LDCs Participation in Digital Economy Agreements and E-commerce Provisions in FTA (Cambodia)

Arguments

There is an online platform, TINA (Trade Intelligence and Negotiation Advisor), developed by ESCAP, still under development, but able to provide insights to digital trade provisions, however the platform hasn’t covered digital trade thoroughly yet.

Supporting facts:

• TINA is an online platform developed by ESCAP.

• Despite being under development, the audience mentioned it can be accessed to see its initial capabilities especially its ability to provide insights to digital trade provisions in over 400 agreements.

Topics: TINA, ESCAP, Digital trade

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Countries must start engaging in digital trade agreements in order to keep pace with the global economy

Supporting facts:

• It is suggested that countries take part in multilateral and regional trading partnerships, rather than bilateral ones, in order to avoid creating a ‘noodle bowl’ of agreements.

• A trend of digital economy agreements has been identified, with Singapore cited as a world leader.

Topics: Digital trade, Global economy, Trade agreement

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Report

During the discussion, several crucial points were raised in relation to digital trade. One important aspect is the development of the online platform TINA (Trade Intelligence and Negotiation Advisor) by ESCAP. Although still under development, TINA has the potential to provide valuable insights into digital trade provisions.

However, it has not yet fully covered all aspects of digital trade. Another significant point raised during the discussion was the recommendation for countries to engage in multilateral and regional trading partnerships rather than bilateral agreements. The aim behind this suggestion is to avoid creating a complex network of agreements, often referred to as a “noodle bowl.” The noodle bowl phenomenon can be detrimental to trade as it can create confusion and inefficiencies.

Additionally, it was noted that Singapore is regarded as a global leader in digital economy agreements, highlighting the importance of such partnerships. The effectiveness of non-binding frameworks and provisions on digital trade was also emphasized. According to econometric analysis, these non-binding measures have been shown to positively influence trade engagement.

This finding aligns with the perspectives shared by a colleague from UNCTAD during the discussion. The argument put forth was that non-binding frameworks can contribute to trade engagement and are preferable at present. In conclusion, the discussion highlighted the significance of participating in digital trade agreements to keep pace with the global economy.

The development of TINA as an online platform for digital trade provisions shows promise, although it is still in the process of being fully comprehensive. Engaging in multilateral and regional partnerships, rather than bilateral ones, is recommended to avoid creating a complex web of agreements.

The effectiveness of non-binding frameworks and provisions on digital trade was also recognized, further supporting the importance of these measures in fostering trade engagement. Overall, the discussion provided valuable insights for stakeholders in the field of digital trade.

Arguments

Cambodia is evolving rapidly in building a strong digital economy momentum.

Supporting facts:

• The median age of Cambodia is 25.6 years old, signifying a vibrant youthful demographic.

• Digital technology is helping in growth in many segments of the economy.

Topics: Digital economy, Cambodian demographic

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Adaptation to the new way of engagement is needed.

Topics: Digital economy, Stakeholder engagement

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Chia Ratan emphasizes on the importance of e-commerce in promoting growth.

Topics: E-commerce, Digital trade policy

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On November 25, 2020, under the aegis of the Ministry of Commerce and with the financial backing of the EIF, we launched the e-commerce strategy.

Supporting facts:

• Cambodia Trade Integration Strategy called CTSI 2019 to 2023

• The Royal Government of Cambodia prioritize on the digital economy and the fourth industrial revolution for our rectangular strategy phase four

Topics: e-commerce strategy, EIF, Ministry of Commerce

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Cambodia is a party of number of regional and bilateral agreement.

Supporting facts:

• Cambodian-China free trade agreement

• Cambodia-Korean free trade agreement

• Cambodia-UAE comprehensive economic partnership agreement

Topics: ASEAN e-commerce agreement, regional comprehensive economic partnership, bilateral free trade agreement

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Chia Ratan, stresses the complexity of creating a general department for digital trade, mentioning that it requires a lot of time and preparation.

Supporting facts:

• The creation of this general department involves engaging all stakeholders, identifying and equipping with necessary tools, and empowering the private sector.

Topics: General Department for Digital Trade, Digital Transformation, E-commerce

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Report

Cambodia is experiencing rapid growth in its digital economy, driven by a vibrant and youthful demographic and the increasing integration of digital technology in various sectors. The median age of Cambodia is 25.6 years old, signifying a vibrant youthful demographic. Digital technology is helping in growth in many segments of the economy.

To harness this momentum, Cambodia has launched an e-commerce strategy aimed at promoting growth and opening up opportunities for businesses. The strategy was initiated by the Ministry of Commerce with the financial support of the EIF (Enhanced Integrated Framework). The government also prioritizes the digital economy and the fourth industrial revolution in their rectangular strategy phase four.

Furthermore, Cambodia is actively engaged in regional and bilateral trade agreements, such as the Cambodian-China free trade agreement and the Cambodia-Korean free trade agreement. These agreements serve as important partnerships for driving further economic growth. To ensure the continued acceleration of the digital economy, effective and well-regulated policies are crucial.

The government recognizes the need for policies that enable growth to be shared among stakeholders and ensure that no one is left behind. The Ministry of Commerce is considering the establishment of a dedicated general department for digital trade. However, creating such a department requires time and preparation.

Chia Ratan stresses the importance of engaging all stakeholders, equipping them with necessary tools, and empowering the private sector for the success of the department. Participation and understanding from the private sector in policy-making processes are also important. Chia Ratan highlights the challenges faced by the private sector during the COVID-19 pandemic, particularly with access to government funding.

She suggests that government policies should be designed in a practical manner that can be implemented effectively by the private sector. Chia Ratan also emphasizes the need to understand the specific needs of different groups, such as women entrepreneurs. Tailored assistance programs that address these specific needs will contribute to more inclusive and sustainable economic growth.

She mentions her involvement with the Cambodian Women Entrepreneur Association and how they secured reduced interest rates for women entrepreneurs during the COVID-19 crisis. In conclusion, Cambodia is rapidly evolving in building a strong digital economy momentum. The country’s youthful demographic and the integration of digital technology in various sectors provide a solid foundation for growth.

The launch of the e-commerce strategy, prioritization of the digital economy and the fourth industrial revolution, and active engagement in trade agreements all contribute to Cambodia’s digital economy momentum. However, well-regulated policies, private sector engagement, and tailored assistance programs are crucial for ensuring sustainable and inclusive growth in the digital economy sector in Cambodia.

Arguments

The main obstacle in promoting cross-border e-commerce is the high shipping cost.

Supporting facts:

• When the platform, CambodianTrade.com was launched for B2B e-commerce activities, the shipping cost is higher than the cost of goods.

• The high shipping cost has become an obstacle to realize the objective of promoting cross-border e-commerce.

Topics: E-commerce, Shipping cost, Cross-border Trade

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The platform was initially to promote B2B cross-border e-commerce but ended up mostly selling to individual customers (B2C).

Supporting facts:

• A lot of sales on the marketplace is mostly B2C indicating that the marketplace is generating sales for SMEs.

• The original target was to promote B2B cross-border e-commerce but it’s mostly being used for B2C sales.

Topics: E-commerce, Marketplace Strategies, B2B vs B2C

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Report

The main obstacle to promoting cross-border e-commerce is the issue of high shipping costs. This challenge has hindered the achievement of the objectives set for CambodianTrade.com, a platform designed for B2B e-commerce activities. Interestingly, shipping costs on this platform are even higher than the cost of goods themselves.

The high shipping costs have become a significant deterrent to the promotion of cross-border e-commerce. As a result, the platform, initially intended to facilitate B2B cross-border transactions, has experienced a shift towards predominantly catering to individual customers (B2C) instead.

To effectively promote cross-border e-commerce and achieve the intended objectives, it is crucial to address the challenge of high shipping costs. This can be achieved through collaborative efforts with relevant stakeholders, such as the General Department of Customs and Cambodian Post, to identify and develop cost-effective shipping solutions that cater to the needs of small and medium-sized enterprises (SMEs).

Prominent examples of successful e-commerce markets, like China, highlight the importance of low shipping costs, which are largely driven by high sales volumes. In conclusion, high shipping costs pose a significant barrier to the promotion of cross-border e-commerce on CambodianTrade.com.

Overcoming this challenge requires collaborative efforts to develop cost-effective shipping solutions for SMEs. By doing so, the platform can fulfill its objectives and effectively support B2B cross-border transactions.

Arguments

Increased e-commerce transactions call for strengthened customs with more human resources and advanced technological systems

Supporting facts:

• There is a growing number of e-commerce transactions from time to time

• Human resources are divided into those who work on system development, those who are expertise in functional and regulatory aspects, and those who handle clearance of e-commerce

Topics: E-commerce Transactions, Customs Reinforcement, Human Resources, Technology

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Implementation of legal frameworks is necessary for e-commerce operations

Supporting facts:

• New laboratories for pre-arrival processing have been set up

• Regulations are implemented following standards, guidelines and international conventions

Topics: Legal Frameworks, E-commerce Operations

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Automatic, paperless systems are preferred by customs for e-commerce transactions

Supporting facts:

• Automatic system ASIHUB has been implemented

• Paperless systems are better for e-commerce as they can be processed by the system as compared to paper-based formats

Topics: Automatic Systems, Paperless Systems, E-commerce Transactions

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Report

In the analysis, the speakers discuss the increasing number of e-commerce transactions and the implications it has on customs and legal frameworks. The main argument put forth is that the rise in e-commerce calls for strengthened customs with more human resources and advanced technological systems.

To support this argument, the speakers highlight that there is a growing number of e-commerce transactions happening regularly. This indicates the need for customs to be equipped with adequate resources to handle the increased workload. They also mention that human resources in customs are divided into different roles, including those involved in system development, those with expertise in functional and regulatory aspects, and those handling the clearance of e-commerce.

This suggests that having a diverse team with expertise in various areas is essential for efficient customs operations. Furthermore, the speakers emphasize the importance of advanced technological systems in customs to manage the influx of e-commerce transactions. They argue that improved technological infrastructure is necessary to effectively process and oversee the increasing volume of e-commerce activities.

This indicates that customs need to invest in advanced technologies to ensure efficient and smooth operations in the face of the e-commerce boom. Another aspect discussed in the analysis is the implementation of legal frameworks for e-commerce operations. The speakers explain that the establishment of new laboratories for pre-arrival processing is a positive step towards ensuring compliance with regulations.

They also mention that the implementation of regulations adhering to international standards, guidelines, and conventions is crucial for the proper functioning of e-commerce activities. This highlights the importance of a legal framework that is aligned with global norms to facilitate secure and seamless e-commerce transactions.

Additionally, the analysis underscores the preference for automatic and paperless systems in customs for e-commerce transactions. The implementation of the automatic system ASIHUB is seen as a positive development that streamlines the processing of e-commerce transactions. Paperless systems are also seen as more efficient and convenient, as they can be easily processed by the automated system compared to traditional paper-based formats.

This suggests that customs should encourage the adoption of automatic and paperless systems to enhance the efficiency and effectiveness of e-commerce operations. In conclusion, the analysis highlights the need for strengthened customs with increased human resources and advanced technological systems to cope with the growing number of e-commerce transactions.

It advises the implementation of legal frameworks that are in line with international standards for the smooth operation of e-commerce activities. Moreover, it encourages the adoption of automatic and paperless systems in customs to improve efficiency and streamline e-commerce transactions.

Overall, the analysis provides valuable insights into the challenges and opportunities presented by the surge in e-commerce and offers recommendations for customs and legal frameworks to adapt to this changing landscape.

Arguments

The importance of e-commerce and inclusion in FTAs

Supporting facts:

• E-commerce market projected to grow from $300 billion in 2020 to $1 trillion in 2030

• E-commerce has seen a spike during the COVID-19 pandemic

• Cambodia has signed multiple FTAs with e-commerce provisions

Topics: E-commerce, FTAs, Economic growth

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Long Khammichet thinks the steps for negotiations are not too high for LDCs, including Cambodia, Laos, and Myanmar to handle in relation to the ASEAN Digital Economy Framework Agreement

Supporting facts:

• ASEAN still adheres quite closely to the principle of different level of development among its members, which provides flexibility

• Flexibilities such as transition periods and capacity building and technical assistance that are seen in its past FTAs will bring comfort

• Negotiations have only just begun, so they have yet to see the first draft of the agreement

• ASEAN is looking to accelerate its transformation into a leading digital economy through this agreement

• Agreement will cover broad elements like digital trade, cross-border e-commerce, payment and e-invoicing, digital ID and authentication, online safety and cybersecurity, cross-border data flows and data protections, competition policy, cooperation on emerging topics, and talent, mobility and cooperation

Topics: ASEAN Digital Economy Framework Agreement, LDCs, Cambodia, Laos, Myanmar

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Report

The analysis underscores the importance of e-commerce and its inclusion in Free Trade Agreements (FTAs). The e-commerce market is projected to grow from $300 billion in 2020 to $1 trillion in 2030, with a significant spike in activity during the COVID-19 pandemic. Cambodia has recognised this potential and has signed multiple FTAs with e-commerce provisions, demonstrating its commitment to leveraging e-commerce for future development.

Including e-commerce in FTAs is seen as a forward-thinking approach, ensuring these agreements are future-ready and aligned with modern digital trends. It also serves as a roadmap for the progressive evolution of national legal and regulatory frameworks for e-commerce. By fulfilling these commitments, countries can keep pace with the rapidly developing e-commerce sector.

Implementing the commitments made in FTAs is crucial for enhancing national e-commerce frameworks. These commitments provide a work plan for the enhancement of legal and regulatory frameworks, which are essential for the growth and stability of the e-commerce sector. The analysis emphasises that fulfilling these commitments is not a matter of “if” but “when,” given the world’s rapid progress in this field.

As for the ASEAN Digital Economy Framework Agreement, negotiations are seen as manageable for countries like Cambodia, Laos, and Myanmar, which are classified as Least Developed Countries (LDCs). ASEAN values the principle of different levels of development among its members, which provides flexibility during negotiations.

Past FTAs have demonstrated that LDCs can benefit from flexibilities such as transition periods, capacity building, and technical assistance. While the first draft of the agreement is yet to be seen, ASEAN aims to accelerate its transformation into a leading digital economy, covering various aspects such as digital trade, cross-border e-commerce, payment systems, online safety, cybersecurity, and data flows.

Competition policy, cooperation on emerging topics, and talent mobility are also part of the agreement. The analysis suggests a positive and progressive approach towards the negotiations, while also advising caution. Some proposed provisions, such as digital identifications and data exchange platforms, go beyond current national laws and regulations, requiring further negotiation and consideration.

Despite these challenges, the negotiations are considered manageable for LDCs like Cambodia, Laos, and Myanmar. The agreement is viewed as a crucial step for the future, regardless of the specific outcomes of the negotiations. In summary, the analysis underlines the importance of e-commerce and its inclusion in FTAs.

It highlights the projected growth and recent surge in e-commerce, as well as Cambodia’s commitment through multiple FTAs. The inclusion of e-commerce in FTAs is crucial for future development and the evolution of national regulatory frameworks. The analysis also provides insights into the ASEAN Digital Economy Framework Agreement and emphasizes the manageable nature of negotiations for LDCs, supported by ASEAN’s flexibility.

While caution is advised for provisions beyond current laws, a positive and progressive approach is encouraged. Overall, the analysis promotes the long-term benefits of integrating the digital economy while accurately reflecting the main text.

Arguments

Policy space is essential in digital trade agreements

Supporting facts:

• A 2014 UNCTAD report defined policy space as the freedom and ability of a government to identify and pursue the most appropriate mix of economic and social policies

• Policy space discussion began in reference to the Uruguay Round of agreements

• The number of agreements that have been recorded as having provisions affecting e-commerce and digital trade is over 400

Topics: E-commerce, Digital Trade, Policy Space, Digital Economy

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Effective use of policy space requires policymakers to have a vision of where they want to take an economy.

Supporting facts:

• Analyzing the national e-commerce ecosystem and digital trade is essential

• Development of statistics to evidence-based policymaking is important

Topics: Policy Space, National Development Strategy, Local capabilities, Policy Instruments, Monitoring Mechanisms

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Report

The analysis conducted reveals several key points regarding policy space and its importance in digital trade agreements. Policy space is defined as the freedom and ability of governments to identify and pursue the most appropriate mix of economic and social policies.

It is argued that policy space is essential in digital trade agreements. One important finding is that there are over 400 agreements recorded as having provisions affecting e-commerce and digital trade. This highlights the growing significance of digital trade and the need for robust policies in this area.

The discussion on policy space began in reference to the Uruguay Round of agreements, and it has since become a crucial issue in shaping trade agreements. Another key point is that appropriate policy space is required in trade agreements dealing with cross-border data flows.

It is highlighted that the issues related to data flows are not limited to trade alone; they also encompass elements such as human rights and national security. This highlights the need for comprehensive and holistic policies that consider a range of factors beyond purely economic considerations.

While having policy space is important, it is also emphasized that countries need to effectively utilise it. Merely having the freedom to shape policies is not enough; policymakers need to have a clear vision of where they want to take their economies.

Effective use of policy space requires a deep understanding of the national e-commerce ecosystem and digital trade dynamics. Additionally, the development of statistics for evidence-based policymaking is deemed crucial in ensuring that policy space is utilised effectively. The analysis also uncovers the role of tools and assessments in guiding countries’ transition in digital trade.

The e-trade readiness diagnostic report and tools like the e-trade reform tracker are mentioned as useful resources for countries looking to develop their digital trade capabilities. These tools provide a clear understanding of local capabilities, constraints, and opportunities, enabling countries to identify areas for improvement and progress.

Furthermore, the analysis highlights the importance of public-private dialogue in ensuring inclusion in digital trade agreements. It is emphasised that such dialogues should encompass all segments of society, including women, youth, rural populations, and people with disabilities. The involvement of diverse stakeholders is crucial in addressing the digital divide and promoting equal opportunities for all.

In conclusion, this detailed analysis highlights the significance of policy space in digital trade agreements. It underscores the need for appropriate policy space, effective utilisation, and comprehensive understanding of the digital trade ecosystem. It also recognises the role of tools and assessments in guiding countries’ transition and the importance of inclusive public-private dialogues.

Policymakers and stakeholders are urged to consider these insights to shape more effective and equitable digital trade agreements.

Arguments

Cambodia’s progress on trade facilitation and paperless trade has been outstanding, leading all the LDCs

Supporting facts:

• Cambodia achieved an implementation rate of 80.6% across measures in the UN Trade Facilitation Survey

• Cambodia exceeds the global average for LDCs, which is 55%, and also exceeds the global average, which is below 70%

Topics: Trade Facilitation, Paperless trade, Digital trade

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Cross-border paperless trade is the ultimate step of trade digitalization

Supporting facts:

• Cross-border paperless trade is a seamless flow of electronic data and documents, not only within the national environment, but across borders and around the entire supply chain

• Implementing cross-border paperless trade can result in about 17% reduction in trade costs on average across the globe

Topics: Cross-border paperless trade, Trade digitalization

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Report

Cambodia has made remarkable progress in the areas of trade facilitation and paperless trade, outperforming other countries classified as Least Developed Countries (LDCs). According to the UN Trade Facilitation Survey, Cambodia has achieved an impressive implementation rate of 80.6%, which is significantly higher than the global average for LDCs of 55%, as well as the overall global average that remains below 70%.

This outstanding achievement reflects Cambodia’s commitment to streamlining trade processes and improving economic growth. In addition to this, embracing cross-border paperless trade has the potential to bring about significant cost reductions. This involves a seamless flow of electronic data and documents not just within national borders but across international supply chains, resulting in an average reduction in trade costs of approximately 17% worldwide.

This highlights the importance of digitalization in revolutionizing international trade and boosting economic efficiency. To ensure the effective implementation and oversight of paperless systems, it is crucial for Cambodia to establish a core team of technical and legal experts. By building this team, the country can leverage the necessary expertise to navigate the complexities of paperless trade and ensure the smooth functioning of the system.

Prioritizing the development of this competent team will allow Cambodia to sustain its progress and maintain its leadership in trade facilitation and paperless trade among LDCs. Moreover, incorporating provisions for paperless trade cooperation in trade agreements can enhance trust and collaboration among trade partners.

By including these provisions, Cambodia can foster stronger partnerships and create an environment conducive to the widespread adoption of paperless trade practices. This, in turn, will streamline trade processes across borders and improve efficiency. Additionally, achieving successful trade digitalization requires addressing capacity gaps within agencies and promoting collaboration among various stakeholders, including inter-agency cooperation and public-private sector partnerships.

By reducing these gaps and encouraging cooperation, Cambodia can overcome the challenges associated with trade digitalization and create a harmonized environment for digital trading. However, before undertaking complex capacity building initiatives, it is essential to prioritize reducing the digital divide and ensuring widespread access to the internet.

Bridging this divide will enable equal participation in the digital economy and allow individuals to benefit from the advantages offered by paperless trade. By ensuring internet access for all, Cambodia can promote inclusivity and maximize the potential of trade digitalization.

In conclusion, Cambodia’s exceptional progress in trade facilitation and paperless trade surpasses that of other LDCs. With an implementation rate of 80.6% in the UN Trade Facilitation Survey, Cambodia has exceeded both the global average for LDCs and the overall global average.

Embracing cross-border paperless trade can lead to significant cost reductions, while building a core team of experts, incorporating provisions for cooperation, narrowing capacity gaps, and prioritizing internet access will pave the way for successful trade digitalization in Cambodia.

Arguments

Sven Calvo emphasizes on the importance of policy space in e-commerce negotiations for developing countries

Supporting facts:

• Policy space allows countries to strategize their own national agenda.

• UNCTAD has been advocating for policy space in procedural trade agreement negotiations.

Topics: Policy space, Digital trade agreements, Developing countries

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Report

Sven Calvo emphasises the importance of policy space in e-commerce negotiations for developing countries. He highlights that policy space allows these countries to strategise their own national agenda, enabling them to shape trade agreements according to their specific needs and interests.

This flexibility empowers developing countries to protect and promote their domestic industries, safeguard labour rights, and tackle inequality. However, Sven also questions the relevance of policy space in digital trade agreements and raises concerns about whether UNCTAD (United Nations Conference on Trade and Development) still supports developing countries in negotiations.

He wonders if policy space remains a priority or if the focus has shifted towards other trade-related issues. It is worth noting that UNCTAD has long advocated for policy space in procedural trade agreement negotiations. They actively promote this concept to allow developing countries the freedom and autonomy to negotiate based on their national agenda in e-commerce discussions.

This approach acknowledges the diverse economic and developmental circumstances among developing countries and ensures their equal participation in global trade. The analysis suggests that policy space plays a significant role in ensuring the interests and priorities of developing countries are adequately represented in trade negotiations, particularly in the dynamic digital economy.

It grants these countries the opportunity to carve out their own paths for economic growth and development, rather than being compelled to conform to a one-size-fits-all approach. In conclusion, Sven Calvo underscores the value of policy space in e-commerce negotiations for developing countries.

While he raises questions about its relevance in digital trade agreements and the support provided by UNCTAD, it is evident that UNCTAD actively advocates for policy space in procedural trade agreement negotiations, recognising its importance in empowering developing countries to shape trade agreements based on their own national agenda.