Logo of Phnom Penh Post newspaper Phnom Penh Post - US sway ignored but not gone

US sway ignored but not gone

US sway ignored but not gone

The message has been sent repeatedly; perhaps no more clearly than through the English language banners hung in front of the ASEAN summit in Phnom Penh last week: “LONG LIVE THE PEOPLE’S REPUBLIC OF CHINA!”

Regional analysts and observers have been quick to write off US influence in developing Asian countries such as Cambodia because it can no longer compete with the financial might of China.

But while Chinese loans can quickly fill gaps in Cambodia’s capital base for infrastructure development, it is buyers in markets such as the EU and US who hold the key to one of the backbones of Cambodia’s severely underdiversified economy –  garment manufacturing.

Key figures in that industry such as Dave Welsh, country representative of the American Center for International Labor Solidarity, had been hoping to meet with US President Barack Obama during his brief trip to the Kingdom last week, but no such talks ever eventuated.

Welsh told the Post he was hoping to use the opportunity to impress upon President Obama the unique leverage his country could still execute to sway the agenda on rights issues through preferential or restrictive trade terms.

“The EU and the US markets still rule the roost in terms of being the biggest markets by far. And you still have a lot of leverage through them,” he said.

“That’s what we put to the brands last month in Vietnam – regardless of Chinese influence the markets are still master in terms of setting agendas, they still have the leverage and the largest industry still remains the garment market in the EU and the  States.”

Despite the slowdown in garment purchases following the global financial crisis, the industry here is booming, with the Garment Manufacturers Association of Cambodia reporting that exports to the EU grew nearly 70 per cent in 2011 alone.

The biggest factor in this, said GMAC Secretary-General Ken Loo in an October 2012 presentation of market trends and mobility, was a new Rule of Origin introduced into the EU’s Generalised Scheme of Preferences in January 2011 that “conferred duty-free access to garments made in Cambodia.”

The Kingdom has been pressing the US for similar preferences but problems with standards of justice, governance and human rights as well as the “autocratic tendencies of Prime Minister Hun Sen”, as a July 2007 report filed by the Congressional Research Service put it, have hampered progress.

Maeve Galvin, a consultant with Better Factories Cambodia, said preference deals aside, Cambodia’s low labour costs and high productivity ensured buyers remained interested in its manufacturers.

“We’ve recorded maybe 70 new factories opening in this year alone. The majority ownership of the factories are Chinese. That’s also a factor. I think Cambodia’s an attractive destination for buyers for many reasons,” she said.

Cambodian garments and textiles for the first half of 2012 accounted for $1.9 billion out of a total of $2.5 billion of exports from all sectors, with $938 million – or nearly 50 per cent – coming from the US, figures from the Ministry of Commerce show provided by an external source show. China is  not a major market for Cambodian garments.

The garment and textile sector grew 11.27 per cent compared to the same period in 2011, the same figures show, with a slight decline registered by buyers in the US.

In short, business is booming in the Cambodian garment sector, representing some 76 per cent of exports.

But there is an emerging tiger on the horizon, Myanmar, also known as Burma, which has been making the overtures the US wants to see and which some worry could eventually threaten the Kingdom’s market share.

“[The Cambodian garment sector] booming now. [But] I’d view that as a little bit of a red herring, and I’d say that the concern down the road is the competition from the emerging garment factory market in Burma,” Welsh said.

In a summary of Obama’s bilateral meeting with Prime Minister Hun Sen last week, US Deputy National Security Adviser Ben Rhodes made it clear that countries that appeased Washington on certain rights issues would enjoy benefits, hinting Myanmar was on the right track while Cambodia lagged behind.

Ken Loo said yesterday that he didn’t believe that the garment industry in Myanmar would pose a threat to Cambodian manufacturers anytime soon but allowed that a preferential trade agreement with the US would be, regardless, “very, very important”.

“The long and short is we have been trying to get preferential terms from the US even before the [free] quotas ended in 2004, because we tried to pre-empt that,” he said.

To contact the reporter on this story: David Boyle at [email protected]


  • Kem Sokha’s daughters slam ‘liar’ Sam Rainsy over ‘smears’

    The daughters of former opposition leader Kem Sokha hit out at Sam Rainsy on Tuesday, accusing the newly nominated “acting president” of the Cambodia National Rescue Party (CNRP) of leading a “smear campaign” against their father and “repeatedly lying to the public”. The Supreme Court-dissolved

  • Phnom Penh authorities ban march for Human Rights Day

    Phnom Penh authorities have banned a planned march as local NGOs and workers’ unions gear up to celebrate the 70th anniversary of the signing of the Universal Declaration of Human Rights on Monday, with a youth group leader saying they would march nonetheless. The UN

  • US Embassy urges reconciliation

    The US has urged Cambodia to restore the independence of the media, drop charges against Kem Sokha and other political prisoners, and end the prohibition of political activity by opposition parties. However, senior government officials see the request, issued by US embassy spokesman Arend C

  • Government deports 235 Chinese scammers

    THE Immigration Department of the Ministry of Interior on Thursday deported 235 Chinese nationals, 35 of whom were female, via the Phnom Penh International Airport for their part in a Voice over Internet Protocol (VoIP) online money extortion scam. The deportees were arrested on November 26 over the