Cambodia faces ‘negative impacts’ if EBA suspended

Content image - Phnom Penh Post
European Commissioner for Trade Cecilia Malmstrom speaks at the European Commission in Brussels on September 18. EuroCham has expressed ‘serious concerns’ over the EU removing the Kingdom’s access to its EBA scheme. Aris Oikonomou/AFP

The European Chamber of Commerce in Cambodia (EuroCham) expressed its “serious concerns” on Monday over the “long-term negative impacts” of the EU removing the Kingdom’s access to the preferential Everything But Arms (EBA} agreement.

It also expressed “hope that a dialogue can be implemented to better address” the bloc’s concerns and suggested “a different course of action”.

The EU notified Cambodia on October 5 that Cambodia would lose its tax-free access to the EU market unless it makes “clear and demonstrable improvements” to human rights and democracy in the Kingdom.

“High Representative Federica Mogherini and I have . . . notified Cambodia that we are launching the process for the withdrawal of their Everything But Arms preferences.

“Without clear and evident improvements on the ground, this will lead to the suspending of the trade preferences that they currently enjoy,” European Commissioner for Trade Cecilia Malmstrom wrote in the European Commission’s blog on October 5.

In a letter addressed to Malmstrom on Monday, a copy of which was obtained by The Post, EuroCham says: “We note that no decision to suspend or withdraw the EBA status has been made yet in Cambodia and hope that a dialogue can be implemented in order to identify better ways to address the concerns of the European Commission.

“Taking into consideration our role to represent the growing European business community and our responsibility to increase European investment in Cambodia, we can stress with certainty that a suspension of the EBA arrangement risks having long-term negative impacts,” the letter continues.

It adds that such a move threatened European business in Cambodia and the EU’s ability to promote its trade agenda.

“As part of the EBA monitoring process, we would like to stress that, as representatives of the private sector in Cambodia and as part of the civil society, we defend the principles and values of the European Union in the country and are strongly committed to developing ties with Cambodia’s private sector and the Royal Government of Cambodia through cooperation activities which we believe can significantly improve Cambodia’s development.

“This would not be possible in a context of a potential suspension or sanctions imposed by the European Union and we urge that an in-depth assessment of the implications of the suspension of the EBA status be conducted by the European Commission ... We would suggest a different course of action to foster the European Union’s core values, through cooperation activities rather than by implementing a suspension or sanctions in respect of the EBA arrangement.

“A suspension or further sanctions would be in fact a direct threat to European businesses competitiveness in Cambodia and to the European Union’s standing to promote its trade agenda and best practices, diminishing the competitive advantage of European businesses in a context where China is increasing its presence in the country and the region. In addition, a suspension would also reduce Cambodia’s competitiveness in the region and reduce its stance as a least developed country.”

Meanwhile, the vice-president of the Cambodia Chamber of Commerce, Lim Heng, expressed confidence that a withdrawal would not have an immediate impact on Cambodian businesses.

Content image - Phnom Penh Post
Withdrawal of the EBA scheme ‘will not be a big concern’. post staff

“Cambodian government officials are working diligently on the issue and will find a way to solve [it],” Heng said. “In the meantime, it will not impact business stability in Cambodia as it will take at least [a year] for discussions to reach the final stage.

“It will not be a big concern for Cambodia as we already follow the [International Labour Organisation] and protect workers’ interests by increasing their salaries and promoting other incentives. If it really happened, I believe we Cambodians are already able to stand by ourselves ... Benefits will not only be lost to Cambodia but to the EU as well in economic terms.”

The Cambodia Rice Federation (CRF) said it had also discussed the issue of the EU’s possible withdrawal of the EBA scheme, said its vice-president, Hun Lak.

“The issue of the withdrawal of EBA still has a long way to go and we do not expect it to impact the agriculture industry ... there is a lot of potentials, especially in the rice industry,” he said.significantly improve Cambodia’s development.

“This would not be possible in a context of a potential suspension or sanctions imposed by the European Union and we urge that an in-depth assessment of the implications of the suspension of the EBA status be conducted by the European Commission ... We would suggest a different course of action to foster the European Union’s core values, through cooperation activities rather than by implementing a suspension or sanctions in respect of the EBA arrangement.

“A suspension or further sanctions would be in fact a direct threat to European businesses competitiveness in Cambodia and to the European Union’s standing to promote its trade agenda and best practices, diminishing the competitive advantage of European businesses in a context where China is increasing its presence in the country and the region. In addition, a suspension would also reduce Cambodia’s competitiveness in the region and reduce its stance as a least developed country.”

Meanwhile, the vice-president of the Cambodia Chamber of Commerce, Lim Heng, expressed confidence that a withdrawal would not have an immediate impact on Cambodian businesses.

“Cambodian government officials are working diligently on the issue and will find a way to solve [it],” Heng said. “In the meantime, it will not impact business stability in Cambodia as it will take at least [a year] for discussions to reach the final stage.

“It will not be a big concern for Cambodia as we already follow the [International Labour Organisation] and protect workers’ interests by increasing their salaries and promoting other incentives. If it really happened, I believe we Cambodians are already able to stand by ourselves ... Benefits will not only be lost to Cambodia but to the EU as well in economic terms.”

The Cambodia Rice Federation (CRF) said it had also discussed the issue of the EU’s possible withdrawal of the EBA scheme, said its vice-president, Hun Lak.

“The issue of the withdrawal of EBA still has a long way to go and we do not expect it to impact the agriculture industry ... there is a lot of potentials, especially in the rice industry,” he said.