Cambodia has been designated as one of four global nations eligible for a new US tariff rate quota arrangement. This program will permit specific volumes of textile and garment exports to enter the United States duty-free over a three-year period. Deputy Prime Minister Sun Chanthol, who also serves as the First Vice-Chairman of the Council for Development of Cambodia, announced the development during a recent press briefing.
The Kingdom joins Indonesia, Malaysia, and Bangladesh as the only countries selected for this specific arrangement. During the announcement, Chanthol was joined by Sim Sokkheng, Secretary of State of the Ministry of Commerce, and Chan Sopheap, Deputy Director General of the General Department of Customs and Excise. Chanthol confirmed that under the US tariff rate quota, Cambodia can export designated quantities of textile products without incurring traditional import duties for the next three years.
Sourcing Requirements for US Duty-Free Textile Exports
The eligibility for these exemptions is contingent upon specific sourcing requirements. To qualify for the duty-free status, manufacturers must utilize textile raw materials sourced directly from the United States. Chanthol clarified that the tariff exemptions apply if the Cambodia apparel industry utilizes American-produced fabric, cotton, or yarn in its garment production processes.
While the framework has been established, the United States has not yet released the final regulations for the program. These forthcoming guidelines will detail the specific formula for quota allocations and the necessary implementation procedures. The Royal Government has expressed its intent to attract investors to the textile sector who are willing to purchase US-sourced textile raw materials for local apparel manufacturing before exporting the finished goods back to the American market.
Industry Perspectives and Supply Chain Logistics
Chea Chandara, President of the Logistics Supply Chain and Brokers Business Association in Cambodia, noted that the new US tariff rate quota presents both opportunities and logistical challenges. He observed that a significant portion of factories within the Cambodia apparel industry are currently under ownership that maintains long-standing supply ties with other regions, particularly China.
The transition to sourcing textile raw materials from the United States would require adjustments to existing commercial relationships and production planning. However, Chandara pointed out that shipping costs for US materials remain manageable despite the distance. He further noted that even for factories that do not shift their sourcing, the local apparel manufacturing sector remains competitive relative to regional rivals. Currently, Cambodia continues to work toward developing a more robust domestic supply chain to support its garment manufacturers.
