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

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violation of its obligation under the EBA regulation, the tariff preferences it currently enjoys must be temporarily withdrawn,” it says.