Background 

Since the early 1990s, the NGO Forum has been concerned about the impacts of structural adjustment, unfettered economic development and trade liberalisation on Cambodia’s fragile economy, and its impacts on the poor.  Since 2002, trade and economic development issues became an increasingly important focus of the Development Issues Project, and training activities were conducted in Phnom Penh and the provinces to help NGOs better understand these issues.   Building on this past experience, in 2004, the NGO Forum commenced a Trade and Economic Development project to more actively involve NGOs in advocacy on trade and economic development issues.  Beginning in 2006, the project intends to build a stronger and more active network of NGOs at the national level to advocate for the rights of poor and vulnerable groups affected by trade and economic development policies and global trade rules.

Problem Statement

Trade liberalisation, a cornerstone of the now widely discredited Washington Consensus, has become perhaps the most influential engine of socio-economic change around the globe.  Despite a growing body of experiential and scientific evidence regarding impacts of liberalisation on the poor, the current global system of free-trade remains essentially unquestioned and unchecked by the institutional powers of the world.   In addition, international trade rules are skewed to allow developed countries to protect their agricultural markets even while preaching trade liberalisation to the developing world.  World Trade Organisation (WTO) rules on investment, intellectual property rights and trade in services all favour rich countries at the expense of poor countries.  During negotiations over Cambodia’s accession to the WTO, Cambodia was forced to accept a set of conditions that far exceeded the limits for least developed countries (LDCs) agreed at the WTO Ministerial in Doha, and even exceeding the conditions on existing members of the WTO.

Policies aimed solely at economic growth are unlikely to help the poor.  In Cambodia, the disparity between economic growth and equitably-distributed human development is clear.  GNP growth over the last decade has been impressive, while poverty levels remain little changed.  Yet the Royal Government and its donors appear inclined toward a policy regime that seeks to amend these disparities here in Cambodia by more completely embracing economic liberalisation, and re-arranging the various segments of the society to work within its confines.             

Two key features of Cambodia’s National Poverty Reduction Strategy (NPRS) 2003-2005 were trade liberalisation and the creation of export processing zones.  The new National Strategy Development Plan (NSDP) 2006-2010, supported by multilateral donors such as UNDP, WB and ADB, will likely be a continuation of the same system of policy deference to the demands of trade liberalization. Cambodia’s accession to the World Trade Organization (WTO) was justified by the promise of improving the country’s trade opportunities, economic growth and wealth creation.  Nevertheless, Cambodians seem to know little about what the impacts of further trade liberalization will be, especially on poor and vulnerable groups. 

Cambodian producers are not well prepared, in terms of comparative advantage and productive capacity, to benefit from access to foreign markets.  Neither are they well-positioned to withstand direct competition from imports that are either subsidized or enter the country tariff-free.  The experience of many countries (e.g. India, Thailand and The Philippines) shows that small farmers and fishers may become worse off.  

Young rural women who decide to leave home to work in factories meet with a host of social, medical, emotional and financial difficulties.  Creating special economic zones may serve as part of a strategy that successfully attracts foreign investment, but it may do little to help Cambodia’s poor if significant labour and environmental standards are not maintained, and sufficient backward links to the rural economy are not created.  Tax and customs exemptions in special economic zones may lead to an overall reduction in national revenues as existing foreign investors move their operations to the new zones, thus affecting budgets for social development.

Economic development in Cambodia still favours the urban areas while rural areas remain economically stagnant.  Economic policies seem to support growth over redistribution.  Although Cambodia’s planned economic development has already been underway for over a decade, the country continues to rely on about 50% per annum on donor support and concessional loans to assist its development.  The percentage of the budget devoted to repayments is sure to increase in the near future. 

Outputs

	NGO have increased awareness of trade and economic development policies.
	Impacts of trade and economic development policies are monitored effectively.
	NGO and community concerns regarding trade and economic development issues are effectively represented to decision-makers.
	Gender perspectives are included in issues of trade.