EU Partially Suspends Tariff-Free Status For Cambodia Exports Over Rights Concerns

The European Union on Wednesday announced plans to suspend tariff-free access for around one-fifth of Cambodia’s exports to its market, citing drastic rollbacks on democracy and human rights in the Southeast Asian nation.

The partial suspension of preferential trade status Cambodia enjoys under the Everything But Arms (EBA) scheme for developing nations would affect around U.S. $1.1 billion of the country’s exports to the EU by reinstating tariffs on garments and footwear, as well as travel goods and sugar, beginning Aug. 12, unless it is blocked by the bloc’s governments or its parliament, the European Commission (EC) said.

The European Union will not stand and watch as democracy is eroded, human rights curtailed, and free debate silenced, EU foreign policy chief Josep Borrell said in a statement.

For the trade preferences to be reinstated, the Cambodian authorities need to take the necessary measures.

On Nov. 12, the EU warned in a preliminary report that Cambodia has not taken enough measures to prevent a withdrawal of its EBA status, noting the country’s further deterioration of civil, political, labor, social, and cultural rights since the launch of a review process in February last year.

The EU launched the process to strip Cambodia of its preferential trade terms following the arrest of opposition Cambodia National Rescue Party (CNRP) President Kem Sokha in September 2017 and the Supreme Court’s decision to ban his party for its role in an alleged plot to topple the government two months later.

The ban, along with a wider crackdown on NGOs and the independent media, paved the way for Hun Sen’s ruling Cambodian People’s Party (CPP) to win all 125 seats in parliament in the country’s July 2018 general election.

Cambodia’s Ministry of Foreign Affairs responded to the EC’s announcement on Wednesday with a statement suggesting that its decision had been triggered by many misperceptions and misunderstandings about the actual realities in Cambodia.

The ministry dismissed the decision as politically driven and devoid of objectivity and impartiality, and said Cambodia’s government would reject any attempt by external parties to use trade or aid as pretexts to justify their interference in Cambodia’s internal affairs.

It also referred to it as an example of a double standard when it comes to the EU’s preferential practices with other trading nations, without elaborating. On Wednesday, the EU Parliament ratified a landmark free trade deal with Vietnam over the objections of lawmakers citing the Southeast Asian nation’s human rights record.

In the lead up to Wednesday’s decision, despite warnings from civil society that loss of EBA status would devastate Cambodia’s working class, Prime Minister Hun Sen had said he had no interest in meeting the EU’s demands to improve his country’s rights record.

Cambodia is the second-largest beneficiary of EBA trade preferences after Bangladesh, accounting for more than 18 percent of all imports to the EU market under the EBA scheme in 2018.

EU imports from Cambodia totaled 5.3 billion euros (U.S. $5.8 billion) that year, nearly all of which entered the EU duty-free, taking advantage of EBA preferences.

Clothing and textiles a crucial industry in Cambodia that employs around one million people account for around 75 percent of EU imports from the Southeast Asian nation.

Call to ‘change course’

Kasit Piromya, a former Member of Parliament of Thailand and a board member of the Association of Southeast Asian Nations (ASEAN) Parliamentarians for Human Rights (APHR), on Wednesday called the EU decision an outcome that didn’t need to happen, and blamed it on Hun Sen’s drastic crackdown on human rights.

This decision by the EU to remove duty-free access on some Cambodian exports under the Everything but Arms programme heaps more pressure on Hun Sen and his government to reverse its dramatic slide towards authoritarianism, he said in an emailed statement.

Let this be clear: the responsibility to reverse course and regain the trade preferences does not lie with the EU, but with Hun Sen. It is up to him to change course and drop all charges against CNRP members and human rights defenders, allow opposition parties to return to the political fold, and amend laws to ensure Cambodians’ rights to freedom of expression, association and peaceful assembly.

Phil Robertson, deputy Asia director for New York-based Human Rights Watch, called the plan for a partial suspension a slap down of PM Hun Sen and his blatant disregard for human and labor rights.

While the EU gave Hun Sen ample opportunities to reverse his crackdown, the prime minister doubled down on his repressive tactics over the past year, Robertson said, leaving the EU no choice but to suspend some trade preferences, in line with EBA rules.

This is not the EU punishing Cambodia, but rather Hun Sen’s arrogant indifference to human rights hurting the Cambodian people who livelihoods may be impacted because of the EU’s decision, he said.

It’s his government’s failure to act to respect rights and fix problems identified by the EU that is driving this decision. PM Hun Sen should recognize this reality and come to the negotiating table now.

Robertson advised Hun Sen’s government to work to fix rights problems identified by the EU while Phnom Penh engages in six-months of negotiations with Brussels focused on, among other things, the imposition of tariffs on goods subject to suspension.

PM Hun Sen should stop his senseless threats to cease discussions on human rights and democracy with the EU, and recognize the only way forward is rescinding abusive laws, and ending punitive attacks, arrests and trials of activists and political opponents, he said.

Meanwhile, the EU needs to stand firm and set clear benchmarks for the government to meet in pursuit of real reforms on human and labor rights.

Vietnam trade pact

The EU’s decision to ratify the EU-Vietnam Free Trade Agreement (EVFTA) on Wednesday while suspending some of Cambodia’s privileges highlights the bloc’s determination to use trading partnerships as incentives to secure protections of environmental, human, and labor rights.

Last week, a group of international and Vietnamese nongovernmental organizations (NGOs) urged EU lawmakers to postpone consent on the EVFTA until Vietnam’s government agrees to reform laws they said has led to the jailing of as many as 300 government critics.

On Wednesday, however, the European Parliament consented to the pact with a vote of 401 in favor, 192 against and 40 abstentions.

EU trade commissioner Phil Hogan touted what he called the huge economic potential of the EVFTA in a statement issued after the vote, adding that efforts by Vietnam to improve labor rights in a bid to secure the deal proves that trade policy can be a force for good.

The EVFTA, inked in June, will eliminate 99 percent of tariffs on goods between the bloc and Southeast Asian country, although some will be reduced over a 10-year period and others will be limited by quotas.

The EU is Vietnam’s second-largest export market after the U.S., mostly for garment and footwear products, and in 2018 the Southeast Asian nation sent U.S. $42.5 billion worth of goods and services there, according to official data. Vietnam imported U.S. $13.8 billion from the EU that year.

The Vietnamese government has said that the EVFTA will boost EU exports to Vietnam by more than 15 percent and those from Vietnam to the EU by 20 percent by 2020, while the agreement will increase Vietnam’s gross domestic product by up to 5.3 percent annually between 2024 and 2028.

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