FES-CIDS Project

	viTüasßankm<úCaedIm,IsikSakarGPivDÆn_ *Cambodia Institute of Development Study* Building a solid knowledge foundation for economic development
779 A. Kampuchea Krom Boulevard, Toek Laak I, Tuol Kork, Phnom Penh, Cambodia (P.O. Box 1658, Phnom Penh, Cambodia) Tel: (855-23) 355-569 I Fax: (855-23) 355-569 I Website: www.cids-cambodia.org
Home About Us Services Publications FES-CIDS PROJECT News Events Economic Freedom Job Opportunities Contact Us	FES-CIDS Project ____________________________________________________________________________________________________ _________ "Monitoring the Impacts of the Expiry of the ATC in Garment Exporting Countries and Enhancing Forward-Looking Industrial and Employment Policies" Financed by the Friedrich Ebert Stiftung and Implemented by the Cambodia Institute of Development Study (2007-2010) At the beginning of 2007, the Friedrich Ebert Stiftung (FES), in cooperation with the German SÜDWIND Institut für Ökonomie und Ökumene, the Indonesian research agencies AKATIGA and the Cambodian Institute of Development Study (CIDS), embarked on a joint project aimed at monitoring the impact of the expiry of the WTO Agreement on Textiles and Clothing (ATC) and enhancing forward-looking industrial and employment policies in Indonesia and Cambodia in the year 2007. The expiry of the WTO Agreement on Textiles and Clothing (ATC) on 31 December 2004 opened a new chapter in the restructuring process which the global textile and clothing (T&C) industry has experienced during the past four decades. The large-scale relocations of the industry from industrialised to developing countries – mainly to Asian countries – were accompanied by quota regulations in the framework of GATT and WTO restricting T&C exports from strong competitors such as China, while at the same time protecting upcoming T&C industries in countries such as Bangladesh and Cambodia. The end of the quota regime was meant to liberalise the world T&C trade and integrate it into regular WTO negotiations. However, in view of an extraordinary increase of T&C exports from China during the first months of 2005, safeguard measures were imposed against China by the USA , the EU and a number of other countries referring to paragraph 242 of the “Report of the Working Party for the Accession of China to the World Trade Organisation” of 2001. On 10 June, 2005 the EU and China agreed to limit Chinese textile and clothing exports to the EU in ten categories of concern to growth rates between 8 – 12.5% for the period June 2005 – December 2007 which will be followed by a system of joint import surveillance in the year 2008. The Memorandum of Understanding between the USA and China signed on 8 November, 2005 foresees quantitative restrictions of the Chinese imports of 34 product categories ranging between 10 – 17% for the period 2006-2008. The newly imposed safeguard measures against China offered a breathing space for competitors, especially for vulnerable countries whose industries and jobs have been relatively protected through the quota regime. Since the phasing-out of the ATC, multinational enterprises have started to consolidate their global supply chains downsizing the numbers of their supplier countries and factories. By and large, they have remained silent regarding their responsibility towards the affected workers in the framework of Corporate Social Responsibility (CSR) programmes. The threat of industry declines, factory closures and job losses is a huge challenge to governments, factory-owners and international buyers, and requires extraordinary measures of mitigation and restructuring. In fact, these trends including a deterioration of working conditions were reported from countries that lost export orders as well as in the countries that succeeded in expanding export volumes. The WTO Trade Report 2006 shows a massive expansion of the Chinese clothing exports, while offering a mixed picture of countries such as Indonesia and Cambodia whose exports to the USA increased, but those to the EU decreased. While these two countries generally succeeded in holding on to previous gains especially after the safeguards were imposed on Chinese exports, the increasing global price competition in the T&C sector casts doubts on their sustainability. It therefore seemed imperative to assess the opportunities, challenges and perspectives of the T&C sector in Indonesia and Cambodia affecting the livelihoods of large numbers of workers – most of them women – and their dependents. CAMBODIA Since the beginning of 2007,CIDS have undertaken an extensive research on the economic and social impact of the phase-out of the ATC in Cambodia, with a special emphasis on the development of forward-looking industrial and employment policies at the provincial level since a large share of the Cambodian T&C industry is considered not to be competitive enough once the safeguards against China will be lifted at the end of 2008. The core activity of the project is the series of public policy dialogues, which is held at both the provincial and national level among representatives of the government, employers, employees and buyers. In Phase 1 of the project (2007), CIDS engaged and initiated provincial policymakers and private sector representatives in the important discussion on creating industrial and employment alternatives at the provincial level. In Phase 2 of the project (2008), CIDS will pay special attention on labour market policy options for Cambodia in response to the expiry of the Multi-Fiber Arrangement (MFA). PROJECT DOCUMENTS Research Paper #1 Policy Briefing Paper #1 - Phase II Policy Briefing Paper #2 - Phase II Garment Industry Monitoring Report - March 2008 Garment Industry Monitoring Report - July 2008