The Cambodia Chamber of Commerce is looking to further maximize on the current record trade to the United States requesting the Kingdom’s largest buyer reinstate the currently expired Generalized System of Preferences.
Cambodia’s GSP status expired in December last year, with US lawmakers yet to reinstate the trade benefits means that Cambodia’s exports currently subject to “most favored nation” status tariffs.
Under the GSP, Cambodia was allowed duty-free on travel goods such as luggage, backpacks, handbags, and wallets – items that previously faced import duties of up around 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. The delay in renewal is estimated to have resulted in extra taxed exports of around $1 billion.
Driving more trade between Cambodia and the United States
Cambodia Chamber of Commerce Vice-President Oknha Lim Heng told Cambodia Investment Review the recent delegation led by Neak Oknha Kith Meng to Washington discussed reinstating the allowances explaining the GSP is a driving force between the two countries to create more trade gates.
“In order to continue trade and expand trade, the Cambodian Chamber of Commerce has requested that the United States continue to provide more GSP to Cambodia in order to strengthen trade and economic ties between the two countries,” he said.
“This is a new success for Cambodia in discussing the expansion of trade and investment markets with the United States, because the volume of Cambodia’s trade to the United States is high,” Lim Heng said.
The Cambodian Chamber of Commerce has confirmed its American counterpart the US Chamber of Commerce had accepted all three of its proposals and agreed to publicize the country’s potential to American investors and business owners.
To read more about the Cambodia Chamber of Commerce proposals click here.
Lim Heng, Vice President of the Cambodian Chamber of Commerce, said that this increase in trade volume is a good sign of the implementation of bilateral economic cooperation between Cambodia and the United States.
He said the increase was due to political instability in some regional countries and the COVID-19 crisis in factories in those countries, which led to orders being diverted to Cambodia.
Cambodian factories record exports to US
Cambodia’s exports to the United States from January to December 2021 were worth $8.74 billion, an increase of 33 percent as Cambodia’s imports from the United States were worth $413 million, up 20 percent.
Most of the goods exported from Cambodia to the US market are textiles, garments, clothing, shoes and travel bags. The main items that Cambodia imports from the United States are electronics, vehicles, machinery, pharmaceuticals and medical equipment.
Lim Heng said that the trade war between the United States and China is also part of the reason for some factories to install in Cambodia to produce and export to the United States market under the GSP tariff preferences.
The Chamber is also promoting the opportunity for US and international investors to utilize Cambodia’s new Law on Investment as well as several multilateral and bilateral trade agreements.
To read more about Cambodia’s new Law on Investment click here.
Regarding the GSP in the past, the US Treasury Department has claimed that the United States, through its trade representatives, will re-evaluate Cambodia’s general preferential tariffs on Cambodia.
Ministry of Commerce spokesman, Pen Sovicheat confirmed to the Cambodia Investment Review that the US’s remarks could be a good sign for Cambodia, as the United States is one of Cambodia’s major export markets.
He also considered that the examination of the possibility of providing GSP to Cambodia could also confirm the effectiveness that the Cambodian side is trying to require the United States to consider giving back this preferential system.
Sam Oudom is a Prince Foundation Young Business Journalist.