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Unions Push Gov’t For EBA Talks As IMF Forecasts Serious Economic Risks

FILE: Workers of garment factories along the Confederation de la Russia Boulevard in Phnom Penh come out during their lunch break. (Khan Sokummono/VOA Khmer)

The IMF forecast showed that a complete suspension of the ‘Everything But Arms’ trade preferences would see Cambodia’s GDP growth rate drop by 3 percentage points.

A week after the International Monetary Fund warned of serious downside risks to Cambodia’s economic outlook, trade unions in the country called on the government to work with the European Union to retain critical trade privileges.

The IMF forecast, published last week, showed that a complete suspension of the ‘Everything But Arms’ trade preferences would see Cambodia’s GDP growth rate drop by 3 percentage points.

It also reported that a full suspension would “lead to a permanent decline in garment sector output and employment in the long-run.” Garment and footwear exports make up a significant portion of Cambodia’s exports to the European Union. The sector also employs around 800,000 Cambodians, mostly women, and indirectly supports 3 million people.

The body also estimated Cambodia’s GDP growth rate, without factoring an EBA withdrawal, to fall to 6.8 percent in 2020, down from the 7.5 and 7 percent in 2018 and 2019, respectively.

Ath Thorn, a member of the Cambodian Labor Confederation, said that Cambodia needed to do its best to engage in a dialogue with the European Union, to convince the trading bloc to not suspend trade preferences.

“I think that the EBA is a crucial issue, which is able to maintain macroeconomic stability, as well as decent job growth and income stability for workers,” he said. “If we lost the EBA in any way, I think it will not be good for Cambodia.”

The European Commission initiated an investigation into the potential suspension of the trade privileges earlier this year, which is expected to be completed in a few months. This, the EU said, was on account of major human rights violations over the years, including the recent crackdown on the political opposition, NGOs and independent media organizations.

Preliminary findings of the report, accessed by VOA Khmer, shows that the EU Commission had not seen little improvement in the country’s human rights record, also pointing to a further worsening since the announcement of the investigation.

The EU has pointed to labor rights violations as one of the major concerns during the investigation. Major concerns are long-pending criminal cases against union leaders and the contentious Trade Union Law, which was recently amended but still flagged as restrictive by pro-worker unions.

Koy Kuong, spokesman for the Ministry of Foreign Affairs, and Phay Siphan, spokesman for the Cambodian government, could be reached for comment on Monday.

Khun Tharo, coordination officer at labour rights group Central, said it was incumbent on the government to engage with the EU to ensure that the EBA was not suspended. The government earlier this month sent its reply to the EU’s preliminary findings.

“The government must show a higher political will because the deal would not be made with merely economic [concessions] but it would be done with political exchanges too,” he said, referring to the imminent treason trial for opposition leader Kem Sokha.

In statements, the EU has said that it would like to see the treason charges against Kem Sokha dropped and reinstatement of the Cambodia National Rescue Party.