Cambodia wants preferential trade terms for its footwear exports from the United States. Preference systems let developing countries export certain goods to donor countries at reduced tariff levels. Cambodian footwear, textiles and garments are excluded from the US GSP. Cambodia’s footwear and garment industry exports under the US’ most favored nation program are taxed by the US, which wants to protect its local industries.

The US offers GSP to poor countries since 1974 but garment and footwear products have never been included. The US is now going to consider granting GSP on footwear and so Cambodia wants to be included under that benefit even though GSP doesn’t reduce the tax to zero. But for that to happen Cambodia has to show improved working conditions with high levels of labor and social compliance and high minimum wages.

If Cambodia does succeed, it would be important for Cambodia’s economic development as there would be more investments resulting in the creation of jobs. It would be good news for Cambodia if the US grants GSP to the footwear industry which currently exports a lot to the EU and the US under the most favored nation scheme. Last year, the US granted GSP to Cambodia for export of travel goods such as luggage, backpacks, handbags and wallets.