Logo of Phnom Penh Post newspaper Phnom Penh Post - Congress holiday holds up MFN

Congress holiday holds up MFN

Congress holiday holds up MFN

AFTER clearing a major hurdle in the US Senate, Cambodia's bid for Most Favored Nation

(MFN) trading status has stalled again after the US Congress went on vacation last

week with the bill still stranded in joint committee.

Cambodia's lobbying effort in Washington DC attempted to convince the House of Representatives

to accept the Senate's version of MFN, but now that Congress is in recess, the final

bill will not reach US President Bill Clinton's desk until after the next legislative

session begins Sept. 4. With most details on the bill already ironed out and no threat

of a presidential veto, smooth passage into law is still expected.

"The Speaker of the House [Rep. Newt Gingrich] has reaffirmed that MFN for Cambodia

is a high priority for the House when it reconvenes in September," a US Embassy

official in Phnom Penh said.

Enabling significant reduction in tariffs on exports to the United States, MFN has

been doggedly pursued by the Royal Government for the last two years. The garment

industry, which accounts for the vast majority of Cambodian exports, will reap huge

benefits after the bill's passage, with tariffs reduced from over 100 percent to

about 10 percent, Minister of Commerce Cham Prasidh said.

After MFN is granted, Cambodia will set its sights on receiving Generalized System

of Preferences (GSP), an even sweeter trade agreement with the US enjoyed by most

Southeast Asian nations.

"GSP is our final goal," Prasidh said. "MFN is only the first door.

Now we will try to open the second."

Designed to give developing countries' products an advantage in the American market,

GSP is currently enjoyed by 136 countries. Every full member of the Association of

Southeast Asian Nations (ASEAN) with the exception of Singapore enjoys GSP status,

and one local analyst said Cambodian products will not be competitive in the US market

until the playing field in the region has been completely leveled.

"If the choice is between doing your investment in Thailand and doing your investment

in Cambodia, not having GSP is a tremendous disadvantage for Cambodia," said

Bama Athreya, the Asian-American Free Labor Institute representative in Cambodia.

Unlike MFN, GSP does have conditions attached to its approval. In order to be eligible,

a country must already have MFN and a per capita gross national product below $10,000

a year.

Certain labor rights - freedom to associate and form unions, the right to decent

wages and working conditions and outlawing forced and child labor-also must be implemented

by governments hoping for GSP approval.

"Cambodia needs investment, and Cambodia needs jobs..., but it is important

that the new investment benefits the entire country," Athreya said. "If

the wealth stays at the top, [new investment] could exacerbate the labor conditions

here."

All GSP labor conditions are covered in Cambodia's draft Labor Law, which is waiting

for legislators to return to session much like the MFN bill in the States. Although

the Labor Law is expected to pass as well, Athreya said its proper implementation

will be key to gaining GSP status.

"I think there will have to be social pressures to ensure implementation, "

she said. "But sure, there is a chance for implementing it."

Although MFN does not have any conditions attached to it, the Royal Government has

already felt some social pressure during the bill's passage through Congress. US

Sens. William Roth and Diane Feinstein submitted a non-binding resolution outlining

American concerns on Cambodia after the MFN bill cleared the Senate.

"The resolution we are introducing today is meant to send a parallel message-that

the US Senate remains deeply concerned about problems in Cambodia and will continue

to follow events in that country closely," Roth said in a July 29 speech to

Congress.

"While the United Nations-sponsored election of 1993 brought a brief period

of freedom and democratic improvement to Cambodia, recent developments on a variety

of fronts suggests that Cambodia's future remains precarious at best," Roth

said, specifically mentioning Prince Norodom Sirivudth's exile, Sam Rainsy's struggle

to form the KNP and the grenade attack at the BLDP's national convention last September.

"Corruption in Phnom Penh is rampant, and Cambodia has emerged as a major heroin

trafficking center in Asia. Finally, in contravention to the Cambodian Constitution,

the RCG has permitted deforestation and timber exploitation on such a massive scale

that the agricultural livelihoods of enormous numbers of Cambodians are now threatened,"

he concluded.

Any talk of attaching conditions to aid or MFN has provoked severe protest from the

Royal Government, and Prasidh did not hide his opposition to the resolution.

"It is a move to alleviate the concerns and fears of some of the senators. [Roth]

proposed this as a way out for them to approve MFN and voice their concerns,"

Prasidh said.

"I consider this a sanction against the government rather than an incentive

to do better. You cannot change everything overnight. It takes the United States

220 years to establish a true democracy. We cannot do everything in one or two years,"

he said. "When people are hungry, they do not listen. We want to provide food,

shelter and education first. These are our priorities."

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