The UK government has released a few more details on the proposed revamp of its Generalised Scheme of Preferences (GSP), due to be rolled out in early 2023, which observers say suggest that the new regime could be more favourable for Cambodian garment and textile-related commodities, especially travel goods.
However, the Garment Manufacturers Association in Cambodia (GMAC), the apex garment makers’ body, highlighted in a letter at the weekend that the Developing Countries Trading Scheme (DCTS) would offer no significant changes in preferences for Cambodia, although acknowledging that the scheme would be “a bit more liberal for travel goods”.
“Travel goods” is a designation that includes suitcases, backpacks, handbags, wallets and similar items.
The letter pointed out that London would retain the same three-tiered system as the previous scheme – General Framework, Enhanced Framework, and LDC (least developed country) Framework – which it noted is based on the EU’s General, GSP+, and EBA (Everything But Arms) tiers.
The tiers of preferences within the DCTS will be renamed to Standard Preferences, Enhanced Preferences, and Comprehensive Preferences, the last of which is specifically designed for LDCs, it added.
“There will still be duty-free, quota-free access for everything but arms for Cambodia, and all LDCs, under the Comprehensive tier,” GMAC said.
“However, a few more products have been made duty-free under the Enhanced tier. That means that around 85 per cent of UK tariff lines are now duty-free under the Enhanced tier while around 80 per cent have reduced duties under the Standard tier. Travel goods are duty-free under all tiers, but apparel is duty-free only under the Enhanced and Comprehensive tiers,” it added.
Speaking to The Post, Cambodia Travel Goods and Leather Association (CTLA) chairman Lim Tong hailed the latest details of the UK’s DCTS as “good news for the travel goods sector in Cambodia that comes as orders start to fall significantly amid a slowdown in the global economy”.
Nonetheless, he voiced concern that the dry-up in orders coupled with global instability and economic downturn are hurting key exports of Cambodian garment items.
Cambodia Chamber of Commerce vice-president Lim Heng said that the new trading scheme would not only be able to offset some of the losses from the EU’s partial withdrawal of its EBA scheme, which affects 20 per cent of Cambodia’s exports to the bloc, but also help boost the volume of Cambodian goods available across EU nations.
“The preferential system will encourage more products to be exported to the UK or to the EU via the UK, which is a sublime opportunity for investors in garments, textiles, bags, bicycles, electrical equipment and solar products,” he said.
However, Ky Sereyvath, economics researcher at the Royal Academy of Cambodia (RAC), claimed that the UK’s more liberal DCTS means that Cambodia would be able to buy raw materials from countries with perceived shortcomings in upholding human rights.
Under the earlier GSP, turning out semi-finished and finished goods from raw materials purchased from such nations “may be a problem with the British refusing to buy the products”, he said.
“But this preferential system does not have the same human rights conditions as before.”
According to the GMAC letter: “The criteria for [the Enhanced tier] is now a simple economic vulnerability criterion as opposed to the human rights criteria in the EU GSP+ scheme. That means almost all non-LDCs are now part of the Enhanced tier – and thus have duty-free access for all apparel and travel goods.”