Industry Urges Trade Benefits for Cambodia

Tuesday December 01, 2009
By Liza Casabona with contributions from Kristi Ellis
WWD Business

WASHINGTON — Apparel brands, retailers and Cambodian officials are urging duty free benefits for Cambodia, the eighth-largest apparel supplier to the U.S., arguing the move would help the country stay competitive at a crucial time.

During a program last month marking the 10th anniversary of the Better Factories Cambodia project, an initiative to improve labor compliance in the Cambodian garment industry, speakers said the competitiveness of the country’s apparel industry is threatened by the economic environment as well as the lifting of quotas last year on garment imports from China and the conclusion of the Vietnam monitoring program, also last year.

The quotas and the monitoring program “gave Cambodia room to breathe” as the country built its garment sector, said Cham Prasidh, senior minister and minister of commerce. However, the end of those programs “started an onslaught.” Dozens of factories have closed and more than 50,000 jobs have been lost as a result of production shifts to other countries, Prasidh said.

Apparel imports from Cambodia dropped 23 percent to $1.41 billion this year, according to the most recent statistics from the U.S. Commerce Department.

A significant portion of the volume lost by Cambodia has shifted to other countries, including many that “do not share Cambodia’s commitment to improving respect for workers’ rights,” said Michael Kobori, vice president of supply chain social and environmental sustainability for Levi Strauss & Co.

Kobori urged apparel buyers to reward responsible sourcing behavior by supporting “trade preference legislation that provides further incentive to countries like Cambodia that are committed to improving workers’ rights.”

A group of apparel brands, retailers and an entertainment conglomerate called on congressional leaders last month to treat Cambodia as a “special case” and grant it duty free status immediately.

Gap Inc., J.C. Penney Co. Inc., Jones Apparel Group Inc., Levi Strauss & Co., Nike Inc., American Eagle Outfitters Inc., Columbia Sportswear Co., Phillips-Van Heusen Corp. and The Walt Disney Co., which all have significant investments in production in Cambodia, urged U.S. lawmakers to help the country halt the decline in imports and reverse the loss of tens of thousands of jobs in the apparel sector.

Congress is unlikely to grant Cambodia duty free status this year, but could do so next year in the context of a broader reform and expansion of trade preference programs.