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Logo of Phnom Penh Post newspaper Phnom Penh Post - US Congress holds MFN key

US Congress holds MFN key

C AMBODIA may soon be in for one of the biggest boosts ever to its long-term

development, if the United States agrees to include the Kingdom in preferential

trade programs.

The US Congress is expected to consider whether to grant

Most Favored Nation (MFN) and Generalized System of Preferences (GSP) trading

status to Cambodia in the next few months.

Several issues - including

American soldiers missing in action from the Vietnam War, intellectual property

rights, labor rights, and free emigration - could yet stymie Congressional

agreement.

Some Cambodian civil rights NGOs are also lobbying in

Washington for MFN and GSP to be withheld until the government does more to

entrench basic democratic rights.

"It can be a political issue, if enough

people bark at Congress and say they [the Cambodian government] are not

respecting human rights, free labor rights, democratic rights," said one NGO

worker, who would not be named.

If granted, MFN and particularly GSP

would offer billions of dollars of potential foreign investment in Cambodia as

it would become an increasingly lucrative location for exporters to the huge

American market.

"Malaysia, Thailand about 30 other countries would never

have developed anything as quickly as they did without MFN and GSP," said one

economic observer.

"Imagine a country like Cambodia, which tries to get

$750m from ICORC [donors] for a four-year period, getting $3-4 billion in

investments a year," he added.

MFN status would see Cambodian exports to

the US attract 30 to 40 per cent lower import duties than

present.

Currently, Cambodian exports are subjected to tariffs or 50 per

cent of or more - the highest US rates. If GSP were approved, many Cambodian

exports would attract no tariffs.

A bill giving MFN status to Cambodia is

expected to be considered by a Congressional committee next month. It may go

before a full vote of Congress in June.

"The word in Washington is that

MFN is going to be granted," one independent Phnom Penh observer said.

A

bill extending GSP to Cambodia is also due to go before a Congressional

committee next month, though it is expected to take longer to reach the full

Congress.

GSP - which could only be extended to Cambodia after MFN status

was granted - allows designated developing countries to export some 4,400

products duty-free to the US.

Lou Laysreng, undersecretary of state for

the Ministry of Commerce, said he had been told by American officials to expect

MFN status to be given in June.

"We are waiting for Congress to pass the

bill," he said.

A bilateral trade agreement between Cambodia and the US -

required before MFN status can be granted - was settled last year. Cambodia has

signed it; the US will not until Congress gives approval.

In fact, the US

administration of President Bill Clinton has apparently deliberately chosen to

seek a decision from Congress on whether Cambodia can be given

MFN.

According to an October memorandum from Washington lawyer Warren

Maruyama to a United Nations adviser at the Cambodian Ministry of Commerce, "the

Administration could probably extend MFN to Cambodia by Presidential

Proclamation".

But, he continued, "for political reasons it will not act

unless it gets a clear signal from Congress".

Referring to controversy

over US soldiers taken prisoner or war, or missing in action, in Indochina

during the Vietnam War, he said: "It would appear that the Administration

concluded that it could not take the politically-charged step of normalizing

[trade] relations with Cambodia, unless it had prior approval from

Congress."

One attempt to get that approval, in a trade bill considered

by Congress last year, was dropped because it was "deemed

controversial".

Other possible barriers to MFN being granted include

ensuring that the intellectual property rights of foreign firms are protected by

Cambodian law, and that free emigration is allowed from the country.

Some

NGOs, meanwhile, talk of social issues which they say should be addressed by

Cambodia before better trade status is granted. They are loathe, however, to

publicly speak out for fear of being blamed for foiling what everyone agrees

would be a huge economic boost for Cambodia.

There are no social

obligations for countries to be eligible for MFN, but to be included in GSP they

must provide key labor rights.

The Cambodian government's proposed new

labor law would probably fulfill some but, according to some NGO workers, not

all of those requirements.

Lou Laysreng, the undersecretary for commerce,

said there were "no problems" between the US and Cambodia yet to be

resolved.

A US Embassy official in Phnom Penh, who asked not to be named,

said he did not think human rights was an outstanding issue but "Congress can

bring up anything they want".

He could not predict when MFN might be

granted to Cambodia, saying it could be a long process.

Observers said

the lack of priority that Congress put on the issue, and the Clinton

Administration's reluctance to boost international aid, might be the biggest

reasons for any delay.

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