3 March 2020
CAMBODIA: Partial Suspension of Duty-Free Access to EU Markets
The country is to lose about 20% of its preferential tariff entitlement under the terms of the European Union’s (EU) Everything But Arms (EBA) programme as of 12 August this year. Unless vetoed by the European Parliament or an individual EU member state, some US$1.1 billion worth of Cambodian exports – including travel goods, as well as low added-value garments and footwear – will be affected. All such goods will be subject to the EU’s standard most favoured nation (MFN) tariff.
The EU’s move follows its widely-publicised concerns over ongoing human rights violations in Cambodia. Addressing the issue, the EU’s High Representative for Foreign Affairs and Security Policy said: “The duration, scale and impact of Cambodia's violations of rights to political participation and the freedom of expression and association left the EU with no choice but to partially withdraw trade preferences.” While reiterating that “respect for human rights is non-negotiable,” it was emphasised that the EU remains committed to supporting Cambodia's economic and social development through the imposition of preferential trade terms.
Accordingly, in a bid to support Cambodia’s export diversification, the EU has said all emerging industries, as well as high added-value garments, footwear and bicycles, will continue to enjoy duty-free and quota-free access. In addition, it indicated it would continue to work with the Cambodian authorities, while monitoring the human rights and labour rights situation in the country, adding that that if significant progress was achieved, it would consider reinstating all tariff preferences.
The EU is Cambodia’s largest export market, accounting for 45% of the country’s exports in 2018. Cambodia’s primary exports to the EU are garments (74.2%), footwear (12.6%), bicycles (5.7%) and rice (3%). Between 2013 and 2018, the country’s exports to the EU more than doubled, rising from US$2.7 billion to US$5.8 billion, largely on account of the trade benefits accruing under the terms of the EBA.