COUNCIL FOR THE DEVELOPMENT OF CAMBODIA (CDC)


Trade Policy

The RGC is developing a trade sector strategy and preparing for WTO accession. NGOs believe that the trade sector strategy must be assessed in the context of an overall pro-poor macro economic policy framework, with equitable poverty reduction as its main policy objective. The development of any trade strategy must allow sufficient time for participatory poverty impact analysis and extensive consultation with communities that would be most affected. For instance, there has been limited debate and no public consultation regarding the impact on agriculture and especially on small farmers. Thus, NGOs encourage the RGC to pursue a fully participatory approach, based on a continuous iterative analytical process. The trade policy is currently labeled as pro-poor but NGOs do not see that the supporting documentation demonstrate a positive correlation between the type of trade strategy proposed and the actual reduction of poverty in Cambodia. In particular, NGOs are concerned about the following issues: (i) export-led growth will not necessarily translate into accelerated poverty reduction if the trade policy is not placed in the context of overall sector and economy-wide poverty reduction strategies; (ii) Foreign Direct Investment (FDI) and export activity will not provide opportunity for poverty reduction if concerns about types and conditions of investment, ownership, labor standards and environmental regulations are not adequately addressed; (iii) Export Processing Zones (EPZs) will export the profits along with the products if they do not guarantee backward linkages and address the possible intensification of income inequalities between rural and urban areas; (iv) lowering labor standards without improving productivity will not make Cambodia more competitive (cheap labor vs. low per unit labor costs) while attracting high-quality FDI requires a commitment to improving human-capital levels; (v) agricultural export growth will not reduce poverty without effective targeting of remote areas to improve access to capital, technology, skills and other productive inputs as well as information on prices and markets. Additionally, agricultural exports should not be allowed to threaten national food security. Therefore, trade policy will only be pro-poor if the pace, sequencing and distributional aspects of trade and economic policy reform are considered carefully. For further information on these issues and the recommendations proposed, please refer to the Agricultural and Rural Development and the Trade Policy papers on pages 11 and 62 respectively. \| Content \| Back \| Top \| Next \|