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Logo of Phnom Penh Post newspaper Phnom Penh Post - Exporters cash in on GSP

Exporters cash in on GSP

L

OCAL garment manufacturers have begun exporting their products to Europe under

preferentially low tariff rates in a Gatt scheme designed to stimulate the

economies of under-developed countries.

The Generalized System of

Preferences scheme (GSP) was set up by the industrialized countries of Gatt to

allow qualifying Third-World countries to export any products at preferential

tariff rates.

In a breakthrough for local exporters four clothing

manufacturers qualified for GSP treatment on April 29 said Mao Chan Samnom

deputy director of the GSPfocal point office. The office comes under the

jurisdiction of the Ministry of Commerce.

Samnom said they have since

exported $379,200 of garments and textiles at low tariff rates to France,

Germany, Austria , UK and Denmark.

He said: "Many traders in the country

do not realize they are entitled to export their goods at low tariff rates. The

government set up the GSP office in February to help exporters qualify for GSP

rates."

"Foreign countries in deciding their trade policies could either

subject trading partner's exports to General Tariff rates which are quite high,

Most Favored Nation (MFN) tariff rates which are lower, or GSP rates which are

lower again. Often under GSP exports are duty free.

"To date at least 26

countries have granted Cambodia GSP status including the EU , Japan,

Scandinavian countries, Russia, Canada and Australia."

Sou Kong, staff

member of the Supreme Garment Company which has exported $58,899 worth of

clothing under GSP since April, said: "Exporting under GSP has reduced tariff

rates on clothing by 40 percent. The export tariff rate was 35 percent, now it

is 21 percent."

Country Manager of June Textiles Lee Thai Keth said:

"Before using GSP export duty levels were very high. We did not export very

much. Now under GSP the tariff rates are very low enabling us to export many

textiles to Europe."

Samnom said: "June Textiles had exported $101,328

worth of goods to Europe between April 29 and June 11.

"Some countries

granted Cambodia GSP status many years ago, but we are not sure if they will

honor their commitments as we have never officially exported any products to

them.

"Many other countries embargoed us during the period of Vietnamese

occupation and only granted us GSP status last year.

"Another function

of the GSP office is to collect information from international organizations

which will enable potential exporters to know what tariff rates they will

face.

"But we need more potential exporters to come to our office so we

can test the waters and find out if countries will honor their GSP commitments.

To date only four companies have exported under GSP."

According to

Samnom, to qualify for GSP status exporters had to show their products were

produced solely in Cambodia and that no intermediary country had added value to

the product on the way to the final destination country.

He said it was

crucial potential exporters approach the GSP National office to obtain

certificates showing their goods are produced in Cambodia so that they can

qualify for the lower tariff rates.

Samnom sees great potential for the

country to export agricultural products to Europe and Japan under GSP schemes

and therefore avoid traditionally high tariff barriers in these

markets.

He said: "The country's potential exports under GSP include

rubber, rice, oxen and buffalo."

He said agricultural exporters

considering the Japanese markets would face GSP tariff rates of around 8 percent

depending on the product, and other goods such as beer could be exported duty

free. He said the GSP rates for the Japanese market were generally about 40

percent lower than MFN rates.

The two other companies who have exported

under GSP are M&V International Manufacturers company who have exported

$143,900 of textiles to Europe, and Gold kavimex who have exported $71,800 worth

of garments.

The companies have also tried unsuccessfully to export to

the US and have expressed disappointment that the US has not granted Cambodia

MFN status.

The public affairs officer for the US embassy David Miller

said: "No exact date has been set for the US to sign an MFN agreement with

Cambodia. It relies on a number of things to be accomplished and it needs

negotiation between the two countries before an agreement can be reached."

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