The American Chamber of Commerce in Cambodia (Amcham Cambodia) yesterday condemned the introduction of the ‘Cambodia Trade Act of 2019’ in the US Congress, arguing its implementation will be detrimental to the livelihood of millions of Cambodians and to American businesses.
For in depth analysis of Cambodian Business, visit Capital Cambodia
Last month Congressmen Alan Lowenthal and Steve Chabot introduced the Cambodia Trade Act, which seeks to initiate a review of Cambodia’s status under the Generalized System of Preferences (GSP) over perceived democratic and human right setbacks in the Kingdom.
The bill would allow the US to withdraw, suspend or limit trade privileges Cambodia enjoys.
Senators Ted Cruz and Chris Coons introduced a similar legislation to the Senate in early January.
In a letter addressed to US lawmakers, Amcham said the introduction of the bill contradicted the spirit of the 1974 Trade Act which sought to provide opportunities for many of the world’s poorest countries to use trade to grow their economies and climb out of poverty.
“We believe the use of the GSP review process as a means for sending a political message, which is unrelated to the spirit of the 1974 Trade Act, will drastically decrease the goodwill and progress this system has created among the ordinary Cambodian citizen,” it said.
“We urge our lawmakers to carefully consider this step which would further distance our nations and weaken the regional strategic interests of Americans,” the letter, signed by Allen Dodgson Tan, the organisation’s chairman, and board members, said.
Though acknowledging the desire or US lawmakers to pressure the Cambodia government for domestic political actions viewed as unacceptable, Amcham said withdrawing GSP benefits will be “counterproductive”.
Amcham said that through the GSP policy, the US has contributed directly to the livelihoods of tens of thousands of low-income Cambodians, each of whom uses their salaries to feed another five family members. The American businesses whose goods are produced in these factories also benefit greatly.
Moreover, Amcham characterised Cambodia-US trade as “critically important” to the bilateral relationship and said the bill would damage the long-term interests of the US.
“We sincerely hope our lawmakers will reconsider moving forward with this action,” it said.
Cambodia is one of 120 nations included in the US’s GSP programme, which was established in 1974 with the aim of promoting economic growth in the developing world.
In July 2016, Cambodia was granted duty-free benefits for exports of travel goods like luggage, backpacks, handbags, and wallets to the United States under the GSP scheme.
Despite what many consider deteriorating diplomatic ties, Cambodian exports to the United States, the world’s largest economy, increased by 25 percent last year, reaching $3.82 billion.
US exports to Cambodia also increased considerably, amounting to $446.6 million in 2018 or an 11 percent increase, data from the US Trade Office shows.
Long Kemvichet, spokesman at the Ministry of Commerce, told Khmer Times on Monday that the Kingdom’s access to GSP for travel goods was the main contributor to the growth in exports to the US last year.
According to Kaing Monika, deputy secretary general for the Garment Manufacturers Association in Cambodia (GMAC), Cambodian exports to the US are not only growing but also diversifying.
During the first eleven months of 2018, total Cambodian exports to the US under the GSP scheme were valued at $675 million.
Exports of goods other than travel goods under the GSP amounted to $321 million during that period, with plastic products exports valued at $133 million, wood products at $78 million, and furniture at $51 million.
According to the letter from Amcham Cambodia, the primary effects of GSP removal will be felt by the factory workers and their families whose livelihoods depend on this trade. At the same time, American businesses will suffer from a perceived lack of stability in the Cambodian economy and further degradation of the trade relationship between the two nations.
“With regards to the official eligibility criteria for GSP, we believe Cambodia’s compliance remains unchanged since GSP was first granted. Worker’s rights and working conditions have made significant progress over the past decade and there continues to be ongoing reform,” it said.
Child labor, an area critical for eligibility and for American business ethical standards, is an excellent example where the International Labor Organization reports a significant decrease to less than ten cases in 2018 (down from 74 cases in 2013), the chamber added.
The letter ends with an invitation to Congressmen Alan Lowenthal and Steve Chabot and Senators Ted Cruz and Chris Coons to visit Cambodia and experience the situation on the ground.