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EU starts EBA withdrawal

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Garment workers are working in the factory at the outskirt of Phnom Penh City last year. If the EU decides to withdraw EBA from Cambodia, it is the workers who will be severely affected. Pha Lina

EU starts EBA withdrawal

The EU on Monday announced that it has begun the 18-month process of withdrawing the Kingdom’s access to its preferential Everything But Arms (EBA) agreement over “a deterioration of democracy [and] respect for human rights”.

However, the Garment Manufacturers Association of Cambodia (GMAC) said the move would see development “halted”.In an immediate response, the European Chamber of Commerce (EuroCham) in Cambodia expressed its “disappointment” with the decision, while academic Kin Phea said the threat of Cambodia losing its access to the EBA should be countered by looking to markets outside Europe and the US.

“The competitiveness of our sector will be unduly put at risk . . . and Cambodia’s development will be halted. All efforts made in building a responsible garment supply chain will be jeopardised and it will be a dramatic setback for workers.”

“GMAC calls on the European Commission and the EU to thoroughly assess whether such a procedure potentially resulting in the suspension of preferential tariff arrangements under the Everything But Arms programme would be proportionate and ultimately strengthen democracy and human rights in Cambodia,” GMAC said on Monday.

The EU announcement quoted the High Representative for Foreign Affairs and Vice President of the European Commission Federica Mogherini as saying “a deterioration of democracy [and] respect for human rights calls Cambodia’s participation in the EBA into question”.

Trade Commissioner Cecilia Malmstrom took a more conciliatory tone, saying the move “was not a final decision”.

Mogherini and Malmstrom launched the process to begin withdrawal on October 4 last year.

The EBA agreement allows the least developing status nations duty and tariff free imports into the 28-member bloc.

“Over the last 18 months, we have seen the deterioration of democracy, respect for human rights and the rule of law in Cambodia. In February 2018, the EU Foreign Affairs Ministers made clear how seriously the EU views these developments.

“In recent months, the Cambodian authorities have taken a number of positive steps, including the release of political figures, civil society activists and journalists and addressing some of the restrictions on civil society and trade union activities.

“However, without more conclusive action from the government, the situation on the ground calls Cambodia’s participation in the EBA scheme into question.

“As the EU, we are committed to a partnership with Cambodia that delivers for the Cambodian people. Our support for democracy and human rights in the country is at the heart of this partnership,” Mogherini said.

Malmstrom said: “It should be clear that today’s move is neither a final decision nor the end of the process. But the clock is now officially ticking and we need to see real action soon.

“We now go into a monitoring and evaluation process in which we are ready to engage fully with the Cambodian authorities and work with them to find a way forward.”

However, Phea said: “The suspension of the EBA will be a challenge to Cambodia’s economic health. Most products are exported to the US and EU markets and [the loss of EBA] would make us weaker competitively.

“But it does not mean we lose the market – we still can export to the EU market, but we will have to pay full duty as set by them.”

He added that the government should continue its reforms [and] look to countries outside Europe and the US, such as China, Japan, South Korea and Russia.

GMAC said on Monday that a suspension of EBA would increase tariffs by 12 per cent in the garment sector and by eight to 17 per cent for footwear.

Following the announcement, EuroCham in Cambodia issued a press release expressing its regret at the decision.

“As the main representative of the large European investment and business community in Cambodia, EuroCham is deeply concerned about the possible negative consequences of this decision on current and future business between the EU and Cambodia.

“The launch of the EBA withdrawal investigation by the European Commission is counterproductive to Cambodia’s socioeconomic transformation.

“This decision not only jeopardises the past and future achievements of this partnership, but also other development initiatives funded by the EU over the last two decades which have helped to vastly improve the socio-economic status of millions of Cambodians.

“We regret this decision but vow to continue partnership and engagement with the government on its business and development goals,” EuroCham said.

The EU said its decision was to be published in its Official Journal on Tuesday, which would begin the process.

“A six-month period of intensive monitoring and engagement with the Cambodian authorities is to follow, with another three-month period for the EU to produce a report based on the findings.

“After a total of 12 months, the Commission will conclude the procedure with a final decision on whether or not to withdraw tariff preferences. It is also at this stage that the Commission will decide the scope and duration of the withdrawal.

“Any withdrawal would come into effect after a further six-month period, the EU announcement on Monday said.

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