Commerce Minister Cham Prasidh warned Friday that an impending ceiling on some garment exports to the US could have severe consequences for the country’s burgeoning textile industry.
Speaking to reporters following a meeting with garment manufacturers, Cham Prasidh said that a quota on cotton knit blouses, T-shirts and sweaters could cause the cancellation of up to 140 proposed garment factories.
“Our question will be, what will happen to the workers and the new factories?” Cham Prasidh said.
He also warned that the practise of importing semi-finished garments—which may be partly responsible for a huge surge in textile exports—could be brought to an end.
The US late last month called for a quota to be imposed on the three categories of garments, following a sharp increase in exports that, according to a US State Department notice, “threatens to cause damage” to the US domestic manufacturing sector.
Cambodian cotton sweater exports surged from zero in 1996 to 53,001 dozen in the 12-month period from July 1997 to July 1998, according to documents released by the Commerce Ministry on Friday.
Exports of shirts rose from 2,568 dozen in 1996 to more than 1.74 million dozen July 1997 and July 1998.
Cambodian government officials have said the US requires quotas when exports from one country surpass a 1 percent share of total imports in these categories, which Cambodia did this year.
Cambodia has been given until Dec 21 to negotiate a quota with the US. If no figure can be agreed upon, the US will impose a quota of 1.7 million dozen for shirts and 53,001 dozen for sweaters, according to the State Department letter.
A quota of 1.2 million dozen on cotton gloves, imposed last year, will be maintained because of the continuing high level of exports, according to the State Department letter.
Cham Prasidh said Friday he will lead a delegation to Washington next week.
The Garment Manufacturers Association of Cambodia will foot the bill for the $100,000 trip, including hiring the services of a US lobbying firm, Sandler, Travis & Rosenberg, according to a letter from Cham Prasidh to the two prime ministers.
Cham Prasidh said he hopes to negotiate a high quota that will take into account future production by the 140 proposed garment factories.
“This is the basis for which we hope the US will allow Cambodia a higher quota, because we want to improve our industrial sector,” he said.
“I think if the US limits quotas on [Cambodia’s] exports, it will hurt the Cambodian economy and workers.”
Garment manufacturers have also warned that quotas in these three categories, which 70 percent of factories produce, would deter future investors.
The current absence of quotas coupled with special trade privileges such as Most Favored Nation status has made Cambodia a particularly attractive place to set up garment factories.
Along with the proliferation of garment factories, Cham Prasidh said the import of partially finished garments for completion in Cambodia is partly responsible for boosting export levels.
Until now, the Commerce Ministry has granted permission to some factories to manufacture complicated parts of garments abroad and then complete them in Cambodia in order to increase production, Cham Prasidh said.
Depending on the size of quota negotiated, Cambodia may end that practice, he said.
