Development Could Mean Loss of EU Trade Preference, Ambassador Says

Cambodia could see less preferential economic treatment by Europe in coming years, as it graduates as a more developed country, the EU’s ambassador to Cambodia says. In an interview with VOA Khmer in Phnom Penh, Ambassador Jean-Francois Cautain said Cambodia currently enjoys tariff exemptions under a scheme called Anything But Arms, which seeks to promote trade with lesser developed countries. But Cambodia’s status under that scheme could change soon with its growing economy, he said. … The threshold for a nation to meet Least Developed Country status is a per capita gross domestic product of $1,000. Cambodia is currently at $900, with an economy growing nearly 7 percent per year. Cautain said other factors, such as a country’s openness and human capital also influence its status. … Cambodia also needs to diversify its economy. Most of its exports come from garments, “which is OK, but not enough,” Cautain said. Better agriculture, including in the rice sector, is needed, he said. That means building the capacity to process rice in country, rather than exporting paddy rice to its neighbors. Good governance and reduced corruption would also help, the ambassador said. In these areas, “there’s still a lot of work to do.” An improved environment would increase foreign direct investment. European investors are still not comfortable coming to Cambodia, which is still in a transition phase, where trade is supported by donors. That means there is a good basis from which Cambodia can develop itself, he said.

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