Cambodia stands to benefit from the ongoing trade spat between the United States and China, with exports of Cambodian travel goods particularly likely to increase as a result of the dispute, according to the Garment Manufacturers Association of Cambodia.
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The US and China have been involved in a tit-for-tat trade war since early last month, with the latest move from Washington being to impose 25 percent duties on $16 billion worth of Chinese imports.
Affected products include car tires, furniture, wood products, as well as handbags and suitcases.
Kaing Monika, GMAC’s deputy secretary general, said the hike in tariffs will impact investor’s confidence in China as a manufacturing base, arguing that many firms will relocate to other countries in the region with cheap labour forces, including Cambodia.
“You should see even further interest in sourcing travel goods from Cambodia now. I predict that more and more companies that produce travel goods will choose to exit China, which could, of course, mean a boost for our industry,” Mr Monika said, adding that China still exports almost $5 billion to the US in travel goods.
“There is now huge potential for our travel goods manufacturing industry. With the trade war between the US and China in full swing, Cambodia-made goods are set to benefit further when orders move away from China to avoid heavy duties by the Trump administration,” he said.
Mr Monika said the rising cost of labour and a more stringent enforcement of environmental laws will continue to prompt companies now based in China to relocate elsewhere, and that “Cambodia stands to benefit from this.”
“The question is whether Cambodia would be the first choice, the second, or the next in line… Peace and stability is important but other factors also count when it come to the issue of national competitiveness,” he added.
Mr Monika said the US has always been one of Cambodia’s biggest export markets for garments and shoes, second only to the combined economies of the countries that make up the European Union.
Cambodian garments and shoes — the Kingdom’s major exports — are not yet included into the US’s Generalised System of Preferences (GSP), a scheme that since 1974 grants least developed nations duty-free access to the US market.
Mr Monika said GMAC is lobbying the American government to include footwear products into the GSP scheme.
“With the support of our legal firm in Washington, we are lobbying the US Congress to give us GSP for footwear,” he said, explaining that 60 of GMAC’s members manufacture shoes.
“The extension of GSP to footwear won’t happen very soon, but there are some reasons to hope for it in the next round of reviews by the US Congress,” he added.
On July 2016, Cambodia-made travel goods were included in the US’s GSP scheme, an achievement that Mr Monika said followed months of hard work from GMAC and the Cambodian government. Since then “investors in the sector and orders have been pouring in,” he said.
According to the Ministry of Commerce, exports of garment and footwear products increased by 9.3 percent during the first half of the year, reaching $3.7 billion. Shipments to the US rose by nearly 11 percent and were worth $858 million. The US and the EU together accounted for 72 percent of the country’s total garments and footwear exports.