US Urged to Renew GSP

Cambodia is urging the US to renew the Generalized System of Preferences to strengthen bilateral relations and trade
Factory workers leave work in Phnom Penh. Kiripost/Siv Channa
Factory workers leave work in Phnom Penh. Kiripost/Siv Channa

The Ministry of Commerce has requested the United States to continue the Generalized System of Preferences (GSP) program to strengthen bilateral relations between the two nations and reap its benefits collectively.

At a meeting on Wednesday, Pan Sorasak, Minister of Commerce, requested that Jason Smith, head of the US House Committee on Ways and Means, reopen the GSP system for Cambodia, particularly for items including textiles, footwear, and travel goods.

Sorasak said that the reopening of the GSP would improve the two countries' bilateral collaboration, particularly for the benefit of each other. In addition, he urged US companies to increase their investments in Cambodia to decrease the trade gap between the two nations.

Penn Sovicheat, a spokesman for the Ministry of Commerce, said that only travel bag products have previously benefited from GSP. Not only Cambodia but all developing nations did not get reauthorization from the US.

However, he added that even if the GSP expires, the trade balance between the US and Cambodia will grow.

“The US is responsible for the decision of our requirements, however, we don’t have high expectations for their approval since we are a nation that is soon to transition from a least developed to a developing country,” he said.

He added that Cambodia has already received a joint assessment from the UNDP on development and trade. The GSP has also gone, therefore boosting Cambodia's trade will not only rely on the preference system.

"Even if Cambodia has previously profited from it, it doesn’t mean it will be our hope,” he said. “The government and the Ministry of Commerce are always prepared for a free trade agreement with another nation, for example, RCEP.”

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Cambodia began to benefit from the GSP in 1997 and exported about $179 million duty-free to the US in 2016, according to the US Embassy. However, the GSP for Cambodia expired at the end of 2020 due to a delay in the US Congress approving a statute to reinstate the GSP, according to a statement from TAFTAC, formerly GMAC.

Amparo Garcia, US Embassy Spokesperson, said that Cambodia has benefited greatly from access to the US market. He added that over 40 percent of Cambodia’s total exports are destined for the US, the Kingdom’s largest single export market – larger than the next five export markets combined.

“Our trade relationship should be mutually beneficial, transparent, balanced, and adhere to the highest standards, including labor rights,” he told Kiripost via email.

Deputy secretary-general of TAFTAC, Kaing Monika, said that the US GSP program is not only for Cambodia but all eligible beneficiary developing countries. He added that Cambodia is one of the nations to gain, particularly in the travel goods sector.

“Reauthorization of the GSP program would benefit both the countries developing and the US consumers, particularly when Western brands are relocating more and more of their production out of China,” he said.

He added that this is not the first time the US Congress is late to reauthorize once it has expired. As importers need to pay for import duty in the short term, it has an impact on their cash flow, he added.

“Once the program is re-authorized, the paid duty would be refunded,” he said. “As a practice, once it’s re-authorized, it’s done retroactively.”

According to the General Department of Customs and Excise, more than $4,000 million worth of goods are exported from Cambodia to the United States in the first six months of 2023. In addition, the US is Cambodia's largest export market, with bilateral trade reaching $ 9.281 billion in 2022 and $ 7,490 million in 2021.

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