IMPLEMENTING THE INTEGRATED FRAMEWORK
“IF”  IN CAMBODIA

Presented by the Ministry of Commerce, Royal Government of Cambodia to the 6^th Consultative Group (CG) Meeting,
Government Palace, Phnom Penh, 19-21 June 2002

CONTENTS

Foreword

Introduction and Overview

Acronyms

"Trade Mainstreaming in Cambodia"
Milestones in the Integrated Framework process to support LDCs

Other legislative and Institutional Developments since the selection of Cambodia as a participant in the IF pilot Scheme

Effective Mechanism for Building Domestic Constituency
Cambodia’s partnership mechanisms for consultation among key stakeholders     

Government and private sector partnership

Government and Donors Partnership 
BUILDING CONSENSUS .…
…… among key national stakeholders
Private Sector

Government Sector
Civil Society Stakeholders

…… among key international stakeholders

Trade Strategy in Cambodia
"Tokyo Road Map: Mainstreaming Trade for Poverty Alleviation" 

Outline of “Cambodia: Integration and Competitiveness Study”

Experiences from the implementation of the pilot scheme in Cambodia 

What is Trade Mainstreaming?
Trade and Investment Linkages  
Maximizing Cambodia’s LDC status to develop exports through companion 
and mutually supportive policies

Benefiting from Economic Integration
Good Governance
Reinforcement of Intellectual Property Rights as Tool for Development
Linking Trade and Labor Standards: 
Making Cambodia as a Sound and Safe Sourcing Place for World Textile and Apparel

Preparation for Accession to the WTO  
Cambodia’s Accession to the WTO: A Historical Perspective

Mainstreaming and “Trade-Related Capacity Building”

List of Trade Related Capacity Building Undertaken or Proposed by the 6 core Agencies and Bilateral Donors

The Comings Months

Conclusion: "Cambodia Leading the Way…to the Future…”

References

Endnotes

ACRONYMS

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IMPLEMENTING THE INTEGRATED FRAMEWORK

“IF”  IN CAMBODIA

 Presented by the Ministry of Commerce, Royal Government of Cambodia
to the 6th Consultative Group Meeting
Government Palace, Phnom Penh, 19-21 June 2002

Foreword

With the pronouncement of the Millennium Development Goals in September, 2000 the world aspired to the goal of developing a true Global Partnership for Development which pointed to the establishment of an inclusive and equitable globalization, and which can be best achieved through a “human development paradigm”. The Millennium Declaration further resounded the need to develop an open, rule-based, predictable, non-discriminatory trading system, and a commitment to good governance, development, and poverty reduction — both nationally and internationally.

The Quad countries statement at the UN LDC-III Conference in Brussels (May 2001) and the Doha Ministerial Declaration (November 2001) is full of promise of trade-related assistance to help LDCs better address their capacity needs  in relation to trade and poverty reduction, and to better participate in, negotiate and implement WTO agreements. The Financing for Development Conference’s Monterrey Consensus (March, 2002) moved the commitment further toward a new resource framework, which goes beyond ODA and included mobilization of domestic resources, revenue generated by trade and FDI, and other key provisions.

The revised Integrated Framework is a significant  and practical component of this determination. Cambodia was fortunate to have been selected as one of the three Pilot Countries for implementing the revitalized Integrated Framework (IF). Since then we have worked diligently and with firm commitment to ensure that the initiative is viable and that we succeeded. LDCs need a success story. Not one of them has been able to accede to the WTO since its transformation from the GATT in 1995. Cambodia has a historic opportunity to play a larger role in the global arena, by sharing Cambodia's IF success stories with the rest of the world. We are trying our best to be the first LDC to accede to the WTO.

Cambodia is proud of and grateful for the responses of the donors and the 6 core agencies throughout the entire IF process. The long list of their support to Cambodia’s efforts at the end of this paper is a testimony of that. From the vast array of trade-related assistance activities ranging from Cambodia’s participation and implementation of global trade rules to the formulation of trade policy reform and other supporting complementary measures to technical support to address the supply side constraints, their responses have been and continue to be overwhelming. And many more are on the way.

We recognize that trade reform must be carried out such that it supports Cambodia's commitment to economic growth and poverty reduction.  Additional work will be done with assistance from donors and other development partners to better understand the potential impacts of trade reforms on the poor, and to develop mechanisms which truly support pro-poor growth.

With appropriate trade related capacity building, Cambodia can further reap the fruits of economic growth generated from trade reform and openness. There is ample evidence that trade and investment reform and deeper integration with the global economy, undertaken within a comprehensive development strategy, are key strategic elements for achieving higher economic growth, a necessary condition for poverty reduction.

In sum, while the challenges for Cambodia to bring economic growth and reduce poverty seem enormous, so are also the hope and the possibilities that have been generated from this IF success. Cambodia’s success will mean liberation: liberation from hunger, poverty and income constraints, liberation from ignorance, and liberation from fear, especially from the fear of dying when still young. In the words of Nobel laureate Amartya Sen "…. economic growth, which brings about a high standard of living, is interpreted too often in materialistic terms. But we need to pay attention to its human aspect too. For developing countries and LDCs alike, economic growth should be looked at as an effective force of liberation." 

On that note, I wish to express my utmost thanks to all the 6 core agencies and the other donors for making the Cambodian IF a success and for helping Cambodia turn its hope into reality.

Cham Prasidh
Minister of Commerce

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Introduction and Overview

In May 2001, Cambodia was selected by the Integrated Framework Steering Committee as one of three countries – the others being Madagascar and Mauritania – to implement a Pilot Scheme to put into effect the new approach for the revitalized Integrated Framework in order to enhance LDCs’ participation in global trade and investment. The core feature of this new approach was to embed a trade agenda or “to mainstream trade” into overall national economic development plans and poverty reduction strategies of the beneficiary countries, to ensure that trade policy and Trade-Related Capacity Building (TRCB) are coherent with the trade policy aims of the country concerned, and that they are prioritized with other development assistance needs.

The mainstreaming process involves 5 steps starting with the carrying out of country diagnostic trade integration studies (DTIS). They look at a number of issues, including establishing the link between trade development on the one hand and poverty reduction on the other, the impact of trade reform on economic growth and development in the country, the complementary policy agenda necessary to support successful trade reform, and market access issues. The outcomes of the DTIS will provide the basis for identification of prioritized trade-related capacity building and technical assistance needs that are linked to the country’s overall development strategy, expressed through the PRSPs. This exercise is undertaken in country, with the World Bank as lead agency and working closely with the other 5 core agencies, the IMF, ITC, UNCTAD, UNDP and WTO.  Cambodia was one of the first countries to undertake and complete a diagnostic trade integration study.

The second step involves the organization of a national workshop to review findings and policy recommendations of the DTIS including identification of a technical assistance (TA) action plan. Cambodia did this in November 2001, followed by the third step, the endorsement by government and other stakeholders of the policy recommendations and a TA Action Plan or TA Matrix. Cambodia adopted the TA Matrix in January 2002, was subsequently endorsed by the 29th IAWG/DAC/OECD Joint Meeting in Paris in the same month. The TA Matrix is available on the MoC website at www.moc.gov.kh/Integrated Framework. Work is currently ongoing for inclusion of the trade policies in the country’s Poverty Reduction Strategy Paper (PRSP).

The fourth step involves the submission of the TA Matrix to donors for financing. Within the 6 months period leading to the CG meeting to be held in June 2002, Cambodia has diligently and systematically worked with the core agencies and bilateral donors to secure funding for activities identified in the TA Matrix. Ultimately Cambodia will table its TRCB requirements at the formal CG meeting which will be held in Phnom Penh. The last step of the mainstreaming process relates to the responses of donors and the six core agencies to follow up on the specific TA projects identified in the TA Matrix.

Outline of the Paper

The overall objective of the present paper is to examine the status of the implementation of the IF and to highlight the efforts of the Government to mainstream trade into national development and poverty reduction policies. It provides an overview of the collaborative efforts required to promote a more integrated approach to trade assistance among the bilateral donors and multilateral agencies.

The paper starts with an overview of the historical development of the IF  presented as a milestones timeline depicting its evolution both in the global arena and in Cambodia. Along that timeline we see a tentative emergence of Cambodia trade policy development in its early days prior to the revived IF initiative. Soon after the selection of Cambodia as a pilot country scheme we see the rapid evolution of the “trade mainstreaming” concept in the flurry of meetings and presentations culminating in its full integration into the national development strategy, reflected in the SEDP II, IPRSP and ultimately the PRSP.

The paper gives major attention to partnership mechanisms for consultation among key stakeholders, among government, the private sector, and civil society organizations. The paper addresses directly the policy coherence issue and presents a detailed and coherent picture of the various supporting and complementary development policies of the government.

The paper also looks at current difficulties associated with Cambodia's accession to the WTO and focuses attention particularly to problems related to the weak capacity of the Government in the understanding of the complex global trade rules on the one hand and the challenges facing Cambodia in their bilateral negotiations, on the other. In that context the paper highlights a few lessons learned from the process related in particular to the efficient and coordinated delivery of trade related capacity building in this area. The paper also acknowledges the need to deepen our understanding of the linkages and potential impacts of trade reform on the poor.

The last chapter is entirely focused on trade-related capacity building. It stresses the need to have an effective delivery of TRCB both in the so-called "Trade rules compliance capacity" and the "Trade competitiveness capacity". The former is needed to enable Cambodia to improve knowledge and implementation of multilateral and regional trade rules and the latter to better address the supply side constraints and to exploit the improved market access for our exports. The chapter concludes with an extensive summary of the various initiatives already undertaken by Cambodia with assistance from the 6 core agencies and bilateral donors, and a series of newly proposed initiatives to further deliver on other development assistance needs, as identified in the Diagnostic Study and prioritized in the TA matrix.  

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" TRADE MAINSTREAMING IN CAMBODIA"
MILESTONES IN THE INTEGRATED FRAMEWORK PROCESS TO SUPPORT LDCs  

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OTHER LEGISLATIVE AND INSTITUTIONAL DEVELOPMENTS SINCE THE SELECTION OF CAMBODIA AS A PARTICIPANT IN THE IF PILOT SCHEME.

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