Newspaper article The Christian Science Monitor

Cambodia's Garment Mills Face Impasse

Newspaper article The Christian Science Monitor

Cambodia's Garment Mills Face Impasse

Article excerpt

Not much gets made in Cambodia except clothes.

Garments account for an astonishing 80 percent of this impoverished Southeast Asian nation's exports, and the World Bank estimates that the industry, which was worth $2.5 billion last year, helps support - directly or indirectly - about 1 in 5 Cambodians, according to government estimates.

US trade policy essentially created Cambodia's garment industry, thanks to a 1999 bilateral deal that granted Cambodia preferential access to US markets in exchange for guarantees on labor standards. Now some argue that US trade policy - in the form of high tariffs - is helping to undo it.

The irony is especially acute because many observers now look to Cambodia as a model of labor-friendly manufacturing, and they say that if Cambodia fails, it will mean the death not just of one industry in one nation, but of the dream of ethical manufacturing itself.

"There was a door for small countries like Cambodia," says Cambodia's minister of commerce, Cham Prasidh. "Now there is no more door. Those who can produce cheaper and faster will sell more."

And that means China.

Shifts in the global garment industry are favoring more developed nations, like China, over the world's poorest. US quotas that benefited Cambodia have expired - or will soon - and the question Cambodia now faces is how to compete with nations that have better infrastructure, more qualified labor forces, deeper supply chains, faster productivity growth, and cheaper electricity.

One easy answer for Cambodia would be to have its major trading partner - the United States, which accounts for nearly two-thirds of Cambodia's garment exports - eliminate its tariffs. Cambodian officials have been lobbying Congress since 2004 to cut those tariffs, which last year averaged nearly 16 percent. China paid, on average, just over 3 percent on its top US exports.

Mr. Cham led a delegation to Washington in July to drum up support in Congress for the TRADE Act, a bipartisan bill introduced in the Senate in February that would slash tariffs on goods from 14 poor Asian nations, including Cambodia.

The US already provides generous trade benefits to many of the world's poorest countries through regional agreements in Africa and the Caribbean, and the EU and Canada already grant Cambodia access to their markets nearly duty- and quota-free.

Cambodian officials are hoping that later this month, House Democrats will introduce legislation that would exempt all of the world's poorest nations, including Cambodia, from tariffs.

Roland Eng, Cambodia's former ambassador to the US, maintains that legislation favoring poor countries won't affect the level of US imports, merely the pattern. …

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