Cambodia’s garment manufacturers have urged the government to push for the fabric-forward rule during negotiations for the Regional Comprehensive Economic Partnership (RCEP) – a move that could hurt the sector if not included, they say.
During a meeting with government officials, representatives of the Garment Manufacturers Association of Cambodia (GMAC) said they were particularly eager to know how the agreement will handle the rules of origin.
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RCEP has the potential to be one of the most significant mega-free trade agreements in the world, both economically and politically. It is an ambitious FTA currently under negotiation between ten member states of the Association of Southeast Asian Nations (ASEAN) – Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam – and six other large economies in the Asia-Pacific region (Australia, China, India, Japan, South Korea, and New Zealand).
In 2015, the group of 16 RCEP members, which comprised more than 3 billion people, had a combined Gross Domestic Product (GDP) of about US$22.7 trillion and accounted for nearly 30% of the world trade volume.
According to GMAC, however, ASEAN needs a unanimous position on rules of origin, the most contentious part in any free trade agreement, before discussing with the other countries.
“Based on the principle of mutual understanding we have at the ASEAN Federation of Textile Industries, ASEAN would agree on the fabric-forward rule, which is a compromise between yarn-forward, which is too strict, and single-transformation, which it too laid back,” GMAC’s Kaing Monika told a Cambodian news outlet.
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By GlobalDataThe fabric-forward rule means the fabric used for manufacturing apparel or other textile products must originate in an ASEAN country. And as Cambodia imports most of its textiles from prospective RCEP members, the country would benefit from the adoption of the rule.
GMAC secretary general Ken Loo confirmed the comments to just-style, adding: “This was a compromise the ASEAN member countries had made internally.”
Textiles and apparel is a critical sector under the RCEP negotiation. In 2015, the 16 RCEP members together exported US$405bn worth of textiles and clothing (54% of the world share) and imported US$115bn (31% of the world share).
RCEP and its potential impact on textile and apparel trade
