Turkey, Cambodia aim to boost trade to $1 billion

Turkey, Cambodia aim to boost trade to $1 billion

BANGKOK – Reuters
Turkey, Cambodia aim to boost trade to $1 billion

Turkey and Cambodia have agreed to increase bilateral trade to $1 billion in the near future, Cambodia’s Prime Minister Hun Sen said on Oct. 22, days after a meeting in Brussels where he failed to allay European Union criticism of authoritarianism.

The European Union began a formal procedure this month to strip Cambodia of its special trade status following a July general election that returned Hun Sen to power after 30 years in office.

Talks between Hun Sen and the EU’s top diplomat at the weekend failed to avert the threat of duty-free trading access suspension.

Hun Sen flew to Turkey after his Brussels visit and met Turkish President Recep Tayyip Erdoğan.

“The two leaders agreed to increase bilateral trade between Turkey and Cambodia to $1 billion in the short future,” Hun Sen said in a post on his Facebook page on Oct. 22, adding that Cambodia will open an embassy in Turkey in 2019.

Bilateral trade was worth $108 million in 2015, the Turkish foreign ministry said on its web site.

Turkey opened its Cambodian embassy in Phnom Penh in 2013.

“Cambodia and Turkey have a strong and cooperative relationship,” Hun Sen added.

The two leaders signed eight memorandums of understanding (MOU) including in the areas of education and agriculture.

Meanwhile, ratings agency Moody’s has said that the withdrawal of a duty-free trading access by the EU for Cambodia over the Southeast Asian nation’s human rights record would have a negative effect on European investments in the country.

“The potential loss of preferential trade access to the EU is credit negative for Cambodia,” Moody’s said in news release on Oct. 22.

Moody’s said that if the EBA were to be withdrawn, the imposition of tariffs would increase the cost of Cambodian-made goods in Europe.

“Additional cost increases as a result of tariffs would undermine the price competitiveness of Cambodia’s garments exports unless they are offset by productivity gains,” the agency said.

Rising costs, including a hike in minimum wage, will also reduce Cambodia’s attractiveness as a production base and could weaken foreign direct investment inflows, Moody’s said.

Moody’s said other countries such as Australia and Canada, which have previously voiced concerns over political and human rights in Cambodia, could follow the EU in reviewing their trade agreements, compounding the effect on exports.

Cambodia’s factories supply global brands such as Gap Inc (GPS.N), Swedish fashion brand H  M Hennes  Mauritz AB (HMb.ST), and sportswear brands Nike (NKE.N), Puma and Adidas (ADSGn.DE), among others.

Cambodia’s exports to the European Union, were worth 5 billion euros ($5.8 billion) last year, EU data showed.

Hun Sen has termed the threat by the EU a “psychological warfare” against his government, adding that the withdrawal of the EBA would not affect Cambodia.

“I would like to tell all compatriots: did you lose jobs or income yet? Nothing has been lost but they issue this review as a psychological war attack,” Hun Sen told thousands of Cambodians living in Europe during a gathering in Brussels on the weekend.