Brussels has partially withdrawn tariff-free trading rights from Cambodia in protest against human rights violations in the country — the first time the EU has revoked preferential “Everything But Arms” trade terms created for the world’s poorest countries.
The European Commission on Wednesday confirmed that Cambodia’s EBA rights had been partly suspended, following through on an EU decision from earlier this year. The move means some Cambodian goods such as clothing and footwear products will now face tariffs when they are imported into the EU, as well as sugar.
Brussels estimates that products affected make up one-fifth, or €1bn, of Cambodia’s yearly exports to the EU. Cambodia can still export the goods to the EU but they will be subject to tariffs under World Trade Organization rules.
Cambodia, where Prime Minister Hun Sen has ruled for more than 35 years, is a test of whether scrapping trade preferences is an effective tool in putting pressure on autocratic governments, or whether it risks harming employees, businesses and the wider economy.
Phil Hogan, Brussels trade commissioner, said the EU needed to see “substantial improvement” in Cambodia’s respect for human rights and labour laws to fully restore EU market access.
“We have provided Cambodia with trade opportunities that let the country develop an export-oriented industry and gave jobs to thousands of Cambodians,” said Mr Hogan. “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 labour rights.”
The EU argued that it was effectively compelled to take the step because of repeated violations against political freedom. Since 2017, Cambodia has arrested and tried the opposition leader Kem Sokha on treason charges, outlawed his Cambodia National Rescue party and cracked down on independent media. Legislative elections in 2018, in which the ruling Cambodian People’s party won every single seat, were widely decried as a sham.
Brussels has long called on Cambodia’s authorities to restore political freedoms and “re-establish the necessary conditions for a credible, democratic opposition and to initiate a process of national reconciliation through genuine and inclusive dialogue”, said a statement from the commission.
Specifically, the EU has asked the government to reinstate rights for opposition figures and amend or repeal a law that places restrictions on non-governmental organisations.
Phay Siphan, a Cambodian government spokesperson, accused the EU of a “double standard” given that it had just signed a trade deal offering tariff cuts to neighbouring Vietnam, an authoritarian Communist state with a poor human rights record.
He said Cambodia hoped to maintain co-operation with the EU and proceed on a “more productive” basis.
EBA is an EU scheme granting full duty-free, quota-free access into the EU market for all products except arms and ammunition for countries classified by the UN as least developed. Cambodia has been one of the programme’s biggest beneficiaries. But the access hinges on respect for human rights and basic labour standards.
The EU is Cambodia’s largest trading partner, accounting for 45 per cent of the country’s exports in 2018. Exports to the EU from Cambodia reached €5.4bn in 2018. About 95 per cent of these exports entered the EU market under EBA tariff preferences.
Cambodian companies and unions had warned the EU that scrapping the preferences for the country would endanger hundreds of thousands of jobs, mostly held by women.
EU officials said the trade curbs had been tailored to try to avoid delivering an economic hammer blow to the country during Covid-19, while at the same time bringing meaningful pressure to bear on the regime. EBA is seen in EU diplomatic circles as a key source of leverage with the country.
In recent months, Brussels has stressed that the Cambodian government can still save the trade preferences by addressing the bloc’s concerns over political and civil 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,” said Mr Hogan.
The EU is also currently reviewing whether to revoke EBA trade preferences for Myanmar over alleged genocidal acts against Rohingya Muslims.