Last year, the American tariff system raised a bit more than $25 billion. Nearly half of it, $11 billion, came from tariffs on shoes and clothes. Though these goods accounted for only five percent of imports, tariff rates on them average about 12 percent, 15 times higher than the 0.8 percent average on other products. As a result, the American tariff system is uniquely tough on low-income countries in Asia and the Muslim world, with Cambodia, Bangladesh, Nepal, and a few others the extreme cases.
Cambodia's $2.2 billion in clothing exports -- the top sellers are cotton pullovers and T-shirts, cotton pants, and pajamas -- accounted for a third of Cambodia's $6.8 billion real-dollar GDP. These goods face U.S. tariff rates ranging from 8 percent to 32 percent. Last year's total tariff penalty came to $367 million, and meant an average of 16.9 percent.
On the other edge of the Eurasian land-mass, the lead exports for France, the old colonial power, include medicines, airplane parts, wine, artwork, and perfume. The U.S. tariffs on these goods are respectively zero, zero, 0.1 percent, zero, and zero. France's total $37 billion in exports received the same $367 million penalty imposed on Cambodian goods; the average U.S. tariff on French goods was 1 percent. Elsewhere, China's exports mix high-tariff shoes and clothes with zero-tariff phones, computer monitors, cameras, toys, and furniture, and get a 3 percent average; Saudi Arabia's crude and refined petroleum products come in at 0.2 percent; South Africa combines zero-tariff platinum, diamonds, and other metals with auto kits, some clothes, and farm products often exempted from tariffs through the African Growth and Opportunity Act, and had a 0.1 percent average.
Cambodia and its unfortunate peers thus operate in a remarkably unfriendly environment. Their goods face much higher barriers than those of natural-resource producers or rich countries specialized in technology and heavy industry; and even setting this aside, they must compete against (1) a handful of very large rivals -- China, India, Mexico, Vietnam -- with large and efficient industrial plants; and (2) 70 smaller countries excused from tariffs through free trade agreements and preference programs. Some help may be on the way, though. Last week, Senators Dianne Feinstein (D-California) and Gordon Smith (R-Oregon) introduced a proposal, known as the "Tariff Relief Assistance for Developing Economies Act," to grant 15 low-income countries in Asia, the Pacific, and the Muslim world exemptions from tariffs.
A Bangladeshi perspective -- Foreign Minister Morshed Khan discusses LDC goals and U.S. trade policy:
http://www.mofa.gov.bd/statements/fm30.htm
Day in the life -- Cambodia's typical factory worker is a young woman, 18 to 20 years old. Recently arrived from a rural town or village -- 10 million of Cambodia's 14 million people live in rural districts -- she earns about $600-$700 in her first year working in one of Phnom Penh's 278 garment factories. (Based on the $50 per month minimum wage, raised from $45 last summer.) The figure seems small to a western eye, but is not: $650 is nearly twice Cambodia's $350 per capita income, and five times as much as domestic-industry workers in the rural provinces usually earn. She will save 30 percent to 50 percent of her pay -- usually in the form of silver bracelets, earrings, and necklaces; shaky rural ID systems make bank accounts hard to get, and wearing your savings is safer than leaving cash in a rented room -- and then bring it home, after turning the jewelry back into cash, during holiday trips for the April New Year's or the autumn rainy-season festival. The jobs are prized: a rural Khmer family normally has about two months of food security, and one daughter in a clothing factory means a year of food security, while two means enough cash to buy fertilizer and some simple farm machinery.
A look inside -- The 278 factories together employ 300,000 people -- about 270,000 young rural women handling sewing, packing, and quality control; 30,000 men working on loading docks, as security officers, in canteens, and so on; and 5,000 Phnom Penh college graduates training as middle managers responsible for human resources, accounting and other professional fields. The International Labor Organization's Better Factories Cambodia program reports:
http://www.betterfactories.org/
How it got that way -- PPI explains America's tariff system:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecID=900010&contentID=253112
Friends of the poor -- Sens. Feinstein and Smith are at:
http://feinstein.senate.gov/ and http://gsmith.senate.gov/public/;
Rep. Joe Crowley is their House partner and founder of the Bangladesh caucus:
http://crowley.house.gov/issues/index.htm
