The four Paon sisters left their poor village of rice paddies for the garment factories and within a few years built a home for their parents, kept them in rice and sent their three younger siblings to school.

Now comes the bad news:

The American trade privileges that have given Cambodia its edge in the world textile market -- and made it a model in the global battle against sweatshop labor -- will expire at year's end, and the future looks less certain for the industry's 240,000 workers, 90 percent of them women.

"I'm quite worried that my children may lose their jobs and be forced to return to work on the rice farm when the land itself is uncultivable," said the sisters' mother, Lai Kheang.

But there's hope, too: Mindful of the anti-sweatshop campaign that appeals to the consciences of Western shoppers, Cambodian factories have built a reputation for fair employment practices that they hope will keep Gap and Nike coming.

In Cambodia's long struggle to overcome its modern legacy of war, communist dictatorship and Khmer Rouge killing fields, followed by a messy democracy that has done little to raise living standards, the garment industry has stood out as something of a miracle.

With nearly half the population of 13.3 million earning $1 a day or less, many families have benefited from having a daughter or two making ski suits or denim dresses.

Clothes accounted for $1.4 billion, or 98 percent, of the country's export earnings last year. The industry has grown from 49 factories in 1996 to more than 200 factories, according to the Garment Manufacturers' Association in Cambodia.

The factories, mostly in or near Phnom Penh, the capital, make clothes for contractors to such giants as H&M, Gap, Nike and Columbia Sportswear.

They owe their success largely to a unique 1999 deal with the United States to raise low-tariff imports of Cambodian garments in return for the government improving abysmal labor conditions.

The United Nations' International Labor Organization has been inspecting factories, suggesting improvements and publishing their findings.

At W&D (Cambodia) Co. Ltd., factory manager Grace Chen said the company has benefited from the inspections.

"Buyers have more confidence in us, with all these improvements . . . so we have benefited from that," the Taiwanese manager said, noting that orders for the company's sportswear have increased, and it is adding four more production lines.

Abuses, such as shortchanging wages and forced overtime, continue at some plants, but overall the industry has made solid strides.

"What we're seeing over time is a gradual lifting of the standards," said Ros Harvey, the ILO's chief technical adviser in Cambodia.

"The presence of the ILO was an important factor in our decision to remain in Cambodia" after a 2000 television expose of the use of child labor in Cambodia, Gap said in its "Social Responsibility Report."

"We . . . saw the opportunity to make real progress in labor conditions through collaborative initiatives," it said.

Today, Gap buys from 33 Cambodian factories and is supporting a program to teach workers about their rights.

But next January, after Cambodia joins the World Trade Organization, it will lose its special deal, and there are fears that India and China will scoop up some of its business.

"I think a lot of our factories have been told by their buyers that definitely some . . . orders will go to China," said Ken Loo, secretary general of the Garment Manufacturers' Association in Cambodia. "If nothing happens in Cambodia and the cost remains what it is today, then a lot of them were quite frank to say that a big chunk of the business will go."

Some Cambodian factories are pinning their hopes on creating a niche market for socially conscious customers.

Competing "will require making as much noise as you can about the hard work you have done and must continue to do to uphold labor standards," Michael Keller, an economic officer at the U.S. Embassy, warned representatives of the garment sector in a speech.

"For the near term, say for the next five years, Cambodia's garment sector will survive only as long as its reputation as a niche market, as one that respects workers' rights, survives."

Loo said the manufacturers are working with a foreign aid donor to publicize their labor record and are considering a "social branding" plan.

Auret van Heerden, president of the Fair Labor Association, an anti-sweatshop group based in Washington, acknowledges Cambodia's progress and the likelihood that it will suffer when it loses its special trade status.

He said he believes its garment industry can survive as a niche market capitalizing on its labor record. The question is whether that record will survive the departure of the ILO monitors, whose contract runs until the end of 2005.

Van Heerden thinks it will -- that apparel companies doing business in Cambodia will launch their own initiatives -- as Gap has already done -- or support a local nongovermental group to enforce labor standards as is already happening in Bangladesh and parts of China.

Protecting workers' rights pays off financially in the long run, van Heerden said.

"It's an abnormal situation for these multinationals to be in, but they need to do it to ensure that labor conditions are respected," he said.

Sophoun Paon, at 18 the youngest of the four Paon sisters, thinks some factories may close.

"I think then it will be difficult for us to find a new job, and my family might face a difficult life like before," she said.

In Prey Veng, the sisters' home province, up to 60 percent of people fall below the poverty line.

"Rice farming has been unsuccessful for many years, and I've been quite ashamed of myself for having to rely on money from my children," said their mother.

"I have seen how difficult their lives are," she said. " Whenever I went to visit them, they told me, 'Mom, it's not easy for us in the city.' ''

Her daughter Sophoeun, a shy 21-year-old who studies English and wants to be a tailor, said she had to deal with gangsters and harassment by young men.

The sisters still see room for improvement. But three of them are now union members and feel free to spell out their complaints about forced overtime, being given too little time in the bathroom, or being denied leave for minor illness.

"When we did not know about our rights, we felt afraid," said Sophoeun. "But once we have learned about them, they made us feel strong and confident and unafraid of others." She now meets weekly with other garment workers to talk about working conditions.

The eldest sister, 25-year-old Phon, said employees at her work place aren't allowed to spend a long time in the bathroom and don't get leave if they are slightly ill.

"I want factories to stay, but there must also be adequate laws to guarantee rights and freedom of the workers," said Sophoun.

She earns $1.50 a day, roughly the minimum factory wage.

Women's Affairs Minister Mu Sochua said many women took jobs at factories purely to support families.

But now, she said, "A lot of them say they won't go back if the factories are closed . . . because they have already been exposed to independence. They cannot go back to the village girls that they used to be, the life that they used to have."

Cambodian garment factory worker Paon Sophoeun, above, in her living quarters, which she shares with three other factory workers near Phnom Penh.Cambodian garment factory workers toil at the W&D garment factory, just southeast of Phnom Penh. Garment factory workers and sisters Paon Phon, 25, left, and Paon Sophoun, 18, second from right, sit with their family at their house in a village 40 miles southeast of Phnom Penh.