The Ministry of Commerce urges US lawmakers to strongly consider reauthorising the Generalised System of Preferences (GSP) accorded to Cambodia by the US – a trade scheme that lapsed on December 31, 2020 and has yet to be renewed – as the private sector awaits a decision from Congress.
The proposal was made during a meeting at the commerce ministry on August 30 between minister Pan Sorasak and US congresswoman Carol Miller to discuss investment opportunities in Cambodia and means to strengthen trade relations. Miller is a member of the Republican Party and represents the US state of West Virginia’s 3rd district.
Sorasak said the GSP has brought great benefit to Cambodia, where many travel goods manufacturers were drawn by the scheme, shifting to Cambodia to set up shop and creating jobs.
“Travel goods” is a designation that includes suitcases, backpacks, handbags, wallets and similar items.
“The ministry has urged US lawmakers to support and continue to provide the GSP and to help the development of technology in view of the growing digital society.
“Currently, Cambodia has needs for new technologies, technicians and human resource development,” he said.
Meanwhile, ministry undersecretary of state and spokesman Penn Sovicheat told The Post on August 31 that Cambodia is not the only country waiting for the reauthorisation of the GSP. “Other least developed countries [LDC] are also waiting.”
Citing Miller, Sovicheat said the US Congress has yet to put the issue on its agenda.
Due to the alleged delay in reauthorisation, Cambodia is forced to pay regular tariffs on the export of travel goods to the US.
“Cambodia, along with other LDCs, is urging the US Congress to consider continuing to provide GSP … [but reauthorisation remains] postponed because the US Congress has yet to discuss this issue,” he said.
However, Sovicheat stated that the US will reimburse the tax paid in the past once Congress approves the GSP.
Garment Manufacturers Association in Cambodia (GMAC) deputy secretary-general Kaing Monika said that, according to the information he received, some lawmakers had tried to push for re-approval before the end of the year, but things were complicated by other issues.
He noted that GSP for bags and travel goods was granted between 2016 and the end of 2020, but it lapsed at the start of 2021.
Since the lapse, exports to the US for the products have been taxed. However, garments and footwear have never benefitted from the GSP, therefore they are subject to 17 per cent tax.
“No one clearly knows when the GSP renewal will take place. Only travel goods and bags are eligible for the GSP,” he said.
Lim Tong, chairman of the Cambodia Travel Goods and Leather Association (CTLA), said members are still waiting for information from the US Congress.
“While we wait for the decision, operations will continue to run,” he said.
According to the General Department of Customs and Excise of Cambodia, in the first seven months of 2022, Cambodia and US trade volume stood at $5.893 billion, up 45.2 per cent year-on-year.
Of that, exports to the US were valued at more than $5.696 billion, up 47.3 per cent, while Cambodia’s imports from the US totalled $196.700 million, up 3.2 per cent.