Since the resumption of diplomatic relations with
Cambodia in 1992, the United States has been at the forefront of Cambodian
development. In 1996, President Clinton signed a bill formally extending Most
Favored Nation (MFN) status to Cambodia. The US Government subsequently
designated Cambodia as a beneficiary under the Generalized System of
Preferences (GSP) in 1997. In 1999, Cambodia and the US signed a Bilateral Textile
Agreement (BTA), a unique agreement that links labor standards to trade.
The BTA has been an unqualified success. It has
boosted Cambodia’s image as a labor-friendly country and contributed
significantly to its economic development by generating employment for over
250,000, mostly rural women, as well as providing significant amounts of
foreign exchange. The BTA is responsible for a robust and booming garment industry
with exports of $1.6 billion in 2003, representing some 40% of Cambodia’s nominal
Gross Domestic Product (GDP) and 73% of Cambodia’s total exports. The US has
been Cambodia’s single largest trading partner by far since 1998. Exports to the
US totaled $1.5 billion in 2004, accounting for at least 70% of Cambodia’s
total exports and over 35% of Cambodia’s entire GDP. US exports to the Cambodia
have been minuscule in comparison, albeit increasing from approximately $20
million in 1999 to $59 million in 2004.
The US is the second largest bilateral donor to
Cambodia after Japan. Assistance from the U.S. Agency for International
Development (USAID) reached $57 million in 2004 and is expected the exceed $55
million in 2005, the highest levels in more than a decade. During the 1990s,
USAID rebuilt highway number 4 connecting Phnom Penh to the port city of
Sihanoukville. More recently, the focus has been on three major areas—good health;
good education; and good governance. More than half of all USAID assistance is devoted
to health. This includes significant funding for HIV/AIDS, where U.S. assistance
accounts for roughly half of all international assistance in this important
area.
While Cambodia still has the highest HIV/AIDS
prevalency rate in South East Asia, this rate declined by more than one-third,
from more than 3 percent five years ago to less than 2 percent today.
Tourism is another major sector of the Cambodian
economy. In 2004, the number tourist of arrivals reached a record high of 1
million tourists, generating approximately $511 million in revenue. Since 1997,
the United States has consistently been one of the top three providers of
tourists to Cambodia. In 2004, the United Stated ranked third after Korea and
Japan. The number of tourists from the US reached a record high of some 100000.
Despite a long-term decline in overall foreign
direct investment (FDI) in Cambodia, the US is still one of the major investors
in terms of the cumulative amount of the foreign direct investment, ranking
third behind Taiwan and Malaysia in FDI. Major US businesses in Cambodia
include Caltex, ChevronTexaco, Coca Cola, Unocal, Conoco, Jupiter, Northbridge
and R.M. Asia.
Although
since 1997 the US government has limited direct assistance to the Cambodian
government, the economic and trade role of the US remains influential.
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