Prime Minister Hun Sen has voiced support for an upgrade of the ASEAN-China Free Trade Area (ACFTA) to what has been termed “Version 3.0”, an incarnation he suggested be underpinned by the world’s largest trade pact – the Regional Comprehensive Economic Partnership (RCEP), following the “successful implementation” of versions 1.0 and 2.0.
He also called on the 11 ACFTA countries to expand and deepen the scope of their economic cooperation, minimise barriers to trade in goods, services and investment, and promote digital-economy and green-growth development as well as capacity building for small- and medium-sized enterprises (SME).
The premier made the remarks in a pre-recorded video shown during the opening ceremony of the mixed-format 19th China-ASEAN Expo held in Nanning city on September 16, officially themed in English: “Sharing RCEP New Opportunities: Building a Version 3.0 China ASEAN Free Trade Area”.
He said that ASEAN-China economic cooperation has accomplished “many fruitful achievements” since the two sides signed the “Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China” in 2002 and subsequent linked trade and investment deals.
“I am confident that the implementation of the RCEP starting this year will not only create and bring more trade and investment opportunities for countries in the region, but also contribute significantly to growth in the aforementioned sectors.
“In particular, it will be the ‘core framework’ for the establishment of the upcoming Version 3.0 of the ASEAN-China Free Trade Area,” Hun Sen said.
The RCEP is a free trade agreement (FTA) among the 10 ASEAN countries of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, as well as five additional Asia-Pacific nations: Australia, China, Japan, South Korea and New Zealand.
The pact took effect on January 1 in 10 out of the 15 signatory states – including Cambodia. The signatory countries account for about 30 per cent of the world’s population, or 2.3 billion people, and 30 per cent of global gross domestic product (GDP), at $38.813 trillion, according to New Zealand’s trade ministry.
The RCEP has since entered into force for all 15 signatories except for Indonesia, Myanmar and the Philippines. Indonesia ratified the pact on August 30 and – according to Singapore’s The Straits Times – aims for the deal to take effect in early November. The RCEP will take effect in the archipelago nation 60 days after it deposits its ratification instrument with the ASEAN Secretariat.
Garment Manufacturers Association in Cambodia (GMAC) deputy secretary-general Kaing Monika voiced concern at a forum in May that the Kingdom’s business community is overlooking and underestimating the opportunities created by the RCEP.
Monika interpreted this trend as a general result of export orientation towards non-member Western markets, a lack of awareness of the pact among manufacturers, and oversight of potential growth in RCEP signatories, which he also noted have a total population of nearly 2.3 billion.
He claimed that garment factories in the 15 member states can “immediately benefit” from the pact without significant adjustments to their supply chains.
Prime Minister Hun Sen went on to say that Cambodia had achieved “strong herd immunity”, which prompted the government in end-2021 to ease Covid-19 measures and allow for domestic production, business and trade to resume.
He said the government has worked hard to address structural issues over the past two years, subsequently putting in place a series of reform programmes to prop up Cambodia’s economic recovery.
These programmes are supported by key instruments such as the new “Law on Investment”, “Cambodia Digital Economy and Society Policy Framework 2021-2035”, “Strategic Framework and Programmes for Economic Recovery in the Context of Living with Covid-19 in a New Normal 2021-2023”, and an FTA with China, he said, noting that another of these trade deals has been signed with South Korea.
ASEAN emerged as China’s biggest trading partner in 2020 for the first time, while the latter has been the former’s top trading partner for 13 consecutive years since 2009, according to official Chinese sources.
Last year, trade between ASEAN and China came to nearly $9 billion, of which ASEAN exported close to $4 billion and imported almost $5 billion, the Cambodian Ministry of Commerce reported, adding that Chinese investment in the Southeast Asian bloc is now valued at more than $14 billion, while ASEAN investment in China is over $10 billion.
Hun Sen thanked China for giving “high priority” to trade with ASEAN and supporting development across the region. “As the chair of ASEAN, Cambodia will continue to promote improvements to ASEAN-China cooperation to ensure sustainable, inclusive, resilient socio-economic development between the two regions,” he said.