A new US-Vietnam trade agreement may hurt Cambodia in the years to come as more companies move to Vietnam, a leading garment manufacturer said.
The bill to normalize trade relations between the US and Vietnam passed the US Senate on Oct 3. It does not include details on textile exports, so Cambodia has a brief respite from its effects, said Van Sou Ieng, chairman of the Garment Manufacturers Association of Cambodia.
“But soon it will come,” he said, adding that if Vietnam is allowed to export textiles to the US free of a quota system, “the effect will be huge on Cambodia.”
Cambodian factories currently receive a certain percentage of the US garment market under a quota system negotiated every year. The US looks at such factors as labor rights and working conditions before deciding on the quota.
If a similar quota is not imposed on manufacturers in Vietnam and its companies are given more access to the US export market, Cambodia will lose its greatest advantage as a factory base, Van Sou Ieng said.
Vietnam’s advantages include a more efficient infrastructure and a more experienced labor force. Some manufacturers have already scaled down production here in anticipation of the trade agreement, Van Sou Ieng said.
“It’s going to be tough,” he said.
Cambodia’s garment manufacturers already have been hit by a downturn in the global economy, punctuated by the Sept 11 terrorist attacks in the US.
Businessmen say they are concerned both by the US-Vietnam trade agreement and China’s entry into the World Trade Organization.
Sok Siphana, secretary of state for the Ministry of Commerce, said the agreement with Vietnam likely will include a quota based on labor conditions, which would reduce any advantage Vietnam would have over Cambodia.
Improving Cambodia’s infrastructure and export mechanisms, along with finding niche markets for Cambodian goods, will help keep Cambodia competitive, he said.
