Logo of Phnom Penh Post newspaper Phnom Penh Post - EU trade safeguards on rice expire January 18

EU trade safeguards on rice expire January 18

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In January-November, Cambodia globally exported 532,179 tonnes of milled rice, down by 11.46 per cent year-on-year from 601,045 tonnes, raking in $454,480,866, the agriculture ministry reported. Heng Chivoan

EU trade safeguards on rice expire January 18

Cambodia is set to enjoy a considerable boost in milled-rice exports to the EU next year after safeguard measures imposed by the European Commission (EC) expire at the onset of January 18.

The EC, the EU’s executive arm, introduced tariffs on Indica rice exports from Cambodia and Myanmar that took effect on January 18, 2019, after an investigation indicated that a considerable rise in these imports were causing significant economic damage to EU producers.

The safeguard regulations required Cambodia to pay import duty of €175 ($200) per tonne in the first year, €150 per tonne in the second, and €125 per tonne in the third.

Ministry of Commerce spokesman Pen Sovicheat believes Cambodian milled-rice exports to the European market will be back on track to normalcy come mid-January.

He told The Post: “We will see more and more exports of our milled rice to the EU next year as the three years of safeguard measures come to a close.”

Cambodia Rice Federation (CRF) president Song Saran confirmed that January 17 would be the last day of safeguard regulations.

“Cambodia will benefit from the EBA [Everything But Arms] framework to compete on the EU markets,” he said.

On August 12, 2020 the EC partially withdrew its EBA trade preference scheme from the Kingdom. The suspension affects one-fifth or €1 billion of the Kingdom’s annual exports to the EU’s 27-nation bloc.

But, Saran noted: “Cambodian rice is not in the list of items affected by the partial withdrawal of EBA, which means Cambodia will enjoy zero tariffs from January 18, 2022. We have seen more demand from EU countries in recent weeks.”

Chan Sokheang, managing director of rice exporter Signatures of Asia Co Ltd, said the EU’s safeguard measures had affected around 70 per cent of Cambodian milled-rice exports.

“This is such wonderful news for our rice sector. It will open a new chapter for Cambodia, where Sen Kro Ob and Phka Malis can once again enter the EU market,” he said, sharing that he had received some orders from old European partners this month.

The CRF’s Saran noted that the EU would typically absorb 60-65 per cent of Cambodian milled rice exports before 2016, but that the figure had dipped to 43 per cent in 2017-2019, and then to 30 per cent once the safeguard clause was introduced.

He explained that competition in exports of non-fragrant varieties from Vietnam, India and Pakistan dampened Cambodia’s overall sales of milled rice to the EU over 2017-2019. Fragrant and organic varieties remained competitive over the period, he said.

Non-fragrant white rice sells for $380 per tonne on the international market, whereas the corresponding Cambodian varieties are around $470-500, Saran noted.

Following the end of the safeguard measures, “more and more fragrant rice varieties such as Sen Kro Ob and Malis Romduol produced from Phka Romduol cultivars will be sent at competitive prices to EU markets”, he enthused.

However, key challenges remain, mostly concerning ocean freight, above all the shortage of empty shipping containers to accommodate the expected uptrend in exports, Saran pointed out.

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