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Cambodia Wants Tax-Free Exports to US: Minister

[Editor’s note: Last month, the International Finance Corporation invited Commerce Minister Cham Prasidh to its offices in Washington, to celebrate the 10th anniversary of preferential trade agreements between Cambodia and the US. On his visit, Cham Prasidh testified before the Trade Subcommittee for the US House of Representatives’ Committee on Ways and Means. He also sat with VOA Khmer for an interview at a hotel in Washington. What follows is an excerpt of that interview, in the first segment of an eight-part series.]

Q. What gains has Cambodia received from 10 years of trade agreements with the US?

A. The trade agreement in 1999 provided us with a big opportunity to export clothes for sale to American over other countries. As you know, countries usually export their products within a limited quota by the US. For some countries the US would increase this by 6 percent after the first export. But because Cambodia has this agreement, Cambodia had the 6 percent increased to 14 percent. We exported more than other countries, and around 20 garment factories in Cambodia grew quickly to almost 300 factories.

Q. What is the next strategy to improve Cambodian trade and people’s daily lives?

A. Overall, we need an open market. That means that if the US grants us duty-free and quota-free status, we will have the possibility of selling more products, and we also have the possibility of attracting investors to agriculture. So we’re trying very hard to get the US market. The US market is the biggest market for Cambodia.

Q. You requested that US Congress remove taxes on every product, including clothing. Do you believe this request will be fulfilled?

A. It is our request, but we’ve only come here to lobby them to draft a bill to submit to Congress. I came to lobby them in 2004, and there was a bill in 2005 submitted to Congress. But the bill hasn’t gone further. Among more than 200 Congressmen, 40 of them supported us, but hundreds more still have not yet looked at our bill. Now, in 2009, we started lobbying and submitted it again, but it has not progressed yet because of, as you know, the economic downturn in the US.

We’ve come here this time to reaffirm [our position] as America prepares to review its [generalized system of preferences]. And I’ve come here to express to them that Cambodia needs to have free taxes on our products exported to America, as America considers which countries should be provided the GSP and which countries should be cut back on the GSP. If the US market opens for us, then all the products that come to America will be tax free. Then we will also have to attract many investors to our country, and our people will have better living conditions.

Q. According to your report, Cambodia paid $407 million in tariffs to America on exports worth $2.4 billion. That’s a tariff of 16.7 percent, which is much higher than that for developed countries like the United Kingdom, Thailand, Russia or South America. Do you think it’s fair for Cambodia to pay such a large tax, when its sales are so small?

A. It is extremely unjust for us as an impoverished country. After we told them these tax statistics, they seemed to feel embarrassed. We are also a poor country, like Africa, but they have not allowed us free duty, while some poor countries in Africa can access America’s market with free duty. It is not fair when a small, poor country pays taxes greater than rich countries like France and the UK. They export more products to America but pay less tax. Cambodia exports a small amount of products, but pays a higher tax. So our struggle here is to lobby the US to lower the tax. Then we can export more.