After meeting with the European Commission, Prime Minister Hun Sen said he had expected that Cambodia would one day lose its access to the bloc’s “Everything But Arms” (EBA) preferential trade agreement and had “already requested low interest” loans from China, Japan, South Korea and the ADB.
“Why does Vietnam not get [access to the EBA]? Why do Indonesia and Thailand not get that? Because of the increase in the size of their economies,” Hun Sen said.
“So Cambodia, sooner or later, was also going to lose it. Even [access to low] interest rate [loans] will be gone when the time comes. When our economy increases to such a point, we would go to borrow their money but they would not let us borrow at a low interest rate.”
Speaking to members of the Cambodian diaspora in Brussels on Friday, Hun Sen said the EBA had been “used as a tool for psychological warfare with which to attack the Cambodian government”.
The prime minister said he had requested low interest rate loans from China, Japan, South Korea and the ADB. He said Cambodia was able to borrow up to 23 per cent of its GDP.
The EBA is considered crucial to the Kingdom’s economy as it is worth $676 million annually to Cambodia in terms of tax and duty free exports to the EU.
But Hun Sen said Cambodia had already experienced losing preferential trade deals after having access to the US Generalised System of Preferences (GSP) taken away. The GSP is a scheme to promote economic development by removing duties on thousands of products.
“I would like to inform that we are used to [this kind of situation] already because of the conditions that are required. The Americans gave GSP to us from 1994 to 2004, then took it way. The US used to give us preferential trade by letting us export products to America duty-free. But that ended in 2004.
“Now we pay tax when we send goods to the US. So to put a question – if companies exporting to the US can make a profit, why can’t the companies exporting to EU make a profit?” he asked.
The EU trade commission said it had launched the procedure to withdraw Cambodia’s access to the EBA based on claims the government had committed human rights violations and rowed back on its democratic advances, including the Supreme Court dissolution of the opposition Cambodia National Rescue Party (CNRP) and the arrest of its leader on treason charges.
In Brussels, Hun Sen also met with EU High Representative of Foreign Affairs and Security Policy Federica Mogherini to discuss the EBA. His Facebook page said both sides had agreed to cooperate to “improve mutual relations”.
However, Mogherini said talks with Hun Sen, which touched on improvements to the Kingdom’s political situation and its democratic climate, produced no resolution.
“We [had a discussion]. I cannot say that we found solutions to any of these issues, but the European Union’s approach is always that of engaging and having a dialogue, especially when problems arise."
“We agreed that our teams would work together, starting in the days and in weeks to come, to go through a long list of issues that we have raised with our decision regarding the trade preferences,” she said.
However, Mogherini said she hoped “positive change could come. So the work will continue”.
Political analyst Lao Mong Hay said he believed that even though Hun Sen had taken a strong stance on losing access to the EBA, the prime minister may yet change his mind.
“It is still possible our prime minister may change his mind after discussions with his cabinet,” Mong Hay said.
The EU notified Cambodia on October 5 that the Kingdom would lose its tax and duty-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,” European Commissioner for Trade Cecilia Malmstrom wrote in the European Commission’s blog on October 5.
“Without clear and evident improvements on the ground, this will lead to the suspending of the trade preferences that they currently enjoy,” she said.