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PROJECT “NETWORK FOR AGRICULTURE AND RURAL DEVELOPMENT
THINK-TAKS FOR COUNTRIES IN MEKONG-SUB REGION” (NARDT)

to China. On the other hand, to maintain the export license, there are also many other
regulations such as fumigation time must reach 120 hours; the test sample must
be brought to the Chinese facility for testing; packaging and labels must have full
information about the origin of goods according to international practices and must
be stamped by the testing agency of this country. Besides, the main import type of
rice from China is glutinous rice. Hence, without a synchronized cooperation among
the three countries, there will be a huge competition between Cambodia, Vietnam,
Thailand with Laos as Laos develops strategies to target on exporting glutinous rice
to China instead of glutinous paddy to other ASEAN countries. This could dilute the
value from exporting to China markets.

+ EU markets, the important partners for Cambodia and most potential high-
value partners for Vietnam, are raising requirements on greenhouse emissions, which
have a heavy impact on the rice industry. At the moment, there is no announcement
from the European Union on the agricultural industry affected by the proposal of
carbon tariffs. The first industries to face potential costs include cement, iron and
steel, aluminum, fertilizer, and electricity. Businesses are expected to face reporting
obligations from 2023, with the costs starting in 2026. However, the rice sector
as well as many other agricultural sectors will face a potential carbon tariff in the
future due to EU commitments to reduce climate change. According to European
Commission (2021), the country members are responsible for removing carbon from
the atmosphere by using Regulation on Land use, forestry and agriculture to reach an
overall EU target for carbon removals equivalent to 310 million tons of CO2 emissions
by 2030. With this target, the EU will soon put the same restriction on partner
countries to reach a reduction in climate change in the future. On the second hands,
EU consumers are raising their awareness on climate issues, including preference over
the agricultural products with carbon footprint labels. This will increase the pressure
for the domestic production of all countries in the region since rice production is
already responsible for 70% of the world’s water consumption and 30% of global
greenhouse gas (GHG) emissions.

4.2.2. Free Trade agreements (FTA)

Free Trade Agreements so far have contributed toward rice sector
development for participating country, opening access toward new markets, remove
trade tariffs, and provides income boost toward actors participating in the value chain.
Before, Cambodia has been affected by the safeguard measured by EU for protecting
domestic production from 2019 – 2022, EU is the largest partner for this country.
With the new Cambodia – China Free Trade Agreement, provides the country with an
estimation of USD 325 million, provides tariff-free for rice export to China, guarantee
national branding of processed rice, as well as the membership in the Regional
Comprehensive Economic Partnership (RCEP), Cambodia will slowly overcome the
gap from EU’s trade arrangement for Least Developed Countries.

For Lao PDR, the Memorandum of Understanding (MoU) on phytosanitary
terms and condition for the joint export of five types of Lao PDR agricultural products
to China, including rice, has largely support the rice sector. The policy helps drawing
many Chinese investors to invest in agriculture through many forms of cooperation,
as well as enhancing the production capacity in relation to organic agriculture and
prioritization of commodities production, including rice. This policy allows Lao PDR
export 50,000 tons of rice by quota, with assurance for consumption, making China
a major export partner for Lao PDR farmers.

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