EU pressures Cambodia: one month to end tariff benefits

Cambodia, countdown to the suspension of tariff benefits. The European Union has given a period of one month to the government of the Asian country, one of the largest textile hubs, to answer to its report on the alleged violation of human rights in the country before withdrawing tariff benefits.

This comes a year after the European authorities announced their intention to withdraw access from the Asian country to the Everything But Arms (EBA) trade preferences program after learning about the conclusions of a Brussels delegation sent to the country to assess the situation and which determined that the current party in front of Cambodia outlawed that of the opposition just before the elections were held.

In October 2018, the European organization threatened the country with this sanction with the aim of correcting practices that violated human rights and urged member countries to vote in the ministers’ council.

The European Commission began testing in October 2018 the withdrawal of tariff benefits to Cambodia

Three months later, the European Commission gave the green light to the process of suspension of the zero tariff to Cambodia, after the member countries gave their approval in late January to the Brussels proposal. In this way, the agency opened a six-month period of intensive monitoring and commitment to the country’s authorities, in addition to another three months for the preparation of a report.

Now, the Commission has issued its preliminary report to the Cambodian government and has given a period of one month to receive a response and make a decision, whether or not to eliminate tariff preferences to the country. In any case, the withdrawal of benefits would take effect six months after the measure was approved.

“While the European Union remains committed to working with the Cambodian authorities towards this goal, a real and credible improvement in human rights issues is needed to avoid the withdrawal of EBA tariff preferences,” stated the European Commission.

About 75% of total Cambodian exports in 2018 were apparel and footwear

If the European organization finally decides to withdraw the benefits from Cambodia, the fashion industry will be one of the hardest hits. In 2018, the Asian country generated a business of 10 billion dollars (8.8 billion euros) in exports of apparel and footwear.

Fashion accounts for 75% of Cambodia’s total exports, being one of the main beneficiaries of the EBA program. If benefits are withdrawn, Cambodia’s exports would be subject to the most favored nation (MFN) rate, which is around 12%, which will undermine its competitiveness.