In the wake of Donald Trump’s surprise win in the US presidential election on Wednesday, Labour Ministry spokesman Heng Sour said yesterday that the president-elect’s campaign promise to pull out of the Trans-Pacific Partnership trade deal would restore the Cambodian garment sector’s competitiveness in the region.
The 12-member Trans-Pacific Partnership (TPP) was signed in February and, once ratified, was expected to liberalise trade among signatory nations – including the US, Japan, Canada, Vietnam, Malaysia and Japan. However, Trump, during his presidential campaign, adopted a protectionist stance on trade deals, vowing to renegotiate or break existing agreements.
“The Trans-Pacific Partnership is another disaster done and pushed by special interests who want to rape our country – just a continuing rape of our country,” Trump said during a campaign stop in the state of Ohio in late June.
Welcoming Trump’s victory in the elections, Sour yesterday said that Trump would dismantle the TPP, neutralising any expected trade advantages for neighbouring Vietnam.
“If he [Trump] really eliminates the TPP, it will mean Cambodia can maintain its competitiveness in the garment sector and put neighbouring countries on an equal footing with us again,” he said.
Sour said the garment sector would face “problems” if it had to compete with Vietnam, which would enjoy tariff-free exports to the US under the TPP, while Cambodian exports would still be taxed.
Experts yesterday said the potential elimination of the TPP could provide the Kingdom some reprieve in the short term, but blamed structural issues within the sector for a drop in competitiveness.
Miguel Chanco, the Economist Intelligence Unit’s lead analyst for ASEAN, said the “death of the TPP” would not necessarily translate into an increase in Cambodian garment exports.
“With or without the TPP, the fact is that wages in the country’s garment industry are rising rapidly, diminishing its cost competitiveness vis-a-vis TPP hopefuls like Vietnam,” Chanco said, via email.
Additionally, the Kingdom would have to improve worker productivity and training, as well as the supporting infrastructure, to stem an exodus of investment away from the sector, said Ken Loo, spokesman for the Garment Manufacturers Association in Cambodia.
However, William Conklin, country director for the labour advocacy group Solidarity Center, said with or without TPP, Vietnam was moving ahead with bringing its garment sector to the stringent standards of the trade deal.
“They’re still going through with it,” he said. “The government needs to see what changes make sense here and then have people invest in it.”