Kingdom, WTO call on US to drop tariffs

[PHNOM PENH POST]

Both Cambodia and the World Trade Organisation this week called on the United States to follow China’s lead in promising zero-tariff treatment to Least Developed Countries.

Chinese President Hu Jintao, in a speech at the G20 summit in Cannes, France, on Friday, announced China would grant duty-free status to 97 per cent of its taxed imports from LDCs such as the Kingdom, provided they had diplomatic relations with China.

The move was designed to prompt among developed countries a similar agreement, which awaits the conclus-ion of the Doha Development Round of trade negotiations among WTO members, Hu said.

Cambodian officials responded positively to Hu’s sentiments, eager to lower trade barriers on the Kingdom’s narrow basket of exports.

“The only one that is still lagging behind is the US,” Minister of Commerce Cham Prasidh said at a presentat-ion on the WTO’s first review of Cambodian trade policy on Monday.

“So [Hu Jintao] is pushing President Obama … to reflect on what the US should do, because now even China can offer that,” he said, chiding the United States for falling short on a trade offer that China had agreed to without obligation.

Although the European Union, Canada and Japan have implemented similar tax preferences for LDCs, the US stalled the treatment after the collapse of the Doha negotiations in 2008.

Cham Prasidh specifically called on the United States to honour the agreement made six years ago in Hong Kong, which was to offer the same tax free status on 97 per cent of taxed imports from LDC countries.

Trade with the US in 2010 reached US$2.45 billion, according to the US Census Bureau, with Cambodia’s exports totalling $2.3 billion. Garments accounted for most of those exports.

Valentine Sendanyoye Rugwabiza, the WTO deputy director-general who spoke at the presentation at the Ministry of Commerce, said China was setting a clear example for other developing countries.

A US trade official that requested anonymity yesterday pushed back against the criticism, saying the world’s biggest economy would meet its obligations in the WTO Hong Kong Declaration.

“It is regrettable that the Doha negotiations are not moving forward at this time, but we are committed to working with others who are willing to do so to find new and creative ways to move ahead,” the official told the Post in an email.

Some experts cast doubt on the potential benefit for the Kingdom from the duty-free status granted by China.

China’s promise – of which details are expected to emerge at a ministerial conference in Geneva next month – could be redundant in terms of Cambodian exports, Edward Gresser, director of the Progressive Economy Project at the Global Works Foundation, said via email from Washington, DC.

Although the move may prove a valuable offer to China’s poorer neighbours, there is no guarantee that the promised duty-free items would include Cambodia’s main exports such as garments, he said.

“So you can’t really be sure how helpful the promise is until you actually see the tariff lines and match them against the light manufactures and agricultural products Cambodia can export.”

Gresser did agree that the United States should adopt an agreement that includes Cambodian and other LDC exports.

However, he said about 99.5 per cent of Cambodia’s trade with the United States in 2010 would not have qualified for duty-free status under a deal similar to the one presently on the table. The United States has generous trade policies with Haiti and African LDCs, and it is lobbying from these countries, as well as from domestic US producers, that has prevented the United States from adopting the agreement, Gresser said.

China’s recent commitment to lowering trade barriers for LDCs was a step the growing power was ready to take, he said.

“So I’d basically say that—assuming the best of the Chinese program—that China would be living up to a responsibility it ought to accept.”