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Missed WTO deadline leaves garment industry exposed

Missed WTO deadline leaves garment industry exposed

The ratification of Cambodia's membership to the World Trade Organization (WTO)

is unlikely to happen before the garment industry preferential US quota is

removed on January 1, 2005, said opposition lawmaker Son Chhay.

Even if

a National Assembly was convened shortly, there would be insufficient time for

members to adequately consider the challenging issues of full WTO

membership.

"I think that lawmakers need time to study the WTO issues

before providing a ratification," said Chhay.

"We don't think the WTO is

bad, but we oppose the government because of its lack of political will to

implement what it has promised," said Chhay, a member of the Sam Rainsy Party,

referring to a lack of enforcement of previous reforms.

Chhay called on

Cambodian People's Party government officials to distribute more information to

the parliamentarians.

Chhim Narith, under-secretary of State of the

Ministry of Commerce and a member of Funcinpec, said that a lack of human

resources has hampered the government's ability to work with the WTO

issues.

"We are now under the pressure of political deadlock and we don't

manage an institution to deal with the private sectors and to build a consistent

legal system to speed up economic reforms to meet WTO requirements," said

Narith.

Requests for information regarding the WTO are generally

referred to Cham Prasidh, Minister of Commerce or to his secretary of state and

WTO negotiator, Sok Siphana.

Siphana would not comment to the Post.

But Prime Minister Hun Sen told reporters on May 14 that Cambodia was

ready to join the international market, despite the challenges.

"We have

many jobs to do and our competitiveness with the foreign market is not an easy

work," said Hun Sen.

Hun Sen's comments came the same day as a conference

to discuss Cambodia's accession to the WTO organized by The Asia Foundation

(TAF) and attended by government legal and commercials experts, international

experts, representatives from the private sector and NGOs.

A report

released by TAF at the conference said the prospects for significant and

sustainable benefits from the WTO are limited by the need for strong

institutional reforms to enhance economic governance.

The WTO membership

is expected to help Cambodia attract foreign investment and increase its

competitiveness in the international market and is seen by the donor community

as a way to accelerate the pace of important economic, democratic and legal

reforms, said the TAF report.

Franck Wiebe, chief economist at the Asia

Foundation, said joining the WTO will provide new incentives to invest in human

resources and increase Cambodia's economic competitiveness.

Sok Hack,

Director of the Economic Institute of Cambodia (EIC), told the Post on May 14

that economic integration might be very beneficial for Cambodia, but it also

posed a great challenge.

"We have many potential resources to boost

industrial development, but the government must have a strong political will to

make reforms to public administration, because everyone knows the public

administration is corrupted," Sok Hach said.

Mark Storella, chargé

d'affaires at the US Embassy in Phnom Penh, said in his speech on May 14 that

business activities based on corruption and nepotism cannot compete in today's

global economy.

Van Sou Ieng, the president of the Garment Manufacturers

Association in Cambodia, said informal costs hurt companies' budgets and

estimated that 200 garment factories pay a total of $20 million every year for

what he termed "bureaucratic expenses".

"The problem of corruption and

bureaucracy in government will make for difficulty in competition in the field

of the garment industry in Cambodia when the quota is phased out by the end of

2004," he said.

Ieng called on the government to stop the numerous and

costly inspections that slow down the transportation of goods.

Cambodia

has committed itself to a raft of legal reforms covering a wide range of

business activities that are scheduled to be approved over the next two years.

However Son Chhay said there had been little progress on the

anti-corruption agenda and many other necessary reforms dealing with commerce,

tax and investment law had not occurred.

Chhay also questioned whether a

more even business playing field would benefit a small global player such as

Cambodia, highlighting last year's trade with China, which saw $400 million

worth of imports and only $20 million in exports.

There is no limit to

the number of times countries can request an extension to their schedule for

ratifying WTO membership, WTO officials said during a journalist training course

in Geneva last month.

Cambodia became the first Least Developed Country

(LCD) to be admitted to the WTO in September last year. The deadline for

ratification by the National Assembly was March 10, 2004.

Cambodia was

granted an extension until September 30, 2004.

In the meantime Nepal,

which completed WTO negotiations after Cambodia, became the first LDC to join

the global trade body on April 23.

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