc Khanh. SUPPLIED

Cambodia and Vietnam have agreed to ensure the sustainability of the value chain to meet trade demands in accordance with the EU-Vietnam Free Trade Agreement (EVFTA), which came into force in July 2020.

Ministry of Commerce secretary of state Sok Sopheak said the agreement between Cambodia and Vietnam was necessary and important to maintain the production of bicycles for export to Europe, including Britain.

 

He said some bicycle parts that are made in Vietnam are imported by Cambodia for assembly and export.

The meeting between Sopheak and Vietnamese Deputy Industry and Trade Minister Tran Quoc Khanh took place on May 9.

“The sustainability of the value chain would benefit both countries’ industrial growth and promote value chain connectivity in ASEAN,” said Sopheak in a statement issued by his ministry.

Both parties are determined to continue to work closely to complete their respective internal consultations and keep each other informed.

Commerce ministry spokesman Penn Sovicheat could not be reached for comment on May 12.

Meanwhile, Asian Vision Institute economic analyst Dr Chheng Kimlong welcomed Cambodia’s “timely” move to discuss with Vietnam to maintain the value chain process which will see Cambodia indirectly benefitting in the export sector.

 

He told The Post that member countries of the EVFTA enjoyed special rights to export goods.

When one country secures that privilege, it results in greater competition between parties and non-parties of the free trade agreement (FTA), he said.

“Cambodia and other countries in the region may [be deprived] of supply and exports. Vietnam will continue being attractive to EU investments,” Kimlong explained.

In that time, he said, EU countries have become special export destinations for Vietnam under special circumstances, thanks to the FTA.

The Kingdom will see some benefit but also suffer some losses, although the loss is not focused on the Cambodia-Vietnam relationship and cooperation, rather Vietnam has gained in terms of favourable treatment in exports under the FTA, he said.

Based on this, industrial negotiations between Cambodia and Vietnam are beneficial for both countries, as well as other countries in the region. This is because it provides services and other industrial goods to complement each other, even though Cambodia has not signed an FTA with the EU, he added.

The EVFTA eliminates almost 99 per cent of tariffs on all goods traded between them.

In the meantime, bilateral trade between Cambodia and Vietnam in the first quarter of 2022 grew 13.6 per cent year-on-year to $1.72 billion from $1.52 billion.

Between January and March in 2022, Cambodian exports to Vietnam rose 3.9 per cent to $758.81 million while imports climbed 22.7 per cent $963.23 million from a year ago.

Cambodia’s trade deficit with Vietnam in the first quarter stood at $204.4 million, up nearly four times from the corresponding period last year.

Vietnam is Cambodia’s third largest trading partner after China with $2.9 billion total trade and the US at more than $2.2 billion last year.