[PHNOM PENH POST]
THE US House of Representatives has renewed a trade law experts said
could have a substantial effect on Cambodia’s exports to the United
States, as well as the future of the Kingdom’s manufacturing sector.
The
Generalized System of Preferences (GSP) program waived tariffs on about
US$13 million of the Kingdom’s $2.3 billion in exports to the United
States in 2010, largely on more skill-intensive products.
The
number represents a roughly 225% increase since 2005, which is seen as a
sign Cambodia’s manufacturing industry is growing ever more
sophisticated.
While the GSP law still requires Senate approval
before it is passed, insiders have said it would have a significant
impact on the Kingdom as its economy develops.
“GSP has been only
a minor factor in US-Cambodian trade until quite recently,” Ed Gresser,
president of the Democratic Leadership Council, said via email.
“It
is likely to grow more important as Cambodia develops, diversifies and
begins to export things like jewellery, foods and small-scale
machinery.”
The GSP, originally approved by the US Congress in
1974, waives duties on certain exports from about 130 developing
countries. The waivers apply largely to skill-intensive goods such as
jewellery, electric wiring and wooden doors, but exclude the vast
majority of Cambodia’s garment exports.
The duty-free status the
Kingdom did enjoy, however, stopped late last year when the US Congress
adjourned without renewing the program. GSP now awaits a review in the
Senate, though a deadline for passage has not been set.
Cambodia
exported $1.29 billion in garments to the United States in the first
eight months of 2011, according to statistics from the Ministry of
Commerce, little of which would be eligible for duty-free importation
into the United States.
Bicycles, which Cambodia began exporting
in 2009, were the Kingdom’s biggest GSP product, with exports reaching
40,000 a year, Gresser said. Other duty-free exports from Cambodia
included mattresses and some craft products like baskets, he said.
The
program pushes Cambodian manufacturers toward higher-value production
in an industry sector almost wholly dependent on garments and textiles,
Chheng Kimlong, a lecturer of business and economics at the University
of Cambodia, said yesterday.
“We cannot rely on garments to
support the export industry forever,” he said. New tariffs on goods
after the expiration of GSP have worked against Cambodians hoping to
export to the United States, he added.
Cambodia was declared a
“least-developed beneficiary country” in 1997, qualifying it – in theory
– to export some 4,300 products duty-free to the United States, US
Embassy in Phnom Penh spokesman Sean McIntosh said via email.
“GPS
gives Cambodia a competitive edge in the US market,” he said, adding
that gold necklaces, textile headbands, plastic bags and some silk
products formerly enjoyed duty-free treatment under the GSP program.
Regionally,
GSP has become a major factor in trade with the United States. About 18
percent of Thai exports to the United States are GSP products, ranging
from rubber tyres to microwave ovens, the Democratic Leadership
Council’s Gresser said. GSP exports are also significant in the
Philippines and Indonesia, he added.
While the GSP program is
not highly controversial, it’s packaged with other bills likely to
generate debate on the Senate floor, Gresser said. Renewal of the GSP
program is linked to approval of free-trade agreements with South Korea,
Panama and Columbia.
The expiration of the GSP program costs US
importers $2 million per day in tariffs, according to a statement from
the Coalition for GSP.
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