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Cambodia's Threatened Textiles

Cambodians have known great hardship in the last thirty years. Pol Pot's killing Khmer Rouge regime is long gone, but Cambodia has enjoyed political stability only since 1998.Still the country has developed a major textiles industry, employing some 200-thousand people. The industry flourished under the World Trade Organization's Multi-Fiber Agreement, or M.F.A., a global pact that set quotas for exports by the world's less developed nations.

Karen Tramontano is Executive Director of the Global Fairness Initiative, a non-governmental organization promoting free trade. She says that until this year, the M.F.A. agreement protected textiles in countries like Cambodia.

Ms. Tramontano says, "So, if the W.T.O. directed that all emerging economies and developing economies had to have a stake at the table for garment production, those that excelled at the end of the ten years would have something substantial in their economy to be an economic driver, an economic force within their economy to move them forward to then diversify and expand the benefits of trade."

In Cambodia, textiles were developed without so-called "sweatshop" labor. Work is performed under monitored, fair labor conditions unusual for an underdeveloped country.

Steven Bennett, also with the Global Fairness Initiative, says that Cambodia's reputation for good labor practices in the garment industry should resonate with large buyers that want no association with sweatshop labor. According to Mr. Bennett, "The World Bank group has done some very methodologically robust studies, that, all things being equal, if a country can produce garments at a competitive price, at a competitive speed and a competitive level of quality, then labor rights verification becomes a very significant factor in garment sourcing decisions by big companies, like the Gap, like Nike, like H and M, like Levi Strauss. And so Cambodia is looking for any kind of competitive advantage. I think the question on everybody's mind is, 'how long does this last?'"

Some analysts say that the end of small textile producers is already here. Peter Craig is the trade commissioner for the Embassy of Mauritius here in Washington. That tiny African island nation exports one billion dollars per year in textiles, mostly to the U.S. and Europe. Mr. Craig says that the end of the M.F.A. has already resulted in the loss of 20-thousand jobs in Mauritius. Mr. Craig says, "With the end of the Multi-Fiber Agreement and the fact that China is a member now of the W.T.O., African exports are no longer competitive. And these infant industries in Africa are just being decimated."

Mr. Craig says that most small garment producing nations will not be able to compete with the likes of China because of what he calls China's "vertical integration." China grows its own cotton, and controls its textiles at every stage of production.

Many trade experts say that poor garment producing nations like Cambodia are at a crossroads. Some will be pushed out of textiles.

According to the World Trade Organization, of the 190 countries currently producing garments, 50 will no longer be doing so by 2009. The W.T.O. also estimates that with the elimination of the Multi-Fiber Agreement, China's share of the U.S. clothing market could jump from 16 to 50%, and India's smaller share could nearly quadruple.

Whether small players in textiles like Cambodia can find niche markets to weather such a shift in sales is not known, but many analysts believe a big change in global textiles trade is already underway.