Trade Holds the Key to the Renewal of US-Cambodia Ties

Longstanding differences aside, the U.S. and Cambodia both have good reasons to strengthen their trade relationship.

In December, the United States’ Generalized System of Preferences (GSP) expired for Cambodia and a decision on the extension is pending. The expiration means that Cambodia’s exports to the U.S. are now subject to “most favored nation” status tariffs, which reportedly range from 12 to 33 percent. Under the GSP, in comparison, Cambodia enjoyed duty-free on travel goods such as luggage, backpacks, handbags, and wallets – items that previously faced import duties of up to 20 percent – as well as preferential import taxes on other goods.

GSP renewal is conditioned on a range of criteria, including labor standards, human rights, and the rule of law, as highlighted by the recent call by U.S. senators Ted Cruz and Chris Coon for Congress to review Cambodia’s GSP eligibility. However, the program is also motivated by a desire to foster economic growth in developing countries, as well as to enhance overseas American business competitiveness through reduced import tariffs.

Although the ongoing delay of GSP authorization to Cambodia has coincided with the perceived deterioration of the country’s human rights situation, the fact that the suspension has also affected 119 other countries indicates that factors causing the delay involves something more than just the state of Cambodia’s democracy.

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