Cambodia Wants US To Review Trade Deal

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Cambodia has suggested that the US review its Generalised System of Preference for Duty-Free and Quota Free (GSP-DFQF), granted to the Kingdom as a less developed country, in order for its exports to have better preferential access to the North American market.

cambodia us trade review
GMAC told US Trade Representative officials that the working conditions for garment workers has improved. KHMER TIMES / CHOR SOKUNTHEA

The request was made during the meeting between Cambodia’s secretary of state of the Ministry of Commerce Ok Boung and Marta Prado, director for Southeast Asia and the Pacific at the United States Trade Representative last Thursday at the Ministry.

Accompanying Prado was Desiree Ganz, director of labour affairs at the executive office of the President – US Trade Representative and US embassy staff.

Boung said that according to the spirit of the World Trade Organisation’s 2005 Joint Declaration of the Ministerial Conference in Hong Kong, the US government promised to give LDCs – including Cambodia – DFQF to at least 97 percent of products originating from their countries. But by 2017, he said, Cambodia only got duty free and quota free status from the US for only 82.6 percent of its products.

Boung said that many of developed countries had already fulfilled the obligations of each country, for example, Australia, New Zealand, Norway and Switzerland providing 100 percent tax preferences, the European Union granting 99 percent under the Everything But Arms (EBA), Canada (98.6 percent), Japan (97.9 percent) and China (97 percent).

“The US has been granting the GSP to Cambodia roughly around 82.6 percent which most of the preference doesn’t allow on the significant potential products that Cambodia could produce and export to the United States,” he added in a ministry press release. “Instead, most of Cambodia’s main potential products were charged duty.”

The meeting with the high-ranking US Trade Representative officials came after Cambodia led a delegation to the United States to attend the fourth Joint Committee on Trade and Investment Framework Agreement (TIFA) in Washington recently. At the summit, Cambodia and the US agreed to create a small team of specialists to accelerate the implementation of the TIFA agreement.

Boung requested that the United States should consider to offer duty free preference to some of Cambodia’s main commodities, including luggage, leather goods and other products under a preferential system to ensure that Cambodia will truly benefit from exports to the US. While the DFQF pledge has largely been fulfilled for the LDCs in Africa and the Americas, the US falls far short of meeting that goal for the apparel-exporters among the Asian LDCs.

Kaing Monika, deputy secretary-general of Garment Manufacturers Association in Cambodia (GMAC) confirmed that the association also met the US trade officials last week. He said GMAC supported the Ministry of Commerce in its request to the US to review the GSP for Cambodia “in order to allow this poor country got more market access”.

“We appreciate they [US trade officials] met with all stakeholders to have a complete picture of Cambodia. GMAC supports the ministry’s proposal and would like to appeal the same to the US government,” he said. “Serious consideration should be given to Cambodia, as the country has performed well in improving the conditions of garment workers. Workers are now paid decent salaries, allowing many families to get out of poverty.”

Monika said the improvement of working conditions for factory workers was one of the main criteria set by the US when it comes to giving preferential trade treatment.

During the meeting with Boung, Prado asked Cambodia to review the items that Cambodia currently enjoys preferential treatment under the GSP-DFGF. At the same time, she also requested the Ministry of Commerce to take part in a further review of the draft of the minimum wage law and the draft law on resolving disputes under the jurisdiction of the Ministry of Labour.

According to the general department of customs and excise, exports of Cambodia’s garment and footwear sector continued to increase by 7.2 per cent to $7.3 billion in 2016 from $6.8 billion in 2015.

This article was originally published in the Khmer Times.

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