PHNOM PENH (AFP) — Safeguards protecting Cambodia's garment sector expire by year's end, and the country hopes the United States, its biggest market, will help stave off a disastrous downturn in the industry which accounts 80 percent of all exports.
Trade officials, led by Commerce Minister Cham Prasidh, were in Washington in July urging US Congress to pass legislation that would slash tariffs on goods from 14 of Asia's least developed countries, or LDCs, including Cambodia.
The measure is the only way to insulate Cambodian manufacturers from a changing global industry that increasingly favours larger producers, like China, with better infrastructure and cheaper production costs.
"We know our quality is the same as the Chinese, we are fighting only over the price," said Cham Prasidh, adding that US tariffs on Cambodian garment exports are between 15 and 25 percent.
"If we don't pay the duty, it means we are competitive," he told AFP in an interview last week.
"Our economy is mainly based on our export of garments ... anything that is affecting this sector is affecting the whole Cambodian economy."
Some 70 percent of all Cambodian textiles go to the US, said Ken Loo, secretary general of the Garment Manufacturers Association of Cambodia (GMAC).
Continued access to that market is crucial to the survival of the garment sector, which was worth 2.5 billion dollars last year and employs more than 330,000 people, mostly young women supporting families in rural Cambodia.
"If we are able to get a reduction or exemption ... it would definitely go a long way to ensure the continued growth and survival of the industry," Loo said.
Cambodia's garment sector was sent into a spin in the first months of 2005 following the end of US textile quotas that guaranteed the country protection from larger competitors.
Factories began closing in rapid succession and thousands of workers were made jobless.
"Safeguard" restrictions imposed on some Chinese textiles in mid-2005 by the US and European Union stabilised the sector, even spurring it on to greater growth.
But while Cambodian trade officials had lobbied Washington for tariff reductions since 2004, their efforts have taken on a greater urgency amid rising fear that the end of Chinese restrictions this year and next could again throw the industry into crisis.
"Our industry suffered significantly" in the months immediately following the expiration of the US quotas, said Loo.
"If safeguards are removed and no new mechanism put in place to restrict China, our industry will suffer similarly," he added.
Foreign diplomats are also closely watching developments, keenly aware of the industry's importance to Cambodia's economic health.
"The entire economy hinges on the success of the garment sector and America must absolutely get rid of the tariffs" if the sector is to survive, said one Western diplomat.
Cham Prasidh said his delegation met with more than 20 members of the US Congress during the July trip, and that "all of them were very supportive."
The Tariff Relief Assistance for Developing Economies, or TRADE Act which cuts tariffs to the 14 Asian LDCs, is already before the US Senate.
A parallel bill extending duty relief to all least developed countries is expected to be brought before the House of Representatives, Cham Prasidh said.
"Some (Congress people) have agreed to co-sponsor, but many of them are waiting to see the new legislation first," he said.
Other US officials point out that tariff relief for poor nations is already being considered within the Doha round of World Trade Organisation negotiations.
But those talks broke down last year, and Cham Prasidh said Cambodia -- as well other poor nations -- cannot wait for a Doha resolution.
"We don't know when these talks are going to be completed -- maybe this year, maybe not," he said.
"So that is the reason why we try to ask that LDCs get this quota-free and duty-free access as an early harvest rather than leave us to wait until the end of the Doha rounds," he added.
"The situation is very critical," he said, but efforts are being frustrated by a fluid political situation in Washington.
Several lawmakers who backed the original legislation are no longer in office, and US presidential elections next year only add to the political uncertainty.
"We continue to believe there is a slim chance to push this bill to be introduced and passed, because they have to find an option," Cham Prasidh said.
"Our bill is so instrumental for the LDCs, and everybody agreed with this perception," he added.
"The only question is whether the political environment will allow this type of bill to be passed."
Trade officials, led by Commerce Minister Cham Prasidh, were in Washington in July urging US Congress to pass legislation that would slash tariffs on goods from 14 of Asia's least developed countries, or LDCs, including Cambodia.
The measure is the only way to insulate Cambodian manufacturers from a changing global industry that increasingly favours larger producers, like China, with better infrastructure and cheaper production costs.
"We know our quality is the same as the Chinese, we are fighting only over the price," said Cham Prasidh, adding that US tariffs on Cambodian garment exports are between 15 and 25 percent.
"If we don't pay the duty, it means we are competitive," he told AFP in an interview last week.
"Our economy is mainly based on our export of garments ... anything that is affecting this sector is affecting the whole Cambodian economy."
Some 70 percent of all Cambodian textiles go to the US, said Ken Loo, secretary general of the Garment Manufacturers Association of Cambodia (GMAC).
Continued access to that market is crucial to the survival of the garment sector, which was worth 2.5 billion dollars last year and employs more than 330,000 people, mostly young women supporting families in rural Cambodia.
"If we are able to get a reduction or exemption ... it would definitely go a long way to ensure the continued growth and survival of the industry," Loo said.
Cambodia's garment sector was sent into a spin in the first months of 2005 following the end of US textile quotas that guaranteed the country protection from larger competitors.
Factories began closing in rapid succession and thousands of workers were made jobless.
"Safeguard" restrictions imposed on some Chinese textiles in mid-2005 by the US and European Union stabilised the sector, even spurring it on to greater growth.
But while Cambodian trade officials had lobbied Washington for tariff reductions since 2004, their efforts have taken on a greater urgency amid rising fear that the end of Chinese restrictions this year and next could again throw the industry into crisis.
"Our industry suffered significantly" in the months immediately following the expiration of the US quotas, said Loo.
"If safeguards are removed and no new mechanism put in place to restrict China, our industry will suffer similarly," he added.
Foreign diplomats are also closely watching developments, keenly aware of the industry's importance to Cambodia's economic health.
"The entire economy hinges on the success of the garment sector and America must absolutely get rid of the tariffs" if the sector is to survive, said one Western diplomat.
Cham Prasidh said his delegation met with more than 20 members of the US Congress during the July trip, and that "all of them were very supportive."
The Tariff Relief Assistance for Developing Economies, or TRADE Act which cuts tariffs to the 14 Asian LDCs, is already before the US Senate.
A parallel bill extending duty relief to all least developed countries is expected to be brought before the House of Representatives, Cham Prasidh said.
"Some (Congress people) have agreed to co-sponsor, but many of them are waiting to see the new legislation first," he said.
Other US officials point out that tariff relief for poor nations is already being considered within the Doha round of World Trade Organisation negotiations.
But those talks broke down last year, and Cham Prasidh said Cambodia -- as well other poor nations -- cannot wait for a Doha resolution.
"We don't know when these talks are going to be completed -- maybe this year, maybe not," he said.
"So that is the reason why we try to ask that LDCs get this quota-free and duty-free access as an early harvest rather than leave us to wait until the end of the Doha rounds," he added.
"The situation is very critical," he said, but efforts are being frustrated by a fluid political situation in Washington.
Several lawmakers who backed the original legislation are no longer in office, and US presidential elections next year only add to the political uncertainty.
"We continue to believe there is a slim chance to push this bill to be introduced and passed, because they have to find an option," Cham Prasidh said.
"Our bill is so instrumental for the LDCs, and everybody agreed with this perception," he added.
"The only question is whether the political environment will allow this type of bill to be passed."
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