Cambodia garment manufacturers are unlikely to win duty-free access to US markets this year, and need to find other ways to compete against China and other garment-producing nations, a US lobbyist for textile imports told a meeting of factory owners in Phnom Penh.
Other speakers at the USAID-funded conference on productivity emphasized the need for local garment factories to reduce inefficiencies that drive up the cost of doing business.
Brenda Jacobs, a Washington-based attorney for the US Association of Importers of Textiles and Apparel, said election-year politics in the US will likely dash the hopes of Cambodia to win the trade concession.
“The [US] domestic textile lobby remains very strong,” said Jacobs. “Cambodia may find itself thwarted.” The US mid-term congressional elections are to be held in November.
Currently, garment buyers must pay average duties of 18 percent on garments entering the US from Cambodia. Garments coming from sub-Saharan African countries are not charged duties as part of an assistance program, and Cambodia hoped to join the list of poor countries receiving that competitive advantage.
After the 2004 tsunami devastated Asian nations, US lawmakers introduced a bill to grant duty-free access to tsunami victims and a few other countries, including Cambodia. Local manufacturers have sent repeated missions to the US hoping to sway Congress and earn another concession.
Jacobs, whose organization is the largest association of garment and textile importers in the US, said Congress is unlikely to act on the tsunami legislation before it adjourns in December.
Cambodia’s best chance for duty-free access in the future lies in banding together with other developing nations to push for a large-scale expansion of US duty-free access.
Currently, there are competing bills in Congress seeking trade preferences for Haiti, South American nations and Africa.
“Yes, they are the competition…but you could all grow together,” she said.
That option is more attractive than a bilateral Free Trade Agreement with the US. A US FTA would require that all raw fabrics used in garments either come from Cambodia or the US. And Cambodia imports nearly all fabric from third countries like China.
Also at the conference, the USAID-funded Garment Industry Productivity Center presented the results of a year spent examining ways to improve local factory efficiency.
Three factories completed efficiency consultations with international experts, and experienced between 5 percent and 18 percent productivity gains, said Jane O’Dell, who heads the center.
O’Dell said that in 2007, the center plans to give efficiency consultations to 26 factories.
Another expert Heinz Reich, said that one USAID survey found that some 80 percent of Cambodian factories could use significant efficiency improvements.
He said most factories could improve efficiency 20 percent to 25 percent by re-engineering workstations and balancing production lines, among other techniques
Local industry representatives were skeptical. Garment Manufacturers Association Chairman Vann Sou Ieng said only newer factories are likely to benefit from such improved techniques.
GMAC Secretary-General Ken Loo said that workers in Cambodia are often resistant to change.
Li Kam Shing, a manager at the Potamon garment factory, said that Chinese supervisors are also resistant to new methods.