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CAMBODIA: Garment sector bounce back after the end of a global quota system

PHNOM PENH: Cambodia's crucial garment sector has bounced back after the end of a global quota system saw orders dip due to competition from China, but experts warn the industry's socially responsible image will not ensure its long-term survival.

The 1.9-billion-dollar sector, which provides the destitute kingdom with more than 80 per cent of its export earnings and employed 270,000 workers at the end of 2004, feared the fallout from the end of the quota system in January.

Under the 30-year-old multi-fibre arrangement (MFA), Cambodia was given special access to the US market through a 1999 trade deal that granted quotas in return for improved labour conditions monitored by the UN's labour agency.

The arrangement was hailed by international buyers, such as US company Gap Inc., which helped local manufacturers to mould an image of themselves as responsible corporate citizens who eschewed sweatshop labour.

With the end of the system, the industry hoped its labour-friendly image would help it stand the onslaught of competition from Asian giants China and India, but sector employment spiralled about 10 per cent lower to less than 250,000.

"In the first four or five months, orders shifted to China because they were able to export freely," said Ken Loo, secretary general of the Garment Manufacturers Association of Cambodia.

In May, the United States, which buys more than three-quarters of Cambodia's exports, invoked safeguards contained in China's WTO accession agreement, which allowed it to impose quotas on seven types of textiles from China.

The European Union, which purchases most of the rest of Cambodia's production, took similar action in June. Employment is back up to about 268,000 and of the more than 200 factories in the kingdom, 25 have closed but 24 new ones opened.

Source: Agencies • News Courtesy: BharatTextile.com