Diagnostic Trade Integration Study 2007

DTIS Background

In 2000, Cambodia was designated as one of three pilot countries under the Integrated Framework (IF).  Subsequently, Cambodia was the first country to complete a Trade Integration Strategy also known as Diagnostic Trade Integration Study or DTIS (Cambodia’s DTIS 2002) under the IF.1

The IF is a program of six multilateral agencies – the International Monetary Fund (IMF), International Trade Centre (ITC), United Nations Conference on Trade and Development (UNCTAD), United Nations Development Programme (UNDP), World Bank, and World Trade Organization (WTO) – supported by a number of multilateral and bilateral development partners. The IF assists Least Developed Countries (LDCs) to integrate more effectively into global trade and turn trade into a driver of national development.  The IF is the product of a commitment made by development partners under WTO agreements.

Cambodia’s DTIS 2002 predates the country’s accession to the WTO in 2004. As part of its accession, Cambodia has committed itself to a significant program of regulatory and legal reforms in trade governance that will have a significant impact on its competitiveness in the global economy. In addition,  with the support of development partners, Cambodia has taken steps since 2002 to implement a  number of actions identified in its first DTIS, notably in the areas of trade facilitation, Intellectual Property Rights (IPRs), Sanitary and Phyto-Sanitary Measures (SPS), and Technical Barriers to Trade (TBTs), as well as  in some product sectors.  Its performance in the trade sector has changed as a result. In view of such changes, Cambodia’s Government determined that the time had come to update its earlier strategy.

In 2005, with the support of UNDP, the Ministry of Commerce (MoC) launched a new MoC-UNDP TRADE Project, a follow-up to an earlier programme. TRADE II focuses on strengthening MoC’s capacity to manage trade reform and Cambodia’s trade integration in the world economy. The programme is built around five major modules, including one focusing on updating DTIS 2002 and another on developing a Human Impact Development Assessment of Trade (HDIA) intended to sharpen Cambodia’s ability to turn trade development into an instrument of poverty reduction and sustainable human development.

Meanwhile, other developments have helped build momentum around Cambodia’s focus on trade.   With initial support from the European Commission, MoC has taken steps to put into place a Trade Sector Wide Approach (Trade SWAp). Trade SWAp will be a key instrument for the successful implementation of Cambodia’s trade sector strategy and the priorities identiἀed by the Government as a result of the updated DTIS. A more eḀective use of limited human, institutional, and financial resources demands a shift from the project-by-project approach that characterized DTIS 2002, to a coordinated programme approach as advocated under Trade SWAp.

Finally, further to commitments made at the launch of the Doha Round (reinforced during the  Hong Kong WTO Ministerial Conference) and as a follow-up to the debate on Aid-for-Trade launched  during the Spring 2005 G8 Meeting, development partners have agreed to launch an Enhanced  Integrated Framework (EIF) with new and expanded financial resources. The EIF places renewed emphasis on national capacity building for management of trade reform and trade sector development.

It also points to the need for updating the DTIS and turning it into a true trade sector strategy. Many  of the steps required under the EIF were anticipated under the MoC-UNDP Trade II programme and have  already been taken up by the Ministry of Commerce.2 Cambodia is well positioned to receive early  support from the EIF.

Cambodia 2007 Trade Integration Strategy

DTIS 2007 has four main objectives:

  1. Identify a set of possible priority product or service sectors to serve as a basis for   strengthening and diversifying Cambodia’s export basket.  Strengthening exports may    involve expanding sales into new import markets or capturing greater value added    through more advanced processing; diversifying exports will require expanding existing,   but smaller exports, or developing products or services not currently produced or exported;
  2. Identify bottlenecks, either common to all priority sectors or specific to each,    that need to be removed to promote development of those export sectors;
  3. Link more clearly trade sector development with human development and    poverty reduction (main streaming);
  4. Serve as a basis for formulating clear trade sector development priorities shared by the    Cambodian government, its development partners, and other concerned stakeholders    to be implemented by all through a trade sector-wide approach (Trade SWAp).

With respect to the fourth objective, DTIS 2007 is not an end in itself but part of a larger process. In particular:

  • DTIS 2007 must be supported by much stronger structures and mechanisms for the formulation and implementation of trade policy and trade development strategy within the Royal Government of Cambodia (RGC). Implementation of DTIS 2007 has to go hand-in-hand with a clear emphasis on strengthening national capacity for management of trade reform and trade sector development;
  • Implementation of DTIS 2007 will require the development of a series of tools that can assist the Government and its development partners in managing and monitoring results and  effectiveness;
  • Effective implementation of DTIS 2007 will require stronger funding coordination between  the Government and its development partners, including more effective use of the PIP process and the Trade SWAp.

     

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