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Private Sector Groups Push The EU to Defer Partial EBA Suspension to 2021

FILE PHOTO - Prime Minister Hun Sen, center, leans over a garment worker during a visit to a factory outside of Phnom Penh, Cambodia, Wednesday, Aug. 30, 2017.
FILE PHOTO - Prime Minister Hun Sen, center, leans over a garment worker during a visit to a factory outside of Phnom Penh, Cambodia, Wednesday, Aug. 30, 2017.

Cambodian manufacturing associations and private sector companies have asked the European Union to delay the implementation of the partial suspension of trade privileges, slated to activate on August 12, to not exacerbate the existing coronavirus-induced economic slowdown.

In a statement dated June 2, the Garment Manufacturers Association in Cambodia (GMAC), Cambodia Footwear Association, and European Chamber of Commerce in Cambodia (EuroCham) asked for a reevaluation of the EU’s decision to impose tariffs on export products and to postpone the implementation to 2021.

If withdrawn in August, the groups said it would be “a massive blow to Cambodian industry over and above the enormous negative impact from COVID-19.”

“We believe that if the EU goes forward with the planned withdrawal of EBA, more jobs will be at risk at a time when COVID-19 is already heavily impacting the economy and employment in Cambodia, as in the rest of the world,” said Blaise Kilian, executive director at EuroCham.

Following a year-long investigation process, the European Commission in February decided to suspend trade privileges under the ‘Everything But Arms’ preferential system, affecting 40 products in the garment, footwear, travel goods, and sugar sector. The suspension would affect 20 percent of exports to the EU, according to the European Commission.

According to the list of export codes released by the Commission, products such as men’s and boy’s t-shirts and trousers, certain kinds of men’s underpants, briefs and pajamas, and women’s tracksuits, pantyhose and tights would be tariffed at standard EU tariffs.

But all sugarcane related products and travel goods, such as suitcases, leather gloves, and rucksacks would be fully tariffed starting August 12.

Since the start of the coronavirus outbreak, Cambodia has seen a massive drop in economic activity, severely affecting tourism and exports in the critical garment and footwear sectors. At least 250 factories have shut down or suspended their operations leaving around 130,000 employees without work.

Yang Sophorn, president of the Cambodian Alliance of Trade Unions, said the sanction was linked to political developments and that senior leaders from the government and the EU should meet and find a resolution for the benefits of workers.

“If the leaders think it is very important, there should be a discussion to find solutions for the benefits of our citizens and their living conditions,” she said.

The European Union has said that the release of opposition leader Kem Sokha and the reinstatement of the CNRP were incumbent to preventing a trade privileges suspension.

So far, Kem Sokha is still being tried for alleged treason, and Cambodia National Rescue Party members have only faced continued persecution, arrest and violence.

Phay Siphan, a Council of Ministers spokesperson, said the government supports the request made by private sector groups, but that there will be no negotiations or concessions made, referring to the Kem Sokha trial and reinstatement of the CNRP.

“Our stance is still the same. If this benefits the workers, we welcome it,” he said. “But, we can’t violate our constitutional, legislative, executive, and judicial principles.”

The European Commission said Wednesday night it was continuing to monitor the situation in Cambodia and was seeking meaningful engagement with Cambodian authorities.

"In case Cambodia shows significant progress, notably on civil and political rights, the Commission may review its decision and reinstate tariff preferences under the EBA arrangement," said the EC's press officer for trade, Kinga Malinowska.

The spokesperson did not respond to whether it was possible to delay the implementation of the EBA partial suspension, as requested by Cambodia's private sector.

Ken Loo, secretary-general of the Garment Manufacturers Association of Cambodia, said the private sector was not going to make any appeals to the government to negotiate with the EU.

“I don't know whether the [EBA suspension] is related to politics or not. We as the private sectors requested the EU, but are not pressuring the Royal government to negotiate with the EU,” he said.

The Delegation of the European Union to Cambodia and Carmen Moreno, head of the delegation, did not respond to requests for comment on Wednesday. The European Commission in Brussels had not responded to queries sent by VOA Khmer, as of publication.

Cambodia exported 45 percent of its products to the EU in 2018, accounting for around $5.8 billion. It was also the second-largest beneficiary of the EBA privileges, only second to Bangladesh.

The World Bank last week estimated that the Cambodian economy could shrink between and 1.0 and 2.9 percent, the first for the country in nearly 30 years. Garment and footwear exports were flagged as one of the three economic drivers in Cambodia that had slowed down considerably.

Note: This story had been updated to include a response from the European Commission in Brussels.