This article provides an analysis of the labor standards provision in the U.S.-Cambodia Bilateral Textile Trade Agreement that was signed on Jan. 20, 1999 (Agreement). The provision creates quota incentives for the Cambodian garment industry to bring it into substantial compliance with international labor standards and Cambodian labor law. The article starts with a description of the poor working conditions in Cambodia’s garment factories during the time the Agreement was signed. Though there were Cambodian labor laws in place, they were seldom enforced due to corruption of labor inspectors and politically-controlled unions. The next section gives a brief overview of the regulations of textile imports in international trade, highlighting the fact that the labor standards provision in the Agreement was the first of its kind and a creative approach to linking trade privileges with labor rights. The next section evaluates the International Labor Organization’s (ILO) initial proposal, the U.S counter-proposal, and the final joint proposal of the program required by the Agreement to improve working conditions of the Cambodian textile and apparel sector. The ILO’s proposal aimed to improve industrial relations by strengthening the Cambodian labor inspection system so that they may effectively monitor and enforce Cambodia’s labor laws. The U.S. counter-proposal’s goal was to implement a system of monitoring that would enable it to determine if the Cambodian garment industry was in substantial compliance with international labor standards and local labor laws. The U.S. proposed that the ILO undertake independent monitoring, visiting individual factories to make assessments and reports. The final proposal included aspects of both. The author critiques all three proposals and proposes a set of criteria that may be used as a guide for similar programs in the future