Cambodia was granted duty-free benefits on Friday for exports of travel goods like luggage, backpacks, handbags and wallets to the United States under the Generalised System of Preferences (GSP) for least developed countries in a long-awaited decision by Washington.
US ambassador to Cambodia William Heidt said that this was the largest expansion for Cambodian products into the US market in 20 years since both the US and Cambodia started trading bilaterally in 1995.
“In total 122 countries worldwide participated in the GSP. However, the decision was announced last week and duty free access [for travel goods] is for 43 countries including Cambodia,” he told the Khmer Times.
The American Apparel and Footwear Association (AAFA), however, said it was disappointed with Washington’s decision in not wanting to grant travel goods benefits to all other GSP beneficiary developing countries like the Philippines, Thailand, Pakistan, Indonesia and Sri Lanka.
“These countries are at a crucial point in development,” said the AAFA in a statement.
Heidt said travel goods from Cambodia like luggage, suitcases, backpacks, handbags and wallets are exported to the US with a 4.5% to 20% levy on duties. However, he said, from July 1 zero duties was levied on these travel goods exports from Cambodia.
The US ambassador cautioned that Cambodia now must respect workers’ rights and provide safe working environments in factories as part of the bargain in receiving duty free access for its travel goods to the US under the GSP.
Van Sou Ieng, chairman of Garment Manufacturers Association of Cambodia (GMAC) said at a press conference on Wednesday that GMAC had filed a petition last year to the US embassy in Cambodia for zero duties to be levied on Cambodian travel goods exports to the US.
However, he said, it was only this month that the petition was granted after Washington completed its assessment of the Cambodian economy and the flow-on benefits to the country after travel goods exports were given duty free status under the GSP.
“We now have 15 factories in Cambodia producing travel goods and these factories are mostly South Korean, Hong Kong and Chinese owned,” said Sou Ieng.
“This duty free status will help boost Cambodia’s competitiveness on travel goods exports, draw more foreign investment and provide about 100,000 new jobs for Cambodians,” he added.
Commerce Minister Pan Sorasak welcomed the news from Washington and said this was a good sign in bilateral trade relations between Cambodia and the US.
“Bilateral trade between the US and Cambodia is increasing on a year-by-year basis. In the first quarter alone this year, Cambodia’s exports to the US amounted to $706 million,” said Sorasak.
He added that there was no specific time limit for Cambodia’s duty free status for travel goods under the GSP. However, he pointed out Cambodia could lose that status in the GSP if it graduates from its least developing country status.
Last year, Cambodia’s exports of travel goods to the US amounted to $48.3 million. It is ranked number 14 among 25 countries in the world exporting travel goods to the US. The top ranking is China, followed by Vietnam, Italy, France, Philippines, India, Mexico, India, Indonesia and Thailand.