Feasibility Study of the Free Trade Agreement between The Kingdom of Cambodia and The Eurasian Economic Union

Date:

4 December 2019

Category:

Cambodia, Trade

Type:

Research Project Reports

                                                Authors:
                                            Ministry of Commerce of Cambodia, Ministry of Economy and Finance of Cambodia

                                                Editors:
                                            Shandre Thangavelu and team

Tags:

trade, free trade agreement, trade in services, trade policy modelling

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To expand market access to Eastern Europe, Cambodia is currently exploring a free trade agreement (FTA) with the Eurasian Union – a common market comprised of five nations (Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia), 176 million people, and a gross domestic product of US$2.5 trillion. An FTA between Cambodia and the Eurasian Economic Union (EAEU) would allow both sides to increase trade, investment, and economic collaboration. The study examined the key impacts of Cambodia–EAEU FTA (CEFTA) on the Cambodian economy and the Association of Southeast Asian Nations (ASEAN) region in terms of trade, investment, welfare, and growth impact on the domestic and regional economy.

CEFTA appears to be a win-win opportunity for Cambodia for deepening its economic integration into the global production value chain and integrating its economy with Central Asia and Russia. CEFTA is also expected to create potential dynamic gains for Cambodia through its integration with the global economy and through implementation of key structural reforms in the domestic economy within a structured framework. Global Trade Analysis Project (GTAP) simulations show greater potential dynamic output gains for Cambodia if the Cambodia–EAEU FTA leads to deeper and more structural economic liberalisation.