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
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
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
"Malaysia, Thailand about 30 other countries would never
have developed anything as quickly as they did without MFN and GSP," said one
"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
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.
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
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
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
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
One attempt to get that approval, in a trade bill considered
by Congress last year, was dropped because it was "deemed
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.
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
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.
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.