Logo of Phnom Penh Post newspaper Phnom Penh Post - Nontariff barriers continue to hinder regional trade

Nontariff barriers continue to hinder regional trade

A crane unloads containers from a docked ship at the Phnom Penh Autonomous Port.
A crane unloads containers from a docked ship at the Phnom Penh Autonomous Port. Pha Lina

Nontariff barriers continue to hinder regional trade

While tariffs across the Asia-Pacific region have dropped over the last 20 years as a result of bilateral and multilateral trade agreements, nontariff barriers such as red tape and quotas continue to hinder the economic growth of Cambodia and other countries in the region, the Asian Development Bank (ADB) said in a report released yesterday.

The report posits that enhancing trade facilitation could stimulate trade and economic growth across the region following the demise of the Trans-Pacific Partnership (TPP) agreement, which was intended to bring together 12 signatory Pacific Rim nations under a unified trading bloc. While Cambodia was never a member of the TPP, it stood to benefit from the enhanced regional trade it would have brought.

Trade facilitation improves trade efficiency and lowers transaction costs, the ADB report said, adding that measures to facilitate trade had emerged as a key instrument for further reducing trade costs throughout the region.

“While tariff rates have come down substantially across Asia and the Pacific, non-tariff barriers remain significant,” the report said, adding that these are the “real impediments to trade”.

Nontariff barriers are a form of restrictive trade set up using quota systems, embargoes, sanctions or exorbitant fees that replace tariffs and typically take the form of protectionist policies, explained Jayant Menon, lead economist for ADB’s Office for Regional Economic Integration.

These policies, he said, were detrimental to long-term trade growth, especially across the economic corridors of the Greater Mekong Subregion (GMS), an area that includes Cambodia, Laos, Vietnam, Thailand, Myanmar and Yunnan province in southern China.

“For Cambodia, and across the region, tariff barriers are no longer an issue due to bilateral trade and multilateral agreements,” Menon said. “However, problems still arise for Cambodia when larger countries use protectionist nontariff barriers that generally leave out poorer countries because they have not reached the same level of transparency and efficiency.”

While Menon said enhanced trade facilitation would help Cambodia deal with its cross-border red tape and start to fulfil the Asean-mandated establishment of single windows, he said Cambodia was far behind its more advanced neighbours.

“The problem is that when you implement standardised procedures you will run into resistance internally with people that don’t want to see the reforms of a single window because the opportunities for corruption are diminished,” he said.

The ADB report highlighted key improvements that Cambodia has made in cross-border trade, citing that from 1999 to 2013 transit times from the border towns of Bavet to Moc Bai in Cambodia and Vietnam, respectively, have been cut in half from 10 to five hours. Bilateral trade has increased from $10 million to $708 million during that same period.

However, Ruth Banomyong, an associate professor at Thammasat Business School in Thailand and a consultant hired by the World Bank to help Cambodia develop its National Logistics Council, said this progress was “a bit misleading”.

“It is true that the time for border crossing has been reduced, but this is more because the cargo is now more containerised than in the past,” he said. “In the past, almost all the cargo was in loose format and therefore required manpower to do the trans-loading.”

Nevertheless, he said Cambodia could enhance its trade viability if it more quickly adopted the Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO). To date, Cambodia currently has ratified nearly 40 percent of the agreement’s obligations.

“The TFA is the first step as it enables initial transparency of cost, increases the reliability of border crossings and calls for the simplification, standardisation and harmonisation of trade procedures,” he said.

“But Cambodia has a long way to go in the implementation of the TFA.”

MOST VIEWED

  • Angkor lifetime pass, special Siem Reap travel offers planned

    The Ministry of Tourism plans to introduce a convenient, single lifetime pass for foreign travellers to visit Angkor Archaeological Park and potentially other areas. The move is designed to stimulate tourism to the culturally rich province of Siem Reap as the start of the “Visit

  • Ice cream, noodles flagged over carcinogen

    The General Department of Customs and Excise of Cambodia (GDCE) has identified three types of instant noodles and ice cream trademarks originating from Thailand, Vietnam and France that are suspected to contain ethylene oxide, which poses a cancer risk to consumers. The general department has

  • Exclusive interview with Josep Borrell Fontelles, High Representative of the EU

    CAMBODIA is hosting the 55th ASEAN Foreign Ministers’ Meeting (AMM) and Related Meetings this week with top officials from the US, China, and Russia and other countries in the region slated to attend and to meet with face-to-face with their counterparts on the sidelines. In

  • Rise in Thai air routes to Siem Reap fuels travel hopes

    Local tourism industry players are eager for regional airline Bangkok Airways Pcl’s resumption of direct flight services between the Thai capital and Siem Reap town on August 1 – home of Cambodia’s awe-inspiring Angkor Archaeological Park – which is expected to boost the growth rate of

  • ASEAN Foreign Ministers’ meet commences, Taiwan issue possibly on table

    The 55th ASEAN Foreign Ministers’ Meeting (AMM) and related meetings hosted by Cambodia kicks off in Phnom Penh on August 3, with progress, challenges, and the way forward for the ASEAN Community-building on the table. Issues on Taiwan, sparked by the visit of US House Speaker

  • Recap of this year’s ASEAN FM meet and look ahead

    This year’s edition of the ASEAN Foreign Ministers’ Meeting (AMM) hosted by Cambodia comes against the backdrop of heightened global tensions and increasing rivalry between major powers that have been compared to the animosity of the Cold War era. The following is The Post’