Cambodia’s Trade Diplomacy: Navigating RCEP, CPTPP, and Beyond

Cambodia, positioned strategically in Southeast Asia, is actively enhancing its trade diplomacy to capitalize on regional and global economic opportunities. As global trade frameworks evolve, Cambodia’s participation in major trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will shape its economic trajectory for years to come. This blog explores how Cambodia is navigating these trade agreements, the challenges and benefits involved, and what lies beyond these landmark deals.

Cambodia’s Strategic Role in Regional Trade Agreements

Cambodia has emerged as a dynamic player in ASEAN’s economic integration efforts. With a population exceeding 17 million and steady GDP growth, Cambodia’s government has prioritized trade diplomacy as a key pillar of its economic development strategy. This involves negotiating and joining trade pacts that reduce barriers, boost exports, attract investment, and improve integration with global supply chains.

Regional Comprehensive Economic Partnership (RCEP)

Signed in November 2020 and effective since January 2022, RCEP is the world’s largest free trade agreement, covering 15 countries including all ASEAN members plus China, Japan, South Korea, Australia, and New Zealand. For Cambodia, RCEP offers multiple benefits:

• Market Access: Cambodia gains tariff reductions and streamlined customs procedures across a huge market of nearly 2.3 billion people.

• Supply Chain Integration: By harmonizing rules of origin and technical standards, Cambodia can more easily plug into regional manufacturing and export networks, especially in textiles and electronics.

• Foreign Direct Investment (FDI): RCEP encourages FDI inflows due to its investor protection mechanisms and predictable trade environment.

However, Cambodia faces challenges such as upgrading its infrastructure and regulatory environment to meet RCEP standards and competing with more developed economies within the bloc. The government has been working on capacity building programs and industrial policy reforms to leverage RCEP benefits fully.

Learn more about RCEP and its regional impact via ASEAN’s official site.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Cambodia is currently an observer in the CPTPP, a high-standard trade agreement among 11 countries including Canada, Japan, Australia, and Mexico. The CPTPP sets more rigorous standards on labor rights, intellectual property, environmental protection, and digital trade than many other deals.

Cambodia’s potential accession to CPTPP offers exciting prospects:

• Enhanced Export Opportunities: Access to lucrative markets with lower tariffs and non-tariff barriers.

• Trade Diversification: Reduces Cambodia’s dependence on traditional markets like China and the EU.

• Regulatory Modernization: Encourages reform in intellectual property laws, e-commerce regulation, and environmental standards.

Nonetheless, joining CPTPP requires Cambodia to implement significant reforms, particularly around labor rights and environmental policies, which could pose political and social challenges. Ongoing dialogues with CPTPP members focus on technical assistance and phased commitments.

Follow updates on Cambodia’s CPTPP status at the CPTPP official website.

Beyond RCEP and CPTPP: Cambodia’s Broader Trade Diplomacy

Cambodia’s trade diplomacy does not stop with RCEP and CPTPP. The country is also engaging in bilateral trade agreements and expanding its role in multilateral institutions such as the World Trade Organization (WTO).

Bilateral Trade Agreements

Cambodia has signed bilateral trade agreements with countries such as South Korea, Japan, and China, often complementing broader regional agreements. These deals often address specific sectoral needs, such as agricultural exports or technical cooperation. For instance:

• The Cambodia-China Free Trade Agreement fosters stronger trade ties and infrastructure investment.

• Ongoing negotiations with the European Union aim to renew and expand the Everything But Arms (EBA) scheme, which currently grants duty-free, quota-free access to the EU for many Cambodian products.

These bilateral relationships help Cambodia hedge its trade dependencies and attract foreign investment.

Multilateral Institutions and Global Standards

Cambodia actively participates in WTO forums and ASEAN economic bodies to advocate for developing country interests and better integration into global value chains. The government is also keen on adopting international standards in customs procedures, intellectual property, and environmental safeguards to improve export competitiveness.

Challenges and Opportunities Ahead

Infrastructure and Capacity Building

To fully benefit from RCEP, CPTPP, and other trade deals, Cambodia needs to continue investing in:

• Transport and logistics infrastructure (ports, roads, dry ports)

• Customs modernization for faster clearance

• Digital infrastructure for e-commerce and trade facilitation

Development partners such as the Asian Development Bank (ADB) and World Bank are active in supporting these initiatives.

Regulatory and Institutional Reforms

Trade agreements come with commitments that require updates to laws and institutions. For Cambodia, this means:

• Enhancing labor standards and enforcement

• Strengthening intellectual property protections

• Improving environmental regulations to meet international benchmarks

Leveraging Trade Diplomacy for Sustainable Growth

Cambodia aims not just to expand trade volume but to upgrade the quality of its exports and ensure sustainability. This includes promoting green supply chains, boosting value-added manufacturing, and encouraging SME participation in export markets.

Conclusion

Cambodia’s trade diplomacy is a balancing act—embracing new opportunities from mega-regional agreements like RCEP and the prospective CPTPP, while addressing domestic challenges in infrastructure, regulations, and capacity. By actively engaging in multilateral and bilateral trade talks and aligning its policies with global standards, Cambodia is poised to deepen its integration into the world economy and attract higher-quality investments.

Businesses and investors looking to enter or expand in Cambodia should closely monitor developments in trade agreements, as they directly impact market access, regulatory conditions, and competitive dynamics.

Useful Resources and Links

• ASEAN Economic Community & RCEP: https://asean.org/asean-economic-community/

• CPTPP Official Info: https://www.mti.gov.sg/MTIInsights/Pages/CPTPP.aspx

• Cambodia Ministry of Commerce: http://www.moc.gov.kh/

• WTO Cambodia Profile: https://www.wto.org/english/thewto_e/countries_e/cambodia_e.htm

• Asian Development Bank Cambodia Operations: https://www.adb.org/countries/cambodia/main