EU Pulls Cambodia’s Trade Perks on Some Products Over Rights Violations

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Prime Minister Hun Sen meets with Federica Mogherini, then-high representative of the EU for foreign affairs and security policy and vice president of the European Commission, in Brussels on October 18, 2018. (European External Action Service)
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UPDATED 12:45 a.m. — Cambodia’s duty-free trade access to the European market was partially withdrawn by the E.U. on Wednesday over “serious and systematic” human rights violations by Cambodia, the European Commission said.

The nation’s exports of selected garment and footwear products, and all travel goods and sugar to the E.U. will face standard tariffs beginning in August, unless the European Parliament and Council object, the Commission said in a statement

The Everything But Arms (EBA) trade scheme grants some developing nations duty-free and quota-free access to the European bloc on all products except weapons and ammunition. Benefiting nations must comply with international human rights conventions to maintain preferential trade access.

Following the partial withdrawal, Cambodia may be required to pay about a 12 percent tariff on garments and 16 percent on footwear for exports to Europe, according to a 2019 World Bank report

Sugar cane will be taxed about $5 per 100 kilos, while some travel bags face a tariff of nearly 10 percent, according to E.U. import duties figures. 

The partial suspension of Cambodia’s EBA benefits amounts to about one-fifth or 1 billion euros ($1.09 billion) of the nation’s annual exports to the E.U., the Commission said.

Cambodia had taken a “series of repressive actions” against the main opposition CNRP and curtailed “political participation and electoral rights in the country,” the Commission said in its published delegated regulation.

The Commission highlighted the dissolution of the CNRP in 2017; arrest of CNRP president Kem Sokha two months earlier on treason charges; and amendments to the Law on Political Parties, which the Commission found amounted to violations of the international political rights convention.

The Commission said Cambodia had made “no significant progress” in regards to upholding civil and political rights in the country since the E.U. launched its formal EBA review process in February 2019.

“The European Union reiterates … the need for the government of Cambodia to re-open the political space in the country, to create the necessary conditions for the re-establishment of a credible opposition and to initiate a democratic process of national reconciliation through genuine and inclusive dialogue,” according to the Commission statement.

CNRP president Kem Sokha leaves the Phnom Penh Muncipal Court on February 5, 2020 (Panha Chorpoan/VOD)
CNRP president Kem Sokha leaves the Phnom Penh Muncipal Court on February 5, 2020 (Panha Chorpoan/VOD)

The Foreign Affairs Ministry said it regretted the Commission’s “unjust decision” to suspend trade preferences, adding that the move was both “politically driven” and “devoid of objectivity and impartiality.”

“The decision is nothing less than the application of a double standard when it comes to the EU’s preferential practices,” the ministry said in a statement issued late Wednesday.

The Commission failed to respect Cambodia’s sovereignty, which couldn’t be the “subject of negotiation for trade preferences nor be a trade-off for any development assistance,” the ministry added, echoing similar statements often made by Prime Minister Hun Sen and other officials.

“In terms of political space, the Government has acted in good faith on anything that it could have done, save for actions that are tantamount to infringing the sovereignty of the nation,” the statement said.

While the ruling CPP currently holds all 125 National Assembly seats, following the 2018 national election, which was swept by the ruling party absent a credible opposition challenger, the ministry maintained that Cambodia upholds a “multi-party democratic system.”

Josep Borrell, the European Commission’s vice-president, said in a statement that Cambodia’s violations of rights to political participation and freedoms of expression and association left the E.U. with “no other choice than to partially withdraw trade preferences.”

The Commission found that Cambodia’s actions taken since 2017, including amendments to Law on Political Parties, the dissolution of the CNRP and the redistribution of the CNRP’s National Assembly and commune council seats, have a “strong negative impact on democracy, political participation and pluralism” in the country.

“The European Union will not stand and watch as democracy is eroded, human rights curtailed, and free debate silenced,” Borrell said. “For the trade preferences to be reinstated, the Cambodian authorities need to take the necessary measures.”

The Commission recognized positive steps taken by the government in the areas of labor and land rights, but said serious concerns remained in regards to unresolved civil and criminal cases against trade union leaders, and investigations of the murders of unionists.

A garment factory worker in Cambodia (ILO)
A garment factory worker in Cambodia (ILO)

CNRP co-founder Sam Rainsy said the outlawed opposition party supported the E.U.’s position on the rights requirements with which the Cambodian government must comply in order to avoid the suspension of trade benefits going into effect in August.

Rainsy, who lives abroad and faces various criminal charges in Cambodia that he says are politically motivated, told VOD in an email that workers’ livelihoods would be impacted by any jobs lost due to the EBA withdrawal.

In the months ahead, Hun Sen would “have to come face to face with economic instability and social unrest,” Rainsy added. “There will be more crackdowns on democratic voices but the bubble has already burst.”

International clothing brand H&M, which sources clothing from Cambodian garment factories, said that it “strongly agrees with the EU’s aim to address serious human and civil rights violations in Cambodia,” but noted that the partial EBA suspension would have a negative effect on textile workers’ jobs.

A lack of trade benefits, H&M said in a statement, would “negatively affect future investments, as well as predictability and trust, two crucially important elements of a well-functioning industry.”

“If Cambodia had complied with the EU’s requirements…the country would continue to be a very attractive sourcing destination,” the company added.

Due to the partial suspension, and a lack of adequate initiatives to develop Cambodia’s garment industry, H&M said it would further evaluate the impacts of the E.U. decision on the company’s business and production strategy in Cambodia.

A spokesman for Adidas told VOD that the brand would review the implications of the E.U.’s measures before commenting in detail.

Phil Robertson, Human Rights Watch’s deputy Asia director, said in an emailed statement that Hun Sen had “doubled down on his repressive tactics” during the Commission’s year-long evaluation period, but the government still had six months to pursue reforms and uphold rights in order to maintain duty-free trade access to Europe.

“Instead of wasting time by engaging in ‘shoot the messenger’ narratives that attack the EU, the Cambodian government should act to fix the rights problems identified by the EU,” Robertson said.

Correction: The article originally misstated a converted dollar amount as $1.09 million. The correct amount is $1.09 billion.

Updated at 12:45 a.m. with comments from the Foreign Affairs Ministry, Sam Rainsy, Josep Borrell, H&M, Adidas and Phil Robertson.

Additional reporting by Danielle Keeton-Olsen

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