Politics Likely To ‘Thwart’ Duty-Free Access to US Markets

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.

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