UAE and Cambodia Forge New Economic Partnership

The UAE and Cambodia have agreed to a trade deal. We discuss key points of the agreement and how it improves their bilateral economic and commercial ties.

By Arendse Huld

The United Arab Emirates (UAE) and the Kingdom of Cambodia have cemented their economic ties with the finalization of the Comprehensive Economic Partnership Agreement (CEPA). This agreement, which was signed on June 8, 2023, and entered into force on January 31, 2024, marks a pivotal moment in the bilateral relationship between the two nations.

The CEPA between the UAE and Cambodia aims to bolster their economic ties by fostering a mutually beneficial relationship. It seeks to reduce or eliminate 92 percent of tariff lines, enhance the competitiveness of UAE businesses globally, and promote fair trade regulations. By facilitating streamlined access to the Cambodian market, the agreement aims to boost competitiveness and enable cost-effective exports of goods and services from the UAE.

This is the fifth CEPA that the UAE has signed, following CEPAs with India, Israel, Indonesia, and Türkiye.

Boosting UAE-Cambodian non-oil trade

The CEPA is expected to open up new trade routes and markets, positioning the UAE as a significant player in global growth centers. It focuses on providing advantages for businesses, entrepreneurs, and industries in both countries, thereby contributing to economic development.

According to a press release from the UAE Ministry of Commerce, the agreement is the culmination of improving UAE-Cambodian relations in recent years, which in 2022 resulted in non-oil trade growing 21 percent year-on-year to reach US$401 million. Meanwhile, bilateral foreign investment between the two countries reached US$3.8 million by the end of 2020.

The CEPA has been touted as providing new opportunities for exporters in both countries. For Cambodia, this will include exports of grains, fruits, meats, processed foods, apparel, footwear, and leather goods. Meanwhile for UAE exports, the products that will be the most positively impacted include polyethylene and other refined petroleum, iron and steel, ceramics, copper and articles thereof, glass, and cement

The CEPA also focuses on addressing Technical Barriers to Trade (TBT) by reducing non-tariff barriers. To do this, it establishes a comprehensive legal framework for technical regulations, standards, and conformity assessment procedures to ensure UAE products access the Cambodian market without unjustified hindrances. The agreement aims to promote mutual understanding of standards, enhance transparency, and facilitate information exchange and cooperation in relevant international bodies. It also prohibits the use of national standards to create unnecessary trade obstacles and establishes mechanisms for information exchange and technical discussions.

Other mechanisms to boost trade between the UAE and Cambodia include improving the efficiency of customs procedures by enhancing cooperation between the parties and by implementing the main principles of the WTO Agreement on Trade Facilitation. It also establishes Rules of Origin to determine the origin of products.

Boosting market expansion and bilateral investment

The CEPA seeks to boost bilateral investment and increase market access to the benefit of various economic segments and industries.

For instance, the CEPA aims to support SMEs by providing transparency regarding laws, regulations, and investment opportunities in the counterpart country. Key areas of cooperation include enhancing trade and investment opportunities through business support infrastructure, partnerships, market research, and web-based platforms. It establishes mechanisms for information sharing on trade-related aspects, including laws, regulations, procedures, and SME programs. Additionally, it focuses on promoting and facilitating investment to further bolster SME participation in international markets.

Meanwhile, the agreement seeks to improve bilateral market access for industries such as the services industry and digital trade. Among the measures to achieve this are establishing the rules and disciplines for cross-border trade in services and promoting future cooperation in areas such as electronic authentication and electronic signatures, paperless trading, online consumer protection, personal data protection, open data, electronic invoicing and payments, cross border flow of information, and other tools for promoting digital trade.

The CEPA also includes a dispute settlement mechanism that establishes methods for resolving disputes between the two parties. It ensures compliance with CEPA obligations through compensation and trade retaliation if either party fails to meet its commitments. The mechanism facilitates the efficient resolution of disputes through panels, which deliver final reports within 120 days of composition.

The investment chapter of CEPA references the Reciprocal Promotion and Protection of Investments signed in 2017 and subsequent amendments. It enhances the existing Bilateral Investment Agreement to offer a more comprehensive framework. Both parties commit to fostering an attractive investment climate within the bounds of their respective laws and regulations. An Investment Facilitation Committee is established to promote cooperation, identify barriers, and facilitate investment flows.

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