Trade SWAp - Ministry of Commerce SWAp - Newsletter 01...the overall Trade SWAp. D/ICO is responsible for overall, day-to-day coordination of the Trade SWAp. 5. How is Trade SWAp contributing

Trade SWApCAmbodiA TrAde SeCTor Wide ApproACh

Issue 1, Vol. 1, AprIl 2010

06–07: Trade developmenT supporT programme (Tdsp)

ELEVEN PROPOSALS ENDORSED by the IMPLeMeNtAtION COMMIttee

04–05: h.e. pan sorasak

TEN fAcTS AbOUtCAMbODIA tRADe seCtOR WIDe APPROACh (sWAp)

Cambodia Trade sector Wide Approach (sWAp) Newsletter 3


© Cambodia trade sWAp 2010

this newsletter focuses on Cambodia’s cross-cutting trade agenda and sector wide approach, to promote economic diversification and export as a way to integrate into global and regional markets and reduce poverty.

Published in english and Khmer

see the online version atwww.moc.gov.kh/tradeswap

PublisherMinistry of CommerceDepartment of International Cooperation (D/ICO)

Address#65, st. 136sangkat Psar Kandal IIKhan Daun PenhPhnom Penh,Cambodiatel: +885 23 213 067

Supervisionh.e. Pan sorasak, secretary of state, Ministry of Commerce

contributorsPeter bolster, GTZJulian Clarke, World Bankbotumroath Keo Lebun MoC/UNDP TRADE projectthierry Noyelle MoC/UNDP UNDP TRADE projectsuon Prasith, D/ICO

cover photographyUNDP/Arantxa Cedillo

Graphic design www.graphicroots.com.kh

contents

PAGE 04TEN fAcTS AbOUt CAMbODIA tRADe seCtOR WIDe APPROACh (sWAp)

PAGE 06cREATiNG A SEcRETARiAT FOR tRADe sWAp the DePARtMeNt OF INteRNAtIONAL COOPeRAtION (D/ICO)

PAGE 08LEAST-DEVELOPED cOuNTRiES tURN tO CAMbODIA tO heLP MOve AID FOR tRADe AgeNDA FORWARD

PAGE 10THE MOc/uNDP TRADE PROJeCtA CONtRIbUtION tO tRADe sWAp

PAGE 12THE TRADE iNTEGRATiON STRATEGy sets 19 PRIORIty PRODUCts AND seRvICes

PAGE 14GERMAN cOOPERATiON sUPPORts INFORMAtION AND COMMUNICAtION teChNOLOgy

Cambodia Trade sector Wide Approach (sWAp) Newsletter4


Cambodia’s participation in the ASEAN Free Trade Area and its membership in the WTO have set the stage for an acceleration in the pace of internal reform, an increase in domestic and foreign investment, and an expansion of trade.

To strengthen further the contribution of trade to Cambodia’s economic growth and socio-economic development, the Royal Government of Cambodia (RGC) has put in place a Sector-Wide Approach (or SWAp). Trade SWAp is helping already to coordinate and manage better the Aid for Trade Cambodia receives from its Development Partners.

In an interview with Pan Sorasak, Secretary of State at the Ministry of Commerce, he explains what is Cambodia’s Trade Sector-Wide- Approach (Trade SWAp); how it can assist Cambodia in meeting the Millennium Development Goals target of reducing poverty levels to 19.5 by 2015; and how it can serve to mitigate the impact of the global financial crisis.

1. Why is trade important to Cambodia’s economic development?

Liberalized trade, when harnessed properly, can contribute to poverty reduction and improvements in people’s standards of living through increased income and job opportunities. Over the last ten years income per capita in Cambodia has nearly doubled in no small part as a result of the increasing importance of trade in the economy.

Continued, unfettered access of Cambodian products and services to the regional and world market

will provide Cambodia with further opportunities to achieve economies of scale, become more competitive, attract new investment, create new employment, generate additional income, and accelerate economic growth.

2. What has inspired the Royal Government of Cambodia to invest in trade development?

Cambodia’s 1993 Cons t i t u t ion recognizes the role of the market economy in the country’s development. Cambodia’s 1998 “Rectangular Strategy” stresses the importance of the free flow of goods and services with its key partners in the region and in the world. Both the 1993 Constitution and the 1998 Rectangular Strategy served as the launching pad for Cambodia’s efforts to accede to the WTO, a process completed in 2004.

Rapid trade development during the current decade bears witness to Cambodia’s recognition that integration into the global economy presents it with some of its best opportunities to grow and develop rapidly – as have other Asian economies before it.

3. What innovative mechanism has the RGC introduced to strengthen its trade sector and deepen its integration into the global economy?

In 2007, the government introduced an innovative mechanism called the Trade Sector-Wide Approach (Trade SWAp) to consolidate its ownership of Aid for Trade, strengthen the effectiveness of Development Partners’ Trade Related Technical Assistance, and move forward the country’s integration in the global economy.

4. What exactly is Trade SWAp and how does it work?

The Trade SWAp provides the frame

work to implement Cambodia’s Trade Integration Strategy formulated in 2007. To respond to the objectives and needs identified in the 2007 Strategy, three “pillars” have been created. They are: Pillar 1: Reforms and Cross-Cutting Issues for Trade Development; Pillar 2: Products and Services Export Development; Pillar 3: Capacity Building for Trade Development

The pillars have begun to function already and are creating new forums and new opportunities for the Government, the Business Sector and Development Partners to identify and program development assistance needs together.

The three pillars report to the Sub-Steering Committee on Trade Development and Trade-Related Investment chaired by the H.E. Senior Minister Cham Prasidh, Minister of Commerce. The Committee is responsible for overall, strategic oversight of Cambodia’s Trade Integration process.

The newly created Department of International Cooperation (D/ICO) in the Ministry of Commerce serves as Secretariat to the Sub-Steering Committee, the three Pillars, and the overall Trade SWAp. D/ICO is responsible for overall, day-to-day coordination of the Trade SWAp.

5. How is Trade SWAp contributing to the development of Cambodia’s trade sector?

Trade SWAp is in line with the principles of the 2005 Paris Declaration on Aid Effectiveness. As I have answered in the previous question, the Trade SWAp seeks to change the balance between the Government and Development Partners to arrive at greater ownership of the design, programming, and implementation of Overseas Development Assistance by Cambodia itself. This shift has been and remains a major capacity- building challenge for Cambodia.

A successful Trade SWAp means that capacity building resources for trade

AN INTERVIEW OF

H.E. Pan Sorasak

Secretary of State

Ministry of Commerce

ten facts ABOUT CAMBODIA TRADE SECTOR WIDE APPROACH (SWAp)



sector development generated through Aid for Trade will be used more effectively and will have a more rapid and longer lasting positive impact on the development of Cambodia’s trade sector

6. Has Cambodia’s trade been affected by the financial crisis and how is Cambodia’s Trade SWAp helping?

Of course, Cambodia is facing great challenges as a result of the global financial crisis. Over the last year or so Cambodia has had to confront a contraction in trade, a slowing down in foreign investment, and job losses in key industries including tourism, garment, and real estate in urban areas.

However, the government has sought to respond to the crisis with macro and micro economic policy measures to increase Overseas Direct Assistance and accelerate key industry reforms. Through Trade SWAp, the Government is trying to accelerate the implementation of legal reforms that are key to improving the business environment for trade as well as accelerate the diversification of Cambodia’s export basket – both in term of new exports products and services as well as new destination markets.

For instance, our garment manufacturers (up to now overly dependent on the US market) are taking steps to expand their exports to the EU market; our rice producers are moving up from exporting raw paddy mostly to Vietnamese and Thai middlemen to exporting milled rice directly to Western and Eastern Europe, possibly also to Africa; our cassava producers are investigating markets in China through trade missions. And Trade SWAp is being used to mobilize appropriate Aid for Trade support to support a number of those initiatives and efforts.

7. Who benefits from Trade SWAp?

Most immediately, the Ministry of Commerce, Line Ministries engaged in trade, government officials, and Cambodian trade stakeholders – especially producers and exporters – are the most direct beneficary of Trade SWAp.

Most importantly, it is the Cambodian people that should benefit ultimately the most from the Trade SWap. Better coor-dination and alignment of Aid for Trade with the country’s trade development objectives should translate in faster job and income growth to benefit the poor in rural areas of Cambodia – especially given the current focus of Cambodia’s Trade Integration Strategy on developing export opportunities in rural areas where 90 percent of the poor reside. Unfortunately, a third of the population still lives below the poverty line.

8. What lessons can be drawn from the initial implementation of Trade SWAp?

Up to now, Trade-Related Technical Assistance (TRTA) was mostly donor “driven.” Development Partners had the greatest say over how to program and implement Cambodia’s development assistance.

Trade SWAp is putting the Government in the “driver’s seat.” This is a great opportunity for us, but also an enormous challenge in term of building our capacity to meet this new role. Our Government machinery is not yet ready to assume fully this new role and there is a steep learning curve for us.

However, I feel we have already made great progress in providing leadership, in particular through some of the new responsibilities taken on board by D/ICO.

Also, Trade SWAp requires a much higher level of inter-ministerial coordination and with the business sector and that, too, is a great challenge. I believe the three Pillars have a critical positive role to play in fostering greater coordination and will contribute enormously in that regard as their work becomes more established.

9. Where do you think Cambodia has made the greatest progress over the last few years in the area of trade development?

Progress cannot be measured simply by the success of the government in building up its own capacity and in better

coordinating – however important that may be.

It must be measured by the effectiveness of Trade Related Technical Assistance (TRTA) in expanding and diversifying Cambodia’s export base in a manner that supports the pro-poor development objectives of the country. But those are developments that may take longer to achieve. Nevertheless, we are beginning to see changes.

Earlier, I gave examples of what is happening in our rice and cassava sectors. But positive developments are happening in other sectors as well like cashew nuts, corn, silk, fish, and others where Cambodian exporters and processors are trying to find new ways to get greater value-added from their products, to access market directly, to find new destinations for their products.

10. How has Trade SWAp helped Cambodia in trade development?

A trade SWAp is unlike SWAps in most other sectors because it requires mustering the institutional and human resources not only from MoC itself but also from other line Ministries that have a key role to play in trade development (for instance, Ministry of Agriculture, Forestry and Fishery (MAFF), Ministry of Industry, Mine and Energy (MIME), Cambodian Development Council (CDC), Ministry of Economy and Finance (MEF) and others.

I believe Trade SWAp has created a new momentum for stronger dialogue and coordination among all key stakeholders – Government, Business, and Development Partners – that can only strengthen the responses that are taking shape.

Trade SWAp is helping us deploy Trade-Related Technical Assistance (TRTA) resources more effectively and this is critical for a country such as Cambodia where millions of people, institutions and infrastructures need attention and capacity support.

INTERVIEW Botumroath Keo Lebun



In 2007, the Royal Government of Cambodia (RGC) undertook to achieve its Cambodian Millennium Development Goals by adopting a Sector Wide Approach for the trade sector (Trade SWAp).

The goal was to ensure that trade expansion helps improve human development and reduce poverty in Cambodia.

In that same year, following a thorough institutional capacity assessment, the Ministry of Commerce (MoC) established the Department of International Cooperation (D/ICO), to manage the Trade SWAp and coordinate Aid for Trade on behalf of the Government.

TRADE SWApTHREE PILLARS

Pillar 1: Legal reform

and crosscutting issues

Pillar 2: Product and

service export sector

development

Pillar 3: Capacity

development for Trade

The role of D/ICO, in addition to its regular ministry department functions, is to serve as the Secretariat to the Trade SWAP and the Sub-Steering Committee on Trade Development and Trade- related Investment (SSC-TDTRI)

The committee has assisted the MoC in organizing Working Groups for each of the Trade SWAp three pillars.

The function of the three pillars is to bring together the Ministry of Commerce, Line Ministries, Development Partners and the Private Sector to help programming and implementing the Trade SWAp.

D/ICO formally consists of four bureaus. Each bureau is managed by a Chief

Officer. D/ICO is under the umbrella of the Directorate General for International Trade (DGIT) within MoC. D/ICO Director and Deputy Directors report to the Secretary of State, who oversees D/ICO’s work.

Current achievements Since 2008, D/ICO has been working to put basic capacity in place with support from the United Nations Devel-opment Programme (UNDP), German Agency for Technical Cooperation (GTZ), European Commission (EC) and the World Bank.

In addition to building up staff capac-ity, these efforts led to the development

cReatinG a secRetaRiat FOR TRADE SWAp THE DEPARTMENT OF INTERNATIONAL COOPERATION (D/ICO)

Silk, including handicraft, part of Cambodia's market analysis for 19 potential products and services (UNDP/Arantxa Cedillo)



of the Trade SWAp website, South-South exchange of experiences on the Cambodian Trade SWAp with sponsored delegations from Lao P.D.R and Nepal, development of some initial monitoring capacity within D/ICO, and other capacities.

For over two years, D/ICO has been working closely with the World Bank on the development and launch of the Trade Development Support Programme (TDSP), a multidonor trust fund managed by the World Bank, in which the European Commission, Danish International Aid Agency (DANIDA) and the United Nations Industrial Development Agency (UNIDO) provided total US$ 12.6 million, launched on 23 March 2009.

In its first call for proposals, the D/ICO has received a total of 48 projects in 2009. Following D/ICO’s technical appraisal, the TDSP Implementation Committee endorsed eleven proposals to be implemented from 2010.

In September 2009, seven years after having been selected as a pilot country under the Integrated Framework (IF) D/ICO successfully obtained US$1.5 million funding from the Enhanced Integrated Framework (EIF) Tier 1 with the RGC contributing an additional US$200,000.

This was the outcome of intensive programme preparation work over a period of nearly two years with technical support from the United Nations Development Programme (UNDP).

Challenges Despite these successes, D/ICO faces a number of challenges including capacity development for the staff from the four offices. For example, their language, computer and programme coordination skills are limited and further training is needed.

Broadly, the Ministry of Commerce must continue to build its own capacity to become a full-fledged partner in the planning, programming and implementation of trade-related technical assistance, in adherence to the principles of the 2005 Paris Declaration on Aid Effectiveness.

Some of these challenges have been met advisors are providing on-the-job training in procurement and financial management that are critical to implementing the TDSP and other skills needed for the oversight and implementation of the broader Trade SWAp.

As Secretariat to the Trade Sector Wide Approach, D/ICO plans to assume greater ownership of the country’s pro-poor cross-cutting trade agenda that is consistent with, and supportive of Cambodia’s National Development Plan and its Millennium Development Goals.

WRITESSuon Prasith

Deputy Director, D/ICO

foUR BUReaUs in D/ico

1. Trade SWAp Secretariat

2. Assistance Management and General Administration

3. Training and Planning

4. Monitoring and Evaluation

a tRUst fUnD foR tRaDe DeVeLoPMent

Launched on 23 March 2009, the Trade Development Support Programme (TDSP) is a multidonor trust fund managed by the World Bank, in which the European Commission, Danish International Aid Agency (DANIDA) and the United Nations Industrial Development Agency (UNIDO) provided total US$ 12.6 million.

In its first call for proposals, the D/ICO has received a total of 48 projects in 2009. Following D/ICO’s technical appraisal, the TDSP Implementation Committee endorsed eleven proposals to be implemented from 2010.

Cashew nuts among priority products for Cambodia's export (UNDP/Arantxa Cedillo)

UNDP/Arantxa Cedillo



Being the first non WTO-Member least-developed country (LDC) to accede to the WTO following the conclusion of the Uruguay Round (2003), one of the original three pilot countries under the Integrated Framework, the first to complete successfully the preparation of its original Diagnostic Trade Integration Study (DTIS) (November 2003), possibly the first country to update its original DTIS with a follow-up study (December 2007), and one of the very first countries to submit successfully a Tier 1 proposal under the new Enhanced Integrated Framework (October 2009), Cambodia is a staunch advocate of Aid for Trade (AFT) and has become a leader among LDCs to promote such agenda.

sharing lessons Larnt

It has done this by organizing a number of key consultations among LDCs to advocate for enhanced Aid for Trade and by sharing the lessons of its experience with other countries.

This has included welcoming study tours from other LDCs (Nepal, Lao PDR, Bhutan) and workshops and presentations at international meetings.

siem Reap, cambodia, november 2008: Jointly organized by the Ministry of Commerce, the United Nations Industrial Development Organization, and the World Trade Organization, the meeting echoes a number of critical themes: the importance of aid for trade and the success of Cambodia in this area in particular; the changing nature of competitiveness for LDC exporters and the need to focus on building up supply capacity that can meet the new Non-Tariff Barriers (NTBs); and the impact of the unfolding world financial and economic crisis on LDCs.

Attending the conference are Ministers of Trade or Industry from over 40 countries, including a number from countries that have yet to accede to the WTO. This makes the example of Cambodia

especially relevant to some. For example, Lao PDR is edging towards accession by addressing the same regulatory and economic issues that Cambodia faced five years earlier.

Key representatives at the meeting are coming with the same message: Cambodia is a flagship country that demonstrates the success of combined donor coordination and targeted trade assistance. Director-General of the WTO Pascal Lamy attends the meeting to show his commitment to the Cambodian trade development agenda and to the Mekong region.

Another message highlighted at the meeting is that technical assistance cannot disappear once countries accede to WTO.

Development Partners must remain committed to their development following accession, until those countries graduate from their least developed status.

Least-DeVeLoPeD coUntRies TURN TO CAMBODIA TO HELP MOVE AID FOR TRADE AGENDA FORWARD

“WTO members continue to ask

newly acceding LDCs to take on

more onerous obligations than those applied to

original WTO LDC members, contrary to the

clear Guidelines language,” said

H.E. Cham Prasidh, Senior

Minister, Minister of Commerce.

aiD foR tRaDe

The Aid for Trade agenda remains a priority for Cambodia. The Cambodian experience of accession to the WTO and its success in bringing about coordinated Development Partner support to focus on its further integration into the world economy are important beacons to least-developed countries.

Cambodia, a staunch advocate of Aid for Trade



The nascent Trade SWAp in Cambodia is a signal of recognition by Development Partners that trade issues may become even more complex once a country enters the World Trade Organization. Reforms can easily taper off if those countries are abandoned by Development Partners after the crucial milestone of WTO accession has been obtained, for example, and the challenges of building up a competitive supply capacity cannot be met overnight.

Phnom Penh, cambodia, november/ December 2008: Senior Minister Cham Prasidh, Minister of Commerce, welcomes over 12 delegates from Nepal and Lao PDR that have come to Cambodia to learn from its experience with its Trade SWAp Program. Meetings include overviews and discussions with Ministry of Commerce senior officials as well as with staff from D/ICO, presentations by Pillars 1, 2 and 3, discussions with donors on their experiences, presentation on the Government-Private Sector Forum (G-PSF) and other feedback on the implementation of the Trade SWAp.

Mr. Shiv Raj Bhatt, an official from Nepal’s Ministry of Industry, Commerce and Supplies, observes during his visit that: “Cambodian coordination between the donors and the government is strong. And based on lessons learned from this tour, Nepal will have to modify its model as we are in the process of updating and improving our Integrated Framework mechanism.”

Mr. Xaysomphet Norasingh, a Lao delegate of the Ministry of Industry and Commerce, explains the study tour has allowed him and his colleagues to

understand the importance for the government to work from the bottom up. “We were looking from the top down,” he said. “We’ll need to adjust our way of working.”

Geneva, switzerland, July 2009: Move to Geneva a few months later when the World Trade Organization holds a global review of Aid for Trade. As usual, the most interesting discussions are taking place outside the giant conference hall where member nations and development partners are listening to carefully crafted speeches.

This time the geographic reach of the conference is worldwide and the issues discussed include the relevance of the needs of development within the Doha Round negotiations.

Developing countries, especially least-developed countries like Cambodia, feel that their interests are being short-changed in the current negotiations and that trade-related technical assistance should be more of a priority for wealthy nations.

A number of countries perceive the ‘ development’ focus of the Doha Round negotiations to be a hollow promise that has failed to be backed up by real commitments from development partners and large trading nations.

Phnom Penh, september 2009: Again, Cambodia takes the lead in the Aid for Trade agenda by organizing an “LDC Round Table on WTO Accession. ”The objectives of the meeting are to share the lessons of Cambodia’s and Nepal’s successful accession to the WTO with others seeking accession

and to hammer out negotiating positions in advance of the WTO Ministerial to be held in Geneva in November.

H.E. Cham Prasidh, Senior Minister, Minister of Commerce, welcomes some 13 LDCs high level officials noting in his opening speech: “WTO members continue to ask newly acceding LDCs to take on more onerous obligations than those applied to original WTO LDC members, contrary to the clear Guidelines language.” He stresses that bilateral negotiations are burdensome on LDCs that often have limited capacity to negotiate their terms of accession.

“Differences with regard to interpretation still remain and some Members feel there is scope to improve the implementation of the Guidelines,” said H.E. Cham Prasidh.

At the conference Cambodian Minister of Economy and Finance, H.E. Keat Chhon, assures the guests that: “In the next three days we can further focus on the discussions initiated at the May 2009 Dialogue to better appreciate the priorities, concerns and challeng-es faced by LDCs in their accession process and to explore, shape and crystallize possible options within the framework of the 2002 Decision on Accession of LDCs.”

LDCs countries that participate in the Round Table discussions include Tanzania, Sudan, Vanuatu, Samoa, Afghanistan, Sao Tome Principe, Bhutan and Lao PDR and Nepal.

The Aid for Trade agenda remains a priority for Cambodia. The Cambodian experience of accession to the WTO and its success in bringing about coordinated Development Partner support to focus on its further integration into the world economy are important beacons to LDCs facing the uphill struggle of entering the organization and reaping the benefits of their accession.

The RGC has demonstrated clearly its desire to be one of the leaders of the Aid for Trade agenda and its willingness to assist others and share the lessons of its experience to LDCs accession to WTO.

WRITESJulian Latimer Clarke

trade economist, World BankCambodia willing to share the lessons learnt from its WTO accession (UNDP/Arantxa Cedillo)



The Trade Related Assistance for Development and Equity Project, also known as TRADE Project and implemented by the Ministry of Commerce (MoC) and the United Nations Development Programme (UNDP), was one of the very first technical assistances aimed at supporting the Royal Government of Cambodia’s ef for t to develop a sector wide approach.

The TRADE project focuses on improving and developing the capacity of the MoC and the Cambodian Private Sector to manage a vigorous trade development agenda that is pro-poor, beneficial to human development, and Government-led.

In line with needs identified by the MoC and UNDP, the TRADE project is consistent with UNDP’s comparative advantage in the area of capacity building.

The TRADE project was formulated in 2004-2005 even before the Royal Government of Cambodia and its Development Partners had a chance to take stock of the implications of the 2005 Paris Declaration on Aid Effectiveness, and foreseen to end in 2010. Still, by then, UNDP and MoC

had already shifted to a “programme approach” in the management of assistance that would make it easier to align this new project with changing circumstances.

Under an initial push from the European Community and in line with the new paradigm of Aid Effectiveness, in early 2006 Cambodia and its Development Partners agreed that they should aim for a Sector-Wide Approach (SWAp)for the country’s trade sector.

MoC and UNDP agreed to use TRADE to organize the updating of Cambodia’s 2001 Diagnostic Trade Integration Study (DTIS) in a manner that would bring together not only the six core Integrated Framework Agencies but other Devel- opment Partners as well.

The updated DTIS 2007 would then serve as the strategy to guide Cambodia Trade SWAp.

cambodia’s trade integration strategy (Dtis 2007)

Together, a team of some 24 Government officials, local consultants, international experts and Development Partners worked over a period of several months under MoC’s leadership to produce Cambodia’s 2007 Trade Integration Strategy.

The new strategy was endorsed by the Government’s Sub-Steering Committee on Trade Development and Trade Related Investment in March 2007 and formally launched in December of the same year at an event opened by H.E. Prime Minister Samdech Hun Sen.

Following the launch of strategy, the Sub-Steering Committee on Trade Development and Trade Related Investment created three pillars – essentially mixed teams of Government officials and Development Partners – to assist with the programming and implementation of the three main themes identified in the strategy – namely, (1) cross-cutting reforms; (2) diversification of the export base; and, (3) capacity development for Trade SWAp management.

aligning tRaDe with Pillars 2 and 3

Upon the creation of the pillars, UNDP agreed to serve as “shepherd” for Pillar 2 (Diversification of Exports) and later on, for Pillar 3 (Capacity Development for Trade SWAp) following UNCTAD initial coordination. MoC and UNDP agreed to alignTRADE with the objectives of Pillars 2 and 3 as effectively as possible.

From 2008 onwards, activi t ies implemented under TRADE were carefully designed to support the objectives of the Pillars 2 and 3 and coordinate with those of other Development Partners engaged in the Trade SWAp.

The year 2010 will be a year of transition for TRADE MoC and UNDP. The project team following an external independent review and identify possible new directions for the year 2011 and beyond.

In addition, as in the past, TRADE will continue to contribute to the Trade SWAp and to make use of its nimbleness to respond to changes as the circumstances require.

WRITESThierry Noyelle

senior trade Policy advisortRaDe Project, Moc/UnDP

tHe Moc/UnDP tRaDe PROjECTA CONTRIBUTION TO TRADE SWAp

The TRADE project focuses

on improving and developing the capacity of the MoC and

the Cambodian Private Sector to manage a

vigorous trade development

agenda that is pro-poor.

A vigorous pro-poor trade development agenda for Cambodia (UNDP/Arantxa Cedillo)



tHe tRaDe PRoJect in 2010

The TRADE project continues to support the Trade SWAp, primarily through Pillars 2 and 3, in 2010.

Developing a Cambodian research capacity on trade and human development linking MoC and other Government bodies through a “knowledge network” approach, including national institutions such as Royal University of Law and Economics (RULE) and Royal School of Administration (RSA) as well as regional partners such as ARTNeT.

Deepening capacity development support at the provincial level by focusing on provincial departments of commerce and provincial producer associations and working jointly with national partners such as RSA.

Supporting the formulation and implementation of a communications strategy in D/ICO to focus on disseminating the activities and results of Trade SWAp.

Supporting the establishment of Trade SWAp liaison offices in other line ministries.

Supporting the implementation of the Tier 1 project as MoC sees fit.

Providing assistance to other UNDP Country Offices and Government through the development of a “knowledge product” on DTIS update, EIF proposal development, organization of national implementation arrangements, etc.

Developing focused capacity in MoC’s Trade Promotion Department (TPD), including the creation of a Value Chain and Trade Information Unit as well as the possible launch of a Cambodian Trade Support Network that would be managed by TPD and would network Government and business trade support institutions to deliver stronger services to exporters.

Continuing to “shepherd” Pillars 2 and 3, including strengthened work on capacity building of producer associations and Government trade support institutions through expanded collaborations with Pillar 2 partners (Government, associations, and development partners).

Remaining supportive of the overall trade SWAp, including possibly working with MoC to develop an overall system to assess the impact and contribution of the many different Trade Related Technical Assistances from the many development partners supporting Cambodia Trade SWAp.

tRaDe actiVities in PiLLaR 2

In 2007-2008, TRADE organized the work programme of Pillar 2 through the creation of a number of Task Teams dealing initially with eight of the 19 priority export sectors identified in the Cambodia’s 2007 Trade Integration Strategy and with two areas of cross-cutting support to exporters.

The project launched some pilot activities supporting producer associations in rice, cassava, cashew nuts, and prahoc in the Kampong Cham and Siem Reap provinces and the North-West areas of Battambang and Bantey Meanchey. These included support to the creation of several producer associations, a study tour of rice millers to Senegal (October 2008) followed by their participation to a buyer-seller meeting in HCMC (November 2008), a study tour of cassava producers to China (June 2009), and other activities.

TRADE arranged preliminary activities to address trade finance bottlenecks in Cambodia and raise awareness to this critical issue among senior policy makers (July 2009).

sUPPoRt to PiLLaR 3

The project built the capacity of the newly created D/ICO, including building up staff resources, supporting the creation of the original Trade SWAp website (together with GTZ), and formulating a Tier 1 proposal to be submitted to the Enhanced Integrated Framework. The Tier 1 proposal was approved in September 2009 by the EIF Board.

It supported D/ICO in showcasing Cambodia’s early experience with Trade SWAp at international meetings as well as through study visits by del-egations from Nepal and Lao PDR.

I t prepared Inst i tut ional Capacity Assessments in six ministerial departments likely to play a key role in the implementation of the trade SWAp (four in MoC including D/ICO, one in MAFF and one in CDC) and providing some initial capacity development supports to those six departments.

It provide an initial capacity needs assessment in the Provincial Departments of Commerce and providing some initial training support to those.



Work on Cambodia’s 2007 Trade Integration Strategy – DTIS 2007 – was launched in mid-2006 by the Ministry of Commerce and UNDP in close consultation with other Development Partners supportive of Cambodia’s efforts in trade development.

DTIS 2007 has four main objectives:

1. Identify a set of possible priority product or service sectors to serve as a basis for strengthening and diversifying Cambodia’s export basket;

2. Identify bottlenecks, either common to all priority sectors or specific to each, that need to be removed to promote development of those export sectors;

3. Link more clearly trade sector development with human development and poverty reduction (“mainstreaming”);

4. Serve as a basis for formulating clear trade sector development priorities shared by the Government, its Development Partners, and other concerned stakeholders and to be

implemented by all through a Trade Sector Wide Approach.

DTIS 2007 must be supported by much stronger structures and mechanisms for the formulation and implementation of trade policy and trade development strategy within RGC.

Effective implementation of DTIS 2007 will require stronger funding coordination between Government and Development Partners, including through more effective use of the the Trade SWAp.

currently exported products

• Beer• Cashewnuts• Cassava• Corn• Fishery• Footwear• Garment• Livestock• Rice,includingorganicrice• Rubber• Silk,includingsilkhandicraft• Soybeans

services and non-exported products

• Fruitsandvegetables,including organic produce, mango, palm and soap products, pepper;

• Wood Products, including sustainable construction materials, such as bamboo flooring, paneling;

• Light manufacturing assembly, which might include bicycle and mopeds, light electrical/electronic (e.g. fans, TVs,) sewing machines, etc.

• Tourism including personal and business travel, entertainment;

• Laborservicesincluding,construction services, household help, and farming;

• Transportandtransportrelated;

• Business-processes/web based services, which might include computer services, architecture, engineering, bookkeeping, accounting.

DTIS 2007 develops an attractive market index for each product line in each of the 19 sectors and for each import market, as a means to rank and identify where the most attractive new markets for expanded Cambodian exports might be found.

attractive market analysis

The attractive market index combines:

• Ameasureofthestrengthofdemand in the importing market, measured by the difference in the growth of that import in the given market and the growth of world imports for the same product;

• The size of import markets, as measured by their share in world imports of a given product;

• The openness of import markets for products from Cambodia, as measured by the ad valorem equivalent tariffs they apply to imports from Cambodia for a given product.

The attractive market analysis includes:

Cassava a possible priority product in Cambodia's export basket (UNDP/Arantxa Cedillo)

tHe tRaDe inteGRation stRateGy SETS 19 PRIORITy PRODUCTS AND SERVICES



• Cambodia’scurrentmainexport destinations include the United States (currently dominant due to the garment sector), Germany, the United Kingdom, France, Canada, Japan, Singapore, South Korea (leading country for tourism,) China (PRC), Thailand and Vietnam;

• EU countries are among themost attractive new or expanded markets with the United Kingdom in the lead for many of the 19 export potentials, followed by France, Italy, Spain, and Germany. Japan and Hong Kong also offer large numbers of promising new or expanded markets for the 19 sectors.

• Other interestingpotentialmarkets are: Singapore, Thailand,Indonesia, Malaysia, and Vietnam in South- East Asia; China PRC, Taiwan (PoC), South Korea, and Japan in East Asia; Saudi Arabia and the United Arab Emirates in the Gulf countries; as well as Canada, Australia, Turkey, and Kazakhstan;

• Besidethepotentialneworexpanded export markets listed above, the analysis also suggests interesting opportunities for exports to a number of ex-Soviet Republics, the Russian Federation itself, as well as some African and Arabic countries.

Perhaps, the most interesting finding from the attractive market analysis is that for a great majority of the 19 product and service sectors (and individual product lines within each sector,) Cambodian exporters hold limited to no tarif f advantage over their main competitors in the top five attractive markets.

This is so either because their main competitors come from other LDCs and benefit from similar tariff prefer-ences and/or because tariffs applied by importing countries are very low for everyone.

Strengthening the ability of a growing number of product and service sectors to develop a competitive export capacity will require, as noted earlier, interventions both at the product or service sector level and in areas of legal and institutional support that cut across most sectors.

The Trade Integration Strategy 2007 focuses on five such cross-cutting areas:

• Tradefacilitation

• Investmentfacilitation

• Technicalbarriertotrade

• Sanitaryandphyto-sanitary measures

• IntellectualPropertyRights

trade facilitation

Improvements in trade facilitation remain critical to the competitiveness of a broad range of export sectors. Areas for further action include:

(1) Implementation of the Risk Management Strategy approved under Sub-decree 21;

(2) Successful automation of CED under the ASYCUDA programme;

(3) Introduction of a WTO-compatible flat fee for service; and

(4) Design and implementation of a Single-Window process at a more aggressive pace than the one currently proposed under the ASEAN 2012 schedule.

investment facilitation

Improvements in investment facilitation focus on two main areas:

(1) The deepening of legal reform for investment; and,

(2) Accelerating the development of Special Economic Zones (SEZs.)

The Achilles heel of the investment framework today remains the lack of a predictable and transparent set of rules that are enforced in a speedy, fair, and efficient manner by the appropriate Government institutions.

In most respects the thrust of Cambodia's investment framework currently on the drawing board compares favorably with the best anywhere.

However, there remains significant work in the coming years to turn legal proposals and drafts into approved laws and fill in the regulatory details through sub-decrees and administrative instructions as well as develop the institutional capacity to implement those.

Accordingly, deepening the successful implementation of a number of Special Economic Zones should rank high on the list of Cambodia’s priorities.

technical barriers to trade

Cambodia’s current draft Law on Standards does not comply with many of the provisions of the WTO Agreement on Technical Barriers to Trade and, for that matter, might create undue new barriers to Cambodian exporters.

The draft Law should be pulled out of the National Assembly where it stands at the moment and should be revisited and amended extensively so that it is made WTO-compliant and meets the needs of Cambodian producers.

sanitary and phyto-sanitary measures

Cambodia’s current SPS institutional capacity for exports is very limited and, at times, characterized by a duplication of agencies whose controls do not even meet international conformity requirements.

There is a need for streamlining the current SPS control institutional frame-work and eliminate controls that have no value to the exporter. In addition, there is a need to develop the human and institutional resources required to support exporters in producing crops or foods that meet SPS requirements of importing countries.

SPS support activities covers three broad areas: plant safety, animal safety, and food safety. Roughly-speaking the complexity of support activities increases as one proceeds from plant safety to animal and food safety.

intellectual Property Rights

Enforcement of Intellectual Property Rights (IPRs) is important for Cambodia. Stronger IPR protection also offers opportunities for Cambodia to develop certain export products that, themselves, might be subject to IPR protection.

A key priority bottleneck to address is the establishment of the Commercial Court system.

Finally, the development of trade marks and geographical indications (GIs) are two areas that could strengthen Cambodia’s competitiveness in a number of the export potential products and services identified in this study, including in agricultural and handicraft product sectors such as rice, pepper, silk and others.



Through the one-stop website www.moc.gov.kh/tradeswap trade stakeholders and development partners have access to shared information on Cambodia’s cross-cutting trade agenda and sector wide approach.

The development of the website has helped the Royal Government of Cambodia, through the Ministry of Commerce (MoC) and its Development Partners to improve communications on development impact and cost- effectiveness by avoiding duplication and help build synergies.

It also aimed at providing information on development challenges in other line ministries that are implementing related trade activities and programmes.

The German Technical Cooperation (GTZ) for Private Sector Promotion in Rural Areas (GTZ-PSP) supports strongly

the active role taken by the Ministry of Commerce (MoC) to harmonize donor-supported initiatives in the area of trade, export promotion and private sector development as well as its efforts to deepen effective communication and adequate information sharing among a variety of partners.

To help MoC communicate Trade SWAp activities, GTZ-PSP funded the creation of a website for the Trade SWAp.

The website has enabled all partners to take part actively in the discussions surrounding the implementation of Cambodia’s Trade SWAp and get the latest information on current development in the trade and export sectors.

The Ministry of Commerce is regularly updating the website – but of course all users, be it donors or other public entities, are invited to contribute.

The website provides the following information:

• Lists of recently completed, ongoing, and planned project;

• Information on programming, implementation, and quality assurance procedures;

• Names and e-mail addresses of contact points and officials in charge of sector-specific programmes;

• Policies and appropriate contacts to access documents.

Besides this and other direct assistance to MoC, the GTZ is seeking to improve living conditions in Cambodia’s provinces by creating and fostering new opportunities for economic activities through its Private Sector Promotion in Rural Areas (GTZ-PSP).

For example, GTZ-PSP supported handicraft producers so that they improve their organizational and marketing skills and upgrade product quality. This has led to increased income and new jobs mainly for women in the respective provinces.

Other private sector promotion initiatives dealt with using Information and Communication Technology (ICT) to improve access to business related information for local small and medium enterprises throughout the country, the so called I–booth.

This new mobile phone based info- service point can now be seen in many provinces throughout Cambodia.

WRITESPeter Bolster

chief technical advisor, GtZ

GeRMan cooPeRation SUPPORTS INFORMATION AND COMMUNICATION TECHNOLOGy

GTZ-PSP funded the creation of a website for the Trade SWAp

Documents

Trade SWAp - Ministry of Commerce SWAp - Newsletter 01...the overall Trade SWAp. D/ICO is responsible for overall, day-to-day coordination of the Trade SWAp. 5. How is Trade SWAp contributing