WTO entry mixed blessing for
Cambodia By Marwaan Macan-Markar
BANGKOK - Cambodia's entry as a full member of
the World Trade Organization (WTO) tests the ground on
whether poor countries in the world would be better or
worse off by becoming new members of the global
free-trade body.
The Southeast Asian country is
days away from becoming the 148th member of the WTO
after Cambodia's Senate followed the National Assembly
in ratifying the country's entry early this month. Under
WTO admission rules, a country becomes a full member 30
days after its national legislature approves entry into
the Geneva-based trade organization, whose rules cover
about 90% of global trade.
But as Phnom Penh
prepares for this new chapter, it is up against a slew
of WTO-imposed requirements that some analysts say weigh
heavily on one of the world's poorest countries. Despite
this reality, the Cambodian government is choosing to
play up the significance of its WTO membership, given
the economic benefits it sees coming the country's way
to boost the lucrative garment sector.
Fellow
Asian nation Nepal is in the same league after the
decision at the WTO meeting in the Mexican seaside
resort of Cancun last September to approve its
application.
This opening marked the first time
since the WTO was created in 1995 that the trade body
had allowed nations that belong to the least developed
countries (LDC) group to join it.
The
Asia-Pacific region has close to 20 LDCs that have yet
to join the WTO, including Vietnam and Samoa. But
Cambodia's entry, which marks the end of a nearly
10-year quest to be in the free-trade body, serves as a
pointer to those LDCs waiting to hop on board this
bandwagon.
Unlike other members that have joined
the WTO since 1995, Cambodia and Nepal were asked to
conform to a new and tougher set of conditions as part
of their membership bid in order to create a free-trade
environment in the two countries.
"Cambodia will
face a tough test after it becomes a WTO member because
of the conditions being placed on it in areas like
agriculture production," Sok Hach, director of the
Economic Institute of Cambodia, a Phnom Penh-based
independent think-tank, said in an interview.
"Psychologically it will be a challenge for Cambodia to
meet the requirements of these trade rules."
Under agriculture, new LDC members have been
given a shorter time to conform to the WTO's conditions
and cannot benefit from tariffs and subsidies, unlike
other developing countries that already are members.
Thus Cambodia, for instance, will not be allowed to
subsidize its agriculture sector, while other
developing-country members will have until 2015 to phase
out their subsidies.
Its disadvantage is
amplified when set against the language of tariff
barriers that countries resort to in order to protect
their domestic agriculture sector from imports.
So Cambodia, with close to 80% of its 11.7
million people employed in agriculture, can only set a
maximum tariff of 60%, while the European Union imposes
a 252% tariff barrier to protect its agriculture sector
and the United States has a 120% tariff wall.
The country's farmers also stand to lose because
of the conditions being placed on it under the Trade
Related Aspects of Intellectual Property Rights (TRIPS),
to which Cambodia has to conform by 2007, despite the
WTO's Doha Development Agenda giving LDCs until 2015 to
comply with TRIPS.
After 2007, farmers who used
plant varieties that were produced by private companies
will not be able to save seeds for a new planting season
or exchange them with other farmers, Francis Perez,
trade-policy adviser at the Asia division of British
development agency Oxfam, explained in an interview.
"The farmers will have to buy new seeds for every
planting season," he said.
The country's nearly
200,000 people living with the human immunodeficiency
virus (HIV), which can cause AIDS, may also feel the
impact of TRIPS far earlier than some public health
activists had expected, since Cambodia only has until
2007, and not 2015, to introduce laws that protect drugs
produced by the pharmaceutical giants. This would make
it increasingly difficult for Cambodia to gain access to
cheap, generic anti-AIDS drugs, which have kept alive
much of its HIV-afflicted population.
Despite
what it stands to lose, the Ministry of Commerce states
that WTO membership will give Cambodia a chance to
increase its sales to the apparel markets in the
developed world.
Currently, the garment industry
contributes to four-fifths of Cambodia's total exports,
valued at US$1.4 billion annually. This sector employs
nearly 240,000 people, and the ministry estimates that
nearly a million people have benefited from it
indirectly.
Cambodia is also placing faith in
new investments being directed its way after it becomes
a WTO member. To ensure such a climate, Phnom Penh will
have to adopt 40 new laws within the next three years.
"Cambodia stands to improve by these changes,
particularly if the government is committed to improve
the laws to attract investment," said Sok, the
economist.
Other analysts are hoping that such a
commitment would also help get rid of the country's
record of rampant corruption and lack of transparency, a
fact that was highlighted in a World Bank report
released in August.
"Unofficial payments are a
large component of the cost of doing business" in
Cambodia, the bank charged.
