Trade Impact Studies for Cambodia

The Project at A Glance

Over the past decades, following Cambodia’s accession to the World Trade Organization (WTO), the country has implemented numerous reforms, leading to economic growth and prosperity. Cambodia is considered to be well-integrated into the global economy. However, with its upcoming graduation from the Least-Developed Country status, the country will face increased competition in the global economy. For instance, it will lose preferential access to markets such as the EU upon graduation. At present, Cambodia benefits from preferential market access to the EU under the Everything But Arms initiative. Therefore, Cambodia needs to ensure its continued competitiveness.

International Economics (IEC), under the ARISE Plus Cambodia programme, is providing technical assistance to Cambodian negotiators with regard to the implementation of free trade agreements (FTAs). The aim is to support greater connectivity and economic integration between Cambodia and the rest of the Association of Southeast Asian Nations (ASEAN) by implementing the ASEAN Economic Community Blueprint 2025 and strengthening institutional capacity.

What We Found

With regard to this project, the IEC team provided analytical support to Cambodian negotiators on the potential costs, benefits and priority issues for negotiating FTAs with identified partners in terms of the agreement’s coverage, based on some broad-based assumptions regarding the degree of liberalisation that would be agreed. The analysis covers three aspects namely: economic impacts; social and human rights impacts; and environmental impacts.
Moreover, IEC also provided capacity building for the Cambodian negotiating team to understand the process of conducting FTA feasibility studies and to interpret the results of the analysis, as well as build the local capacity within Cambodia to conduct future FTA feasibility studies.

Our Strategy and Impact

In conducting the feasibility study, the first step undertaken was the identification of the potential countries with whom Cambodia should seek to secure a trade agreement. Following consultation with the Ministry of Commerce and the EU Delegation, several countries were selected, including the EU, South Korea, Japan, and Canada, among others. Subsequently, existing trade relations between Cambodia and the FTA potential partner countries were analysed including looking at the trade flows; trade complementarity, product space methodology, and other competitive cluster approaches that offer insights into extensive margin opportunities. To conduct the economic analysis, two different modelling tools were used, namely a Computable General Equilibrium (CGE) model and a Partial Equilibrium (PE) model. Finally, issues relating to sustainable development namely the human rights, social and environmental aspects, were also studied.

Our Core Solutions

With the rapid proliferation of trade agreements worldwide, there are new market and investment opportunities for countries to explore. At International Economics Consulting, based on our extensive experience in international trade, we assist our clients by providing a detailed analysis of the key impacts of new trade agreements on their operations and competitiveness through an assessment of tariff, and non-tariff barriers, provisions on rules of origin, customs efficiency, the effectiveness of transport networks, and sustainability provisions, among others.
We can help assess the opportunities in different markets, determine the feasibility and viability of projects, and benchmark the wider ecosystem to support business growth. We also support clients in navigating the policy landscape regarding international trade by establishing robust monitoring and evaluation framework through sophisticated real-time dashboards and reporting systems to ensure the best outcomes.