The EU announced in the EU Journal in February 2019 that it will initiate the process of temporarily revoking Cambodia’s “Everything But Arms” (EBA) tariff preference qualification (2019/C55 /07). According to EU regulations, after initiating the procedure, the EU will complete the relevant review and assessment within 6 months, and complete the relevant report within 3 months after the end of the above process. Accordingly, the EU sent the above-mentioned report to the Cambodian government on November 12, 2019, alleging that it violated human rights issues, and required the Cambodian government to respond to the report within one month, otherwise Cambodia’s EBA qualification will be revoked.
The EU’s general trade preferences (GSP) are mainly divided into three types: (1) Standard GSP, which applies to the exports of developing countries that are applicable to this mechanism. Products with EU tariff code 66% enjoy tax reduction or exemption; (2) GSP+, compared with standard GSP, countries under this category are all vulnerable developing countries. For products with EU tariff code 66% , enjoys tax-free treatment; (3) EBA, applicable countries are lowly developed countries, and all products exported to the EU, except weapons and ammunition, enjoy zero-tariff benefits. Cambodia is an EBA country, but the EU can suspend EBA benefits to the country based on its domestic human rights and labor conditions.
Although this report has not yet been made public, according to previous EU reports, Cambodia is facing three major human rights crises. The first is labor rights. According to the International Trade Union Confederation, Cambodia ranks among the top 10 worst labor conditions in the world. This is due to long-term low wages and national laws that do not pay attention to workers’ rights to protest. The second is land grabbing. Since EBA has greatly increased Cambodia’s sugar exports, the Cambodian sugar industry has occupied people’s land to increase production, causing EBA to indirectly worsen Cambodia’s human rights issues. The third is political oppression. Cambodian Prime Minister Hun Sen used his power to arrest members of the opposition party. The Cambodian Supreme Court even ordered the dissolution of the opposition party in 2017, putting the credibility of the 2018 election into question; this issue is also the most serious problem in Cambodia currently. Based on the above reasons, the EU decided to initiate the process of revoking Cambodia’s EBA qualification.
Faced with the EU’s threat to cancel the EBA, many manufacturers in Cambodia expressed nervousness. Cambodia’s exports to the EU accounted for 39% of its total exports in 2018, reaching US$5.8 billion, especially in manufacturing industries such as garments and footwear. The EU estimates that the cancellation of tariff preferences for Cambodia will affect about two million garment factory workers and have an impact on the country’s economy. It is understood that in response to the report sent by the EU on the 12th, the Cambodian Ministry of Foreign Affairs only stated that it would continue to pay attention to issues of concern to the EU and update recent developments. On the 14th, Prime Minister Hun Sen released 70 prisoners in the name of “promoting national unity” Opposition figures.
After the EU sent the report to Cambodia on the 12th, it has asked the country’s government to respond to the content of the report within one month. The EU will decide whether to cancel the EBA preferential treatment for Cambodia in February 2020 at the earliest, based on the development situation of Cambodia. If the EU finally decides to temporarily revoke the preferential system for Cambodia, the decision will take effect 6 months later at the earliest, which means Cambodia will lose its EBA preferential treatment in August 2020.
