Non-Tariff Measures Faced by Exporters: Experiences and Findings From Cambodia

1. Non-Tariff Measures Faced by Exporters: Experiences and Findings From Cambodia Dourng Kakada, Economic Institute of Cambodia (EIC) May 4th,2006 Krabi, Thailand

2. Content • Cambodian Export Profile • Major Non-Tariff Measures Faced by Cambodian Exporters • Case Study • Conclusion

3. Cambodian Export Profile (1) Source: EIC, Compiled from various government and international organisation primary data

4. Cambodian Export Profile (2) • Cambodian merchandise exports are limited in terms of products………. Source: Custom and Excise Department

5. Cambodian Export Profile (3) • …..And directions of exports Sources: Custom and Excise Department and Ministry of Commerce • Informal exports still large in agricultural products!

6. Major NTMs Faced by Cambodian Exporters Internal Constraints • Low standard and SPS infrastructure • Weak institutional capacity to respond to new trade regulations Major NTMs • Standard • Rule of Origin • Conformity Assessment • Sanitary and Phytosanitary (SPS) Measures

7. Case Study

8. Garment • Garment products suffer from the EU’s criteria of rule of origin attached with EBA (Part II:F) • Lack of textile industry in the country • Fabrics and accessories mostly imported from China, Hong Kong, Taiwan and Korea which are not qualified for the rule • Buyers’ nominations • EBA utilization rate: 63.3% • Administrative hassles: • Cost: Official and Unofficial fees • Unofficial fee for obtaining a certificate of origin equal to a salary of a garment worker/month

9. Rubber (1) • Rubber not able to access to broader market access (Part III:B) • Cambodia is not a member of International Rubber Association • Laboratory with qualified personnel and pre-requisite equipments • Test participation in compliance with international standards • Formation of Cambodian Rubber Association • Exported to transit country for further processing and accreditation

10. Rubber (2) • Products suffers from price discount • Rubber export is about 45,000 tons/year • Rubber price on average by June 2005 (by French Development Agency): • Malaysia: US$1,343/ton • Cambodia: US$1,150/ton (at Vietnamese border)

11. Rice • Rice exports to China has been banned since end of 2004 (Part IV:B) • More required documents for risk analysis and assessment • Local rice traders can not compete to buy and stockpile paddy rice at peak harvest time due to relatively high cost of capital (Part I:A) • Leading to informal exports to neighboring countries

12. Additional requirements imposed by China before export plants from Cambodia • Information about the plant and/or the product being tested including general name, scientific name, variety and class. • Information about the producing area of the product indicating the province, city and area, showing the product location on the national map with associated acreage. • Information about field management, growing and harvest times. • Information about pests and diseases involved including the general and scientific names, distribution, plants with parasites, harm-stricken parts of the plant, harm season, the supervision and inspection system, an impact statement on economy and biology. • Information of plant protection such as the method and effect of protection adopted, the description and frequency of chemicals used for protection. • Risk management measures for harmful plants including import & export inspection and quarantine law, processes and standards. • Information of the organization system of Inspection and Quarantine Bureau from central administration to local government, as well as its responsibility; the institution which is used as the inspection and quarantine lab is included. • Information of ongoing procedures, organisation relating to the Issuance of Certificate of Inspection and Quarantine, and a copy of the Certificate.

13. Fish Products • Fish product exports to the EU have been banned since 1997 by European Commission’s decision 97/296/EC (Part IV:C) • Compliance with EC legislation, • Sanitary conditions in the production of fish products/live shellfish, • Hygienic conditions in production areas and in product handling, and controls such as physical inspection, • Inspection of HACCP systems and laboratory checks carried out by competent authorities • In 2004 the EU banned imports of tuna and swordfish since Cambodia failed to respect international conservation law

14. Pharmaceutical products • Industry has been noticeably growing in recent years • Currently, one factory is exporting to a number of countries in Africa • Unable to access broader markets and to join international bids due to lack of: • Good Manufacturing Practices (GMP) • Bio-equivalent study

15. Other agro-processing products (1) • Confirel products unable yet to access Chinese marketsdue to “Certificate of Approved Labels for Foods” • Certificate of origin • Certificate of free sales • Production process (description and diagram) • Composition of formula • Certificate of registered trade mark • Certificate of free use of trade mark • Certificate of Analysis • Example of labels in Chinese

16. Other agro-processing products (2) • Black pepper is not accessible to Japanese markets due to the requirement of a certificate of sterilisation

17. Other agro-processing products (3) • Protein foods failed to export several times to the US and the EU due to lack of standard certificates such as ISO, GMP and HACCP

18. Conclusion • Cambodian exports severely face NTMs • No systematic records of NTMs in the country • Careful consideration in FTA negotiation

19. Thanks for Your Attention!