Minister of Commerce Cham Prasidh yesterday called on the US to allow duty-free entry for Cambodian exports, a benefit the Kingdom already enjoyed with the European Union.
If the US government provided Cambodia with preferential tax treatment, similar to that offered by the EU, its market share in the US’s garment sector would double, the minister said at a garment buyers’ forum in Phnom Penh yesterday.
“While we are trying to maintain and improve exports to the US, we are still fighting hard with its administration, urging them to adhere to the pledge made at the Doha meeting to offer duty-free entry for exports,” he said, referring to the World Trade Organisation’s negotiation rounds in Doha, Qatar.
The introduction of preferential tax treatment from the US would result in the Kingdom’s share of that country’s garment market rising to 4 percent from 2 percent.
Cambodia currently exports around US$2 billion worth of garment products to the US, 60 percent of the Kingdom’s total garment exports, said Cham Prasidh.
“Although we export a substantial amount to the US, we still pay the same in duty as much larger economies such as France and the UK.”
He added that the “US is lagging behind on tariff introduction” and appears hesitant to offer Cambodia export concessions, although it has opened 95 percent of its tariff lines to African countries.
“I think members of US Senate still think this is a communist country.”
If the taxes were vetoed, the additional funds could be used to improve wages and infrastructure within the Cambodian garment industry, Cham Prasidh added.
As an alternative destination for garment exports, the Kingdom is turning its attention towards the world’s second-largest economy.
“The US might not have money to buy, but China does, which is why it is a much safer market and why we are currently negotiating a duty-free tariff with them.”
Cham Prasidh called on companies to open outlets in China in order to sell products made in Cambodia.
“China are purchasing for export, not to sell in the country, so garments will still be produced in Cambodia, but sold from China.”
Ahead of confirmation of a duty-free tax arrangement with China, the Kingdom has requested an “early harvest payment” from the country in order to contribute to sustaining improvements within the sector.
However, Cambodia still welcomes the opportunity to strengthen trade relations with the US, Cham Prasidh said.
“We continue to cross our fingers on the completion of the Doha agreement [with the US].”
Officials at the US Embassy declined to comment, while American Chamber of Commerce in Cambodia officials could not be reached yesterday by the Post.
Officials at the Garment Manufacturers Association of Cambodia were not available for comment.