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Cambodia

Hun Sen’s crackdown: loss of EU trade benefits could cost Cambodia US$700 million annually

In 2016, Cambodia exported US$6.2 billion worth of products such as garments to European markets, which absorbed some 70 per cent of the country’s total garment exports

PUBLISHED : Wednesday, 20 December, 2017, 10:44pm
UPDATED : Wednesday, 20 December, 2017, 10:44pm

Cambodia stands to lose nearly US$700 million per year if the European Union suspends its preferential trade treatment in response to the government’s crackdown on the country’s main opposition party, according to a document seen Wednesday.

In a letter to Prime Minister Hun Sen, Commerce Minister Pan Sorasak warned that if European Parliament’s suspension call were implemented, Cambodia would have to pay US$676 million a year in taxes on its Europe-bound exports and the jobs of 400,000 workers producing those products would be put at risk.

In 2016, Cambodia exported US$6.2 billion worth of products such as garments to European markets, which absorbed some 70 per cent of the country’s total garment exports.

The European Parliament’s resolution adopted December 13 calls on EU authorities to review Cambodia’s fulfilment of its obligations under the “Everything but Arms” initiative, under which most imports from least developed countries are both duty-free and quota-free.

The resolution stresses “that respect for fundamental human rights is a prerequisite for Cambodia to continue to benefit from the EU’s preferential EBA scheme.”

“If Cambodia is acting in violation of its obligation under the EBA regulation, the tariff preferences it currently enjoys must be temporarily withdrawn,” it says.

Respect for fundamental human rights is a prerequisite for Cambodia to continue to benefit from the EU’s preferential EBA scheme
European Parliament

According to the commerce minister’s letter, the EBA benefits were withdrawn in the past for other countries like Myanmar, Sri Lanka and Sudan.

In its resolution, the European Parliament condemned the forced dissolution of the Cambodia National Rescue Partly, which was the only opposition party represented in parliament, and the banning of CNRP politicians from politics for five years – moves that come ahead of a general election scheduled for next July.

It also called for the release of detained politicians including CNRP leader Kem Sokha, as well as activists and trade unionists, and for the dropping of all charges against Sam Rainsy, another opposition leader who is living abroad in self-exile.

Hun Sen of the ruling Cambodian People’s Party has repeatedly defended the actions taken against CNRP and its leaders, insisting they committed acts of treason that cannot be tolerated.

Pan Sorasak said that if the United States were to similarly suspend its tax exemptions, Cambodia would lose much less than without the EBA, or just about $10 million per year.

The United States and the European Union have already suspended their funding support for the next general election.

During the last general election in 2013, the results of which were disputed by the CNRP, the opposition party won 55 seats in the 123-seat National Assembly, against 68 seats captured by the CPP.

Some 700,000 Cambodians are employed in the garment industry, out of a total population of over 15 million, and many fear the social and economic consequence of drastic reduction in trade with the West.