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509 Chapter 24 Regional Integration 24.1. Cambodia’s Integration into the Region In April 1999, Cambodia became a member of the Association of Southeast Asian Nations (ASEAN). Economic cooperation within ASEAN led to the establishment of a free trade area. Cambodia is also part of the Greater Mekong Sub-region (GMS). Cambodia’s regional cooperation activities now include a new regional grouping referred to as “ASEAN Plus Three,” that brings in China, Japan, and South Korea to the regional grouping, as well as the ASEAN Regional Forum (ARF), a dialogue facility focusing on issues of regional security. In 2004, Cambodia became a member of the World Trade Organization (WTO) and began to attend other forums, including the Asia-Europe Meeting (ASEM). As a relatively new member, Cambodia has been able to take advantage of numerous initiatives put in place by the more developed partners for new members and less developed members of ASEAN, including the ASEAN Integration System of Preferences (AISP) (349 articles). Further framework agreements with ASEAN’s partners have also brought benefits to Cambodia, among these being the Special and Preferential Tariff (SPT) with China (297 articles), the General System of Preferences (GSP) with Japan (226 articles) and the Republic of Korea (78 articles). Cambodia has continued its efforts to grasp SouthSouth trade development opportunities within ASEAN and with non-member countries. The government is currently studying the potential of integrating the Global System of Tariff Preferences among developing countries that are desirous of promoting trade flows. Upon becoming a member of ASEAN, Cambodia became a part of the ASEAN Free Trade Area (AFTA). The AFTA agreement was signed in Singapore on January 28, 1992 at the time of the Fourth ASEAN Summit in order to lay the foundation of a common market. The scope of the agreement covers products defined on a sectoral basis, with a certain added value content and originating within the free trade area. Setting up the free trade area was the first challenge for Cambodia in the long term process of integrating with the ASEAN. The key mechanism to implement the AFTA is the Common Effective Preferential Tariff (CEPT). Under this arrangement members agree to reduce customs duty on goods imported from any of the ASEAN countries at a rate between 0 and 5% within a time frame of 15 years. For 15 goods deemed as priority, reduction of customs duty would be 510 speeded up by the Fast-Track (FT) mechanism. For FT products, the cutoff date for compliance was January 1, 2001. Some of the key initiatives undertaken by ASEAN include: “Framework Agreement between ASEAN and China on Comprehensive Economic Cooperation”; “ASEAN-Japan Comprehensive Economic Partnership Agreement”; “India-ASEAN Framework Agreement on Comprehensive Economic Cooperation”; the free trade area between ASEAN and the Republic of Korea; and, forthcoming, the AFTA-CER free trade area (Closer Economic Relations with Australia and New Zealand). Increasing investments, production, and consumption resulting from these will also benefit Cambodia as a member of ASEAN. For example, trade between China and ASEAN nearly doubled, jumping from US$55 billion in 2001 to US$100 billion in 2005. ASEAN mainly exports to China intermediate products and raw materials, notably electrical/electronic equipment, hydrocarbons, plastics, chemicals, and paper. China exports to ASEAN electrical/electronic equipment, textiles, and metallurgy products. A vast free trade area is now being formed between ASEAN and China, pursuant to the “Framework Agreement for Comprehensive Economic Cooperation” signed between ASEAN and China in November 2002 in Phnom Penh during the Eighth ASEAN Summit. ASEAN and China agreed to set up a free trade zone by 2010 linking China and the six most developed countries, ASEAN-6, and by 2015 additionally for the rest, including Cambodia. As part of ASEAN-China cooperation, the railway linking Singapore with Kunming and the Bangkok-Kunming highway which are key projects for the development of the Greater Mekong Sub-region (GMS) will also be fast tracked. At the Leaders’ Summit in Bali in 2003, ASEAN set as its goal the creation of an ASEAN Community by 2020 that would be based on three pillars: (i) the ASEAN Security Community (ASC); (ii) the ASEAN Economic Community (AEC); and (iii) the ASEAN Socio-cultural Community (ASCC). The objective of AEC is to establish a single production area and market for over 500 million people, with an aggregate gross domestic product (GDP) of over US$600 billion in 2002. Other noteworthy sub-regional socio-economic development initiatives include: the Greater Mekong Sub...

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