EU Partially Withdraws Trade Preferences from Cambodia
The European Union’s decision to withdraw 20% of the preferential trade agreements took effect from August 12, 2020. This decision will have great effects on the garment industry since it provides jobs for thousands of factory workers, and the garment is one of the major exports of Cambodia.
The partial withdrawal of the EBA trade scheme was a result of the rising human rights concerns and labor rights issues in Cambodia. The 20% EBA withdrawal means that 20% of the country exports will be subject to tariffs like other World Trade Organization(WTO) members, but the remaining 80% of Cambodia’s exports can still have a duty-free and quota-free access to the EU market. The EU will continue to monitor Cambodia’s progress through its reforms to restore freedom of expression, social and political rights, land disputes, and labor rights.
Commissioner for Trade Phil Hogan said: “We have provided Cambodia with trade opportunities that let the country develop an export-oriented industry and gave jobs to thousands of Cambodians. We stand by their side also now in the difficult circumstances caused by the pandemic. Nonetheless, our continued support does not diminish the urgent need for Cambodia to respect human rights and labor rights. I stand ready to continue our engagement and to restore fully free access to the EU market for products from Cambodia provided we see substantial improvement in that respect.
In an inauguration event to celebrate the achievements of the Tbong Khmum Police Department on August 13, Sar Kheng, Deputy Prime Minister and the Minister of the Ministry of Interior reiterated the firm beliefs of the government to keep relation with the EU regardless of the 20% withdrawal of the EBA trade privileges.
“We can still export goods to the EU market. The only difference is that we have to pay taxes,” he said.
He also reaffirmed that the government of Cambodia still remains firmly in its stance that “it pledges to protect the constitution of Cambodia by not giving away its sovereignty and independence in exchange for special trade privileges or foreign aid, especially Cambodia will not beg for help from anyone.”
Despite the differences in perspectives between the government and other institutions, civil society groups, or other countries, we look forward to seeing the effect of the 20% EBA withdrawal on the economic growth on Cambodia, especially when the garment sector is one of the major exports into the EU market.
The “Everything But Arms” (EBA) trade scheme is a part of the EU’s Generalized Scheme of Preferences (GSP). It facilitates trade for developing countries by allowing them to enjoy a reduction in tariffs when exporting products to the EU market. The goal is to stimulate economic growth and create jobs for the people in developing countries. EBA provides “full duty-free, quota-free access for all products except arms for Least Developed Countries (LDCs).” This is one of the reasons for Cambodia to enjoy the trade privileges and shows great economic growth with an average annual GDP of about 7% since 2011 (World Bank).
Sources: European Union, Ministry of Information || By: Sokhoeun Noeut