Cambodia and the United States are preparing for important first bilateral free trade talks. These key discussions happen on May 14 and 15 in Washington, D.C. This meeting is taking place at a time when both countries are attempting to deepen their economic relationship and mitigate trade deficits on both sides.
A press release from the Office of the Spokesperson of the Royal Government of Cambodia, issued on May 2, confirmed the upcoming negotiations. Leading the Cambodian delegation will be Sun Chanthol, Deputy Prime Minister and first vice president of the Council for the Development of Cambodia (CDC). He’s pleased to be joined by Cham Nimul, Minister of Commerce. They have been actively participating in discussions through the AD Hoc Cambodia-US Bilateral Relations Coordination Working Group, which recently held a virtual conference with the US Trade Representative (USTR), led by Sarah Ellerman, assistant USTR for Southeast Asia and the Pacific.
Today, Cambodia’s US imports are around $300 million annually. The Cambodian government has set ambitious targets to raise this figure to over $1 billion in the years ahead. In 2023, Cambodia’s exports to the United States reached $9.9 billion, an increase of 11.4 percent compared to previous years. In contrast, US imports from the Kingdom of Wonder registered at merely $264.14 million as of 2021.
The negotiations are incredibly high stakes. Cambodia is currently subject to the highest import tariff rate of the ASEAN region at a heavy 49 percent import tariff rate imposed by the US. On April 3, the US administration announced a new wave of “reciprocal” tariffs. They agreed to a 90-day delay of implementation to allow time for negotiations to take place.
Cambodia’s official production figures are through the roof! Apparel, footwear, travel bags, bicycles as well as vehicle tires and some agricultural products are carrying the torch. Economists have high hopes that something good can come out of the upcoming trade talks.
Lor Vichet, an economist and current vice-president of the Cambodia Chinese Commerce Association (CCCA), stated his extreme confidence towards the Cambodian Government. He has found them committed to strengthening trade relations with the US. “For the negotiations to bear fruit, Cambodia should offer trade terms such as committing to increase imports from the US from around $300 million per year to over $1 billion in the future,” he stated. Vichet recommended that the Cambodian government dramatically reduce existing import tariffs on US goods down to zero percent. This step would sour negotiations that seem to be growing increasingly profitable.
The spokesperson for the Royal Government added, “The Royal Government, led by Prime Minister Hun Manet will continue to cooperate closely with the US to achieve a mutually beneficial trade and investment relationship.”
Even US trade experts say relaxing import tariffs would deliver an important shot in the arm to Cambodian exports to the US market. As Cambodia has some of the most competitive labour costs in the world, if the US removes import tariffs on our products, more Cambodian goods will be able to access the US market. At the same time, Cambodia would have to be buying more US-made goods,” said an otherwise economic analyst who requested anonymity.
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