Trade Impact Studies for Cambodia

The Project at A Glance

Over the past decades, Cambodia has implemented numerous reforms, leading to economic growth and prosperity and the country is considered to be well-integrated into the global economy. However, with its upcoming graduation from the Least-Developed Country (LDC) 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.

In this context, International Economics (IEC) conducted a series of Trade Impact Studies for the Cambodian Ministry of Commerce (MoC) with an aim to determine the effects of either a policy change, the outcome of a negotiated agreement, or changes to the external trade environment. Project was implemented under the ARISE Plus Cambodia programme and was funded by the German Federal Ministry for Economic Development (GIZ).

What We Found

IEC team provided analytical support to Cambodian negotiators on the potential costs, benefits and priority issues related to trade agreements with identified partners or determine implications of a change in the market access regimes of a market, and the necessary adjustments needed to meet the new requirements. The analysis covered three aspects namely: economic, social and human rights impacts; and environmental impacts.

Our Team has developed three studies, starting with a Study on Trade Impact Assessment of GSP and GSP+ for Cambodia, to help Cambodia make informed decisions on trade policy and to carry out support measures for the economy to prepare for the opportunities and challenges arising from trade policy changes, particularly in trading with the EU under either the GSP or GSP+ regimes.

Second study on Trade Impact Assessment of the EU-Vietnam FTA on Cambodia and Opportunities for Cambodia-Vietnam Trade, showed how this FTA potentially can influence Cambodia due to shifts in regional economic dynamics and trade routes and how Cambodia needs to adapt to these changes. Furthermore, against the backdrop of LDC graduation and the change in market access regime on the EU market after graduation, the last study aimed to support Cambodia in navigating the changing landscape from 2030 onwards, with an emphasis on providing recommended actions for Cambodia to Strengthen the capacity of the Garment, Footwear, and Travel Goods and Handbags (GFT) sectors to maintain exports to and strengthen its market position in the EU.

Moreover, IEC also provided capacity building for the Cambodian negotiating team to understand the process of conducting Trade Impact studies and to interpret the results of the analysis, as well as build the local capacity within Cambodia to conduct future Impact studies.

Our Strategy and Impact

The methodology for the Trade Impact Assessment contained both quantitative and qualitative analysis. Since studies focused mostly on goods, the analysis was limited to trade in goods analysis, and the labour and environmental conditions in association with the international conventions incorporated in the EU GSP Regulation. For the economic impact analysis, two different modelling tools were used: Computable General Equilibrium (CGE) model and a Partial Equilibrium (PE) model. For social and human rights and environmental impact assessment, a qualitative approach was used and complemented by quantitative data from the modelling. The primary basis for quantitatively assessing impacts in the three areas was derived from secondary sources (national and international monitoring reports), and discussions with stakeholders.

IEC Team delivered three studies, which provided detailed information on the selected topics, as well as provided recommendations. While for some, calculated impact assessments suggest negative implications for Cambodia’s trade and GDP, strategic policy interventions offer avenues to mitigate specific impacts. Policymakers in Cambodia may need to focus on diversifying exports and trade partners, strengthening domestic industries, and enhancing competitiveness to navigate the evolving regional trade landscape successfully. Navigating the shifting regional trade landscape requires proactive policy measures and diplomatic collaborations to ensure that Cambodia can optimise its economic resilience and find new avenues for growth amid changing regional trade dynamics.

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.