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Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment manufacturers back US bill on trade relief

Garment manufacturers back US bill on trade relief

090605_13.jpg
090605_13.jpg

A proposal recently introduced in the US Senate would eliminate duties on

garments produced by 15 developing nations, including Cambodia and Laos

Photo by:

GEORGE MCLEOD

The Garment Manufacturers Association of Cambodia said that the US bill, if passed, would create more jobs.

Trade Relief bill

The bill would provide duty-free status to garments from the following countries:

  • Cambodia
  • Laos
  • Afghanistan
  • Bangladesh
  • Bhutan
  • Kiribati
  • Maldives
  • Nepal
  • Samoa
  • Sri Lanka
  • Solomon Islands
  • East Timor
  • Tuvalu
  • ¬†Vanuatu
  • Yemen

Source: US Senate

DOMESTIC garment manufacturers have welcomed a bill introduced into the US Senate late last month that would give Cambodia duty-free access to the American market.

The bill, sponsored by Democratic Senators Dianne Feinstein and Kit Bond, would eliminate apparel duties for Cambodia and 14 other least-developed countries, including neighbouring Laos.

Duties stand at an average 15 percent for the countries that would benefit from the legislation. Sponsors of the bill say that these countries represent just 4 percent of the US textiles and apparel market.

The Garment Manufacturers Association of Cambodia (GMAC), which represents most of the country's garment factories, said it welcomes the proposed law, but that the impact would depend on whether extra restrictions are attached.

they [the government] have visited the US and supported lobbying efforts.

"It would create a lot of jobs in Cambodia," said Roger Tan, executive committee member at GMAC. "This type of proposal has been on the table for a long time, and we have not seen much development, but of course, dropping the import duties would be a good thing."

He added that garment makers would only realise the full benefits of duty-free access if no restrictions, such as quotas, were attached. The United States is Cambodia's biggest garment market, purchasing more than 70 percent of the sector's total exports. Some say rising costs in China are leading more garment makers to set up shop in Cambodia.

The local industry and the Cambodian government have pressed hard for a cut in US import duties by sending high-level trade missions and hiring Washington lobbyists. But as Cambodia becomes a bigger player in the American market, protectionist forces in the US are fighting back, claiming that cheaper Cambodian garments cost American jobs.

The president of the National Council of Textile Organisations, which represents US textile makers, called the proposed bill: "A billion-dollar bailout [for garment importers] under the guise of helping impoverished countries," in an industry publication. He said that dropping the import duty would also cost US$1 billion in lost import revenues.

Johnson singled out Cambodia in a 2008 speech, saying, "As costs in China have risen ... Bangladesh and Cambodia - have actually gained market share."

World Bank figures for 2008 say Cambodia is the eighth-biggest garment supplier to the US, and Johnson said the country does not need trade concessions.

"[The] apparel trade is rapidly consolidating into five major suppliers, including two least-developed countries, Bangladesh and Cambodia."

He added that cutting import duties would not fight poverty in Cambodia as the bill's sponsors claim. He cited Haiti, where the garment sector has virtually collapsed despite free market access to the US.

Lobbyist battle

One major garment producer in Cambodia said the latest bill to eliminate duties came after a long fight against protectionist lobbyists in the US.

"The textile lobby in the US is very powerful ... that's why we have been lobbying for years and spending hundreds of thousands of dollars," said the source, who asked to remain anonymous. "But the [Cambodian] government has been very supportive of [the industry] ... they have visited the US and supported lobbying efforts."

US Senator Dianne Feinstein, one of the bill's backers, said in a statement that the legislation would create jobs and fight poverty.

"These 14 nations face some of the highest US tariffs in the world, averaging over 15 percent. This bill would help correct this trade inequality," said the Senator.

The US embassy in Phnom Penh was not available to comment on the proposed legislation.

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