Duty-free access to Cambodia damages [US] textiles: NCTO

November 18, 2009
National Cotton Council of America (USA)

David Hastings, chairman of Mount Vernon Mills, urged the House Ways & Means Committee’s Subcommittee on Trade to keep in mind that the United States’ manufacturing sector is hurting badly and not to take action that could potentially cause further job losses in this country.

Testifying on behalf of the National Council of Textile Organizations (NCTO), Hastings specifically urged the Subcommittee that as it reviews different options regarding preference programs – not to consider a proposal to extend duty free status to apparel imports from Bangladesh and Cambodia as a part of broad trade preference reform.

Hastings said, for example, if this Committee grants these large competitive countries with duty-free status, Mount Vernon’s Trion facility, and many others, will be forced to close.

“And, in the case of Trion, the U.S. military will lose one of the country’s largest producers of combat fabric for our soldiers,” he noted.

Hastings said of the 55 countries in the current trade preference and free trade areas, not a single country or NGO support is granting any sort of preference to these two countries.

“In fact, not one country has asked for broad trade preference reform for textiles,” he said.

Hastings testified that 42 textile and apparel associations from 28 countries in Africa and the Western Hemisphere, including Least Developed Countries such as Haiti, asked him to present to the Committee a letter stressing strong opposition to any such effort.

With regard to trade preferences, Hastings offered three solutions: 1) Congress must pass an Andean trade preference extension immediately; 2) take action against China; and 3) the U.S. government should do more to support manufacturing.

“I also do not think we should abandon our free trade and preference program partners in order to reward countries that barely pay their workers or engage in predatory and illegal subsidy schemes,” Hastings stated. “Instead, I believe that we should be focusing our efforts on ensuring a prosperous future for the U.S. worker, as well as the millions of workers in the preference and free trade areas.”

What will Obama mean for Asia?

Thu, November 13 2008
South Asian Post (Canada)

"Obama’s negativity on preferential trade agreements with Asian nations has Cambodia concerned about the threat to its textile exports."

The marginalized Untouchables of India have labeled him an “American Dalit”.

Filipino politicians are riding on his popularity by adding Obama monikers to their names.

The Japanese town of Obama can’t stop doing the hula.

Everybody in Indonesia now has a friend of a friend who knew a friend from the Menteng 1 Elementary School in Jakarta where Obama was educated in his younger years.

Yes, there is elation all over Asia over the matter of the first black man to run the White House.

And most of us want to be connected to him and his gospel of change.

But what will Obama mean for Asia?

Asian giants like China, Japan and India are raising concerns over whether the Democratic-president elect of the United States will retain any of the relationships built by the Republicans or ruin them.

China in its congratulatory message to Obama included a subtle reminder to the New America not to recognize the democratic Taiwan, which it contends is part of its communist empire.

They also want a change from the Republican philosophy which favored Taiwan with military exports.

Some anti-Beijing commentators are already pointing out that while Obama has chastised China about pollution, he has been quiet about China’s human rights abuses and like his predecessors, is going down the “China exception” path.

They point to his China-excluded campaign speech in Berlin where he asked: “Will we stand for the human rights of the dissident in Burma, the blogger in Iran, or the voter in Zimbabwe?”

As Obama the orator gets ready to step into the Oval office, the American financial crisis is worsening. This will undoubtedly impact on what he needs to do for America versus what America needs to do for the world.

Japan and South Korea have already expressed worries that the sagging American economy will force Obama to implement protectionist policies in the interest of keeping his campaign promises.

Both nations are also perturbed with Obama’s planned relations with communist North Korea.

There has been a frightening chill in the Korean peninsula as the North continuously berates the South, while the South threatens to get tough with Pyongyang until nuclear issues are resolved.

Many in Japan have viewed the recent removal of nuclear-hungry North Korea from the U.S. terrorism blacklist as an indication of degrading America-Japanese ties. Japan blames North Korea for the abduction of up to one hundred of its citizens over the last four decades.

In the Philippines, John McCain was more popular than Barack Obama in a Gallup poll.

While his racial first was hailed, many in the Southeast Asian nation of islands are fearful of Obama who has voiced skepticism about the outsourcing of jobs by US companies to Asia.

President Gloria Macapagal-Arroyo, whose congratulatory phone call was not accepted by Obama, is also worried that America will withdraw its 600-strong military unit, which is helping battle Islamic extremists and communist rebels in South Philippines.

Obama’s negativity on preferential trade agreements with Asian nations has Cambodia concerned about the threat to its textile exports.

Members of the ASEAN grouping in Southeast Asia all have individual issues with America, but experts have indicated that any new policy in this region will be directly linked to how Obama and Beijing get along.

While Washington is not expected to get directly involved with local politics, it can be expected that Obama’s White House will tacitly approve of a change in Malaysia to a rule by the maverick Anwar Ibrahim.

India views Obama with apprehension on many fronts.

In a country that has been a priority for the Bush administration which allowed it to resume civilian nuclear imports, India has been rankled by the 20 minute phone call to Pakistan’s Zardari. This was done before any communication with New Delhi.

Obama also wants to use the long-standing India-Pakistan dispute in Kashmir as the key to dealing with the Afghanistan conflict.

He is of the opinion that Pakistan will commit itself more forcefully to defeating Al-Qaeda and the Taliban, if the US offered it carrots in Kashmir.

India has responded swiftly saying that the US has no place in the Kashmir dispute because it is a bilateral issue between India and Pakistan.

The Times of India commented: “There is little clarity on how the chips will fall on several issues..Pakistan, China, terrorism, nuclear issues, trade, all issues on which India has had a prickly relationship with the Democratic Party.”

History will record that Obama brought change to America.

How this change impacted Asia will likely be another story.

Cambodia's dependence on exports to the US reduces immediate business profits with negative connotations for jobs and wages

Tuesday, April 29, 2008
By Karen Remo-Listana
Emirates Business 24|7 (UAE)

Emerging markets in Asia should not underestimate current global financial challenges as further surprises cannot be ruled out, the World Bank has warned.

The crisis in the United States has deepened as asset prices struggle to find a new equilibrium and financial institutions go through a painful process of de-leveraging and recapitalisation, the bank said.

And previous experience of real estate price busts suggest they can last twice as long and be twice as deep as equity price busts. This is the first financial crisis in the post-securitised world, wherein most intermediation is done through securities markets not depository institutions. "It could take even longer to resolve," the bank said in a report.

Despite the popularity of the decoupling theory, some analysts believe the current mild recession in the US and the financial crisis in Europe will badly hurt Asian economies, which still rely heavily on these two export markets for growth.

Decoupling holds that European and Asian economies, especially emerging ones, have broadened and deepened to the point they no longer depend on the US for growth, leaving them insulated from a severe slowdown there, even a full-fledged recession. Faith in the concept has generated strong out-performance for stocks outside the US.

However, sceptics of the theory point to indicators of a slow down. Growth in developing East Asia will decline by around one to two percentage points to around 8.5 per cent in 2008 as a result of the unfolding financial turmoil in the US and the resulting global slowdown, said the World Bank's latest six-monthly review of the East Asia and Pacific region's economies.

Analysts at Lehman Brothers believe economic growth in Singapore could slump to as low as 2.5 per cent this year if the worst-case scenario of a recession occurs. The official forecast is for growth of 4.5 per cent to 6.5 per cent.

And the Asian Development Bank lowered its 2008 forecast for China's economic growth to 10 per cent from 10.8 per cent. That revision came a day after the World Bank cut its 2008 forecast for China by 0.2 percentage points to 9.4 per cent. Earlier this month, the United Nations Economic and Social Commission for Asia and the Pacific said in a report that China's economic growth would decelerate in 2008 because of slowing exports and the government's cooling measures.

Investment banks including Goldman Sachs and China International Capital Corp have also agreed that growth will be lower, indicating rising concern over the impact of slower world demand and rising domestic inflation.

Economists said while the Asian region's economies have managed to stand on their own feet in recent years, their fortunes are still closely tied to external conditions. The slowdown in demand for imports in the US will have an impact on Asian economies, particularly those that are dependent on exporting to the US, a report by Euromonitor International said.

Asia has positioned itself as a major supplier of exports and outsourcing due to its low labour costs and skilled technical knowledge. The US, meanwhile, is a major destination for these exports.

Figures from Euromonitor show in 2007 the US received 34.6 per cent of its imports from the Asia Pacific region. About 22.7 per cent of Japan's exports went to the US. Pakistan and China were major exporters of manufactured goods with exports to the US at 21.3 per cent and 21 per cent, respectively.

Bangladesh, Cambodia, Indonesia, Vietnam and the Philippines are major textiles exporters. Malaysia, Indonesia, Kazakhstan, and Tajikistan on the other hand are suppliers of energy products, such as oil, gas and biofuels. Bangladesh, China, Pakistan and India are also suppliers of food commodities, such as rice and grain.

For countries reliant on sending a large amount of low-level manufactured or textile goods to the US, the effect of a slowdown will be highly detrimental, Euromonitor said.

"For example, since Cambodia sends over half its exports to the US, the direct effect of lower sales in the US will be to reduce immediate business profits, with negative connotations for jobs and wages," Euromonitor, an independent business intelligence provider, said. This impact will be felt all the more acutely since social conditions are poor, with GDP per capita being only $544 in 2007, it said.

This means a drop in income will be felt to a disproportionately high effect, indicating a knock-on negative impact on consumer spending in Cambodia.