VZCZCXRO2197
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #1151/01 2530134
ZNR UUUUU ZZH
R 100134Z SEP 07
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC 8922
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGV/USMISSION GENEVA 1629
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 PHNOM PENH 001151 
 
SIPDIS 
 
SIPDIS 
 
BANGKOK FOR FCS--ANN BACHER, JIM GOLSEN; FAS--GARY MEYER AND COREY 
PICKELSIMER; AND USAID/RDMA--SKIP KISSINGER 
COMMERCE FOR OTEXA- D'ANDREA, DOUGLAS; MAC-MIKALIS, PHO 
HO CHI MINH CITY FOR FCS--MARSHAK, LE 
GENEVA FOR ESA AND USTR 
STATE FOR EAP/MLS, EEB/TPP/ABT--GARY CLEMENTS, AND EEB/TPP/MTA 
STATE PLEASE PASS TO USTR FOR DAVID BISBEE 
 
E.O. 12958: N/A 
TAGS: ETRD ELAB KIPR CB
SUBJECT: ENGAGEMENT ON CAMBODIAN TRADE REFORM GETS A BOOST FROM 
TIFA 
 
REF:  PHNOM PENH 345 
 
¶1.  Summary.  Cambodian government officials once again displayed 
open and engaged attitudes during recent trade consultations with 
U.S. Trade Representative (USTR) official David Bisbee.  Commerce 
Minister Cham Prasidh highlighted the recent passage of legislation 
on key economic topics and agreed to speak out in favor of a 
successful conclusion to the Doha round of the World Trade 
Organization.  Prasidh also appealed for greater trade preferences 
for Cambodian garments and other LDC products.  Commerce ministry 
officials asked for technical assistance on a variety of topics from 
E-Commerce laws to intellectual property enforcement.  A Ministry of 
Labor official reported that a key USG concern surrounding 
Cambodia's groundbreaking Arbitration Council had been resolved, and 
pledged to take concrete steps to certify more unions as most 
representative.  End Summary. 
 
¶2.  In February 2007, the U.S. and Cambodia held their first Trade 
and Investment Framework Agreement (TIFA) Joint Council meeting in 
Siem Reap, a very successful event which exceeded USG expectations 
(reftel).  David Bisbee, USTR Director for Southeast Asia, returned 
to Cambodia July 5-6 to discuss progress on issues raised in the 
TIFA Joint Council and other trade issues. 
 
Commerce Officials Tout TIFA Progress, Request Assistance 
--------------------------------------------- ---------- 
 
¶3.  Two top Ministry of Commerce officials, Minister Cham Prasidh 
and Secretary of State Pan Sorasak, highlighted progress Cambodia 
has made in implementing the TIFA action plan.  The action plan was 
developed by USTR in consultation with the Cambodian government 
following the February 2007 TIFA Joint Council meeting.  It tracks 
and supports fulfillment of Cambodia's WTO commitments and its 
broader trade facilitation and economic reform program.  In the past 
six months, the National Assembly has passed the Customs Law, Civil 
Code, and Secured Transactions Law--all action plan items.  In 
addition, other donors are also supporting trade reform efforts in 
Cambodia via the Enhanced Integrated Framework, a multi-agency, 
multi-donor World Trade Organization initiative to help least 
developed countries use the multilateral trading system to their 
advantage to increase market access and ultimately reduce poverty. 
 
¶4.  Encouraging the government to speed up vetting of the large 
number of draft laws awaiting ministerial review and parliamentary 
action is another important element of the action plan.  Both 
Prasidh and Sorasak saw value in the U.S. suggestion to use the TIFA 
or consider other ways to better engage the RGC law-making machinery 
in economic and trade reform.  Both sides agreed to develop specific 
proposals for discussion at a later date. 
 
¶5.  Prasidh expressed his desire to see more capacity building work 
being carried out under the TIFA.  Cambodia is interested in 
additional USG assistance in a number of trade-related areas, 
including: creating a legal framework for E-Commerce; additional 
practical training in intellectual property enforcement and 
administration; capacity building to meet sanitary and 
phyto-sanitary standards and other technical standards in key export 
markets; and assistance with broader reforms in the banking sector 
and judiciary. 
 
Commerce Minister on Trade Preferences, Doha Conclusion 
--------------------------------------------- -------- 
 
¶6.  Prasidh also encouraged the United States to extend greater 
trade preferences to Asian LDCs, particularly for garments and 
apparel.  Cambodia has established a thriving garment sector but 
struggles to compete with China and with other LDCs that have 
preferential access to the U.S. market.  (Note: Minister Prasidh and 
representatives from the Garment Manufacturers Association of 
Cambodia traveled to Washington in mid-July to meet with 
Administration and Congressional leaders on this topic, including 
Rep. Jim McDermott, sponsor of an LDC trade preferences bill.  End 
Note.) 
 
¶7.  Prasidh also agreed to advocate for a successful outcome to the 
Doha negotiations on behalf of Cambodia and other LDCs.  As a 
recently acceded WTO member, Cambodia has undertaken greater trade 
liberalization commitments than many older WTO members and hopes 
that the round will lead to greater market access in developing 
countries as well as in developed ones.  Cambodian trade officials 
admit that market access barriers in India and China inhibit 
meaningful increases in exports to those markets, which if addressed 
 
PHNOM PENH 00001151  002 OF 002 
 
 
could reduce Cambodia's dependence on the U.S. and EU markets. 
 
Progress on IPR Legal Framework 
------------------------------- 
 
¶8.  Var Roth San, Director of the Intellectual Property Department 
of the Ministry of Commerce, thanked the USG for its comments on 
Cambodia's intellectual property laws.  He explained that Cambodia 
was working to reconcile the EU technical assistance on the draft 
law on geographical indicators with the U.S. comments provided on 
the draft, noting the different approaches taken by the U.S. and EU. 
 Var also requested U.S. assistance in creating the necessary legal 
framework to combat optical media piracy, indicating that he would 
like to consider drafting an optical media law. 
 
Labor Concerns Focus on Most Representative Unions 
--------------------------------------------- ----- 
 
¶9.  Seng Sakda, Director General at the Ministry of Labor and 
Vocational Training, was pleased to report that one of the key 
labor-related issues discussed in the February TIFA meeting--the 
continued operation of Cambodia's innovative Arbitration 
Council--has been resolved. 
 
¶10.  Another key concern raised in February's TIFA discussion was 
the proliferation of multiple unions at each garment factory, a 
situation which fuels inter-union rivalry, harassment, and violence, 
and hampers collective bargaining.  USTR Director and Econoff 
encouraged Sakda to take the first step towards certifying more 
unions as most representative by auditing the existing, out-of-date 
unofficial list of most representative unions and creating an 
updated authoritative version.  They conveyed the American Center 
for International Labor Solidarity's willingness to assist in this 
effort, and both sides agreed that an updated list would be 
completed by late August.  This list is still outstanding. 
 
COMMENT 
------- 
 
¶11.  The productive discussions and proactive engagement by 
Cambodian officials during USTR Director Bisbee's visit demonstrate 
Cambodia's commitment to the TIFA process and its effort to 
strengthen the economic partnership with the United States. 
Cambodian officials are aware of current global trade dynamics and 
are ambitious and relatively sophisticated in their approach to 
making the best of their situation given very real capacity 
constraints. 
 
¶12.  Although the United States is Cambodia's most important trading 
partner, many other actors are far more involved in helping Cambodia 
shape its economic future through technical assistance, training, 
and economic partnerships.  While it is a small economy, Cambodia's 
growth rates have been among the world's highest over the past two 
years--13.5 percent in 2005 and 10.8 percent in 2006.  Cambodia's 
booming economy and trading potential demonstrate that requests for 
technical assistance warrant serious consideration by Washington 
agencies.