A highly inequitable textiles agreement between the US and Cambodia puts the latter - one of the poorest countries in the world - at a great disadvantage.

By Chakravarthi Raghavan

April 1999

Geneva: A bilateral textiles agreement between the United States and Cambodia provides not only for export quotas by Cambodia, but commitments on labour standards and the lowering of Cambodian tariffs on textiles and clothing products.

Cambodia is asked to reduce and bind its tariffs in two stages on - 1 January 2000 and 1 January 2001 - on fibres and yarns, on fabrics, made-ups and on apparel.

And while Cambodia will do this in two years, the US as part of its Uruguay Round schedules has provided that its own tariff reductions in this sector will be phased in over a 10-year period, that is, the Uruguay Round tariff reductions will take effect only on 1 January 2005.

And at that time, most of the US tariffs in this sector will be higher than what Cambodia's would be.

Cambodia is now not a member of the World Trade Organisation. It applied for accession in 1994, but a working party is yet to be named.

But the US-Cambodia agreement provides that when Cambodia becomes a WTO member the provisions of the accord (on labour standards and tariffs) would become necessary in relationship to the implementation of the WTO's Agreement on Textiles and Clothing and 'will remain in force and notified to the TMB [Textiles Monitoring Body]'.

The US-Cambodia pact is for a three-year period (1999, 2000 and 2001) and during that period, Cambodia has agreed to limit its exports in 24 categories - gloves and mittens of cotton and MMF (C & M), men's and boys' coats (C & M), women's/girls' coats (C & M), knit shirts (C), men's and boys' woven shirts (C & M), sweaters (cotton), pants (C & M), underwear (C & M), knit shirts/blouses (wool), sweaters (wool), knit shirts (MMF) and sweaters (MMF).

Cambodia, in return for the quotas, has to reduce its tariffs to 20% as of 1 January 2000, and by next year undertake a further downward cut to: 7% on fibres and yarns, 10% on fabrics, 12.5% on made-ups and 17.5% on apparel.

The US tariffs on some of the items on its tariff schedule, that will be attained only on 1 January 2005, are: yarns 7-10%; synthetic yarns 8-10%; fabrics: woven wool 25%; denim 8%; cotton 8-9%; synthetic (MMF) 10-15%.

On apparel knits: wool shirts 14.09%, cotton 19.7%, MMF 32%. Woven apparel: wool shirts 17.5%, cotton 19.7%, MMF 25.9% plus 29c per kilogramme.

And Cambodia is not to exercise any non-tariff import restrictions including import licensing, quantitative restrictions (QRs) or bans on these items - while the US itself will be maintaining QRs till 31 December 2004.

Cambodia 'shall' also support the implementation of a programme to improve working conditions in the textiles and apparel sector, including internationally agreed core labour standards. And the two governments are to conduct at least two consultations every year on the implementation of the programmes.

And based on these consultations, the US will make a determination on whether working conditions substantially comply with labour law and standards. In the event of a positive US determination, the quota levels shall be increased by 14% for the following year. But if subsequently the US determines a significant, presumably adverse, change in working conditions, the US may withdraw its increase. - Third World Network Features

About the writer: Chakravarthi Raghavan is Chief Editor of SUNS (South-North Development Monitor), a daily bulletin, and Third World Network's representative in Geneva. The above article first appeared in the SUNS.