• Economics

Business Associations Call on EU to Delay EBA Withdrawal

• Phoung Vantha
• June 3, 2020 8:44 AM

Arguing that now is not the time to add further strain to the Cambodian economy, three business associations have requested the EU postpones the partial withdrawal of the EBA trading scheme.

PHNOM PENH--Three business associations related to garment and footwear manufacturing on June 2 called upon the European Union to postpone the scheduled withdrawal of Cambodia’s access to the Everything But Arms (EBA) preferential trading scheme. The delay is necessary, the associations said in a joint statement, to save jobs in Cambodia that have been directly affected by the Coronavirus Disease 2019 (COVID-19) pandemic.

The Garment Manufacturers Association in Cambodia (GMAC), the Cambodia Footwear Association (CFA) and the European Chamber of Commerce in Cambodia (EuroCham) noted some 256 factories have suspended their operations across Cambodia, with more than 130,000 Cambodians affected by the Labor Ministry’s estimates. 

“The COVID-19 pandemic has had a devastating impact on the economy globally and the situation is no different in Cambodia where the development of the country relies heavily on its trade with Europe,” said Arnaud Darc, chairman of the European Chamber of Commerce in Cambodia. 

Spokesman for the Ministry of Labor Heng Sour said “This is a case for the private sector and the other parties. The Royal Government of Cambodia has a clear stance on the EBA withdrawal.” 

An estimated 850,000 Cambodians are employed in garment and footwear manufacturing, the majority of whom are women, but in February 2020, EU’s decided to partially revoke benefits afforded to Cambodia under the EBA scheme. While the EU’s decision was made on the grounds of gross human and labor rights violations taking place in Cambodia, critics have argued that creating more barriers to trade will not only impede Cambodia’s economic development, but will have a dire impact on hundreds of thousands of vulnerable Cambodians. 

Tariffs are expected to be applied to Cambodian exports worth roughly $1 billion to the EU from Aug. 12, 2020, unless the EU postpones the partial withdrawal of trade benefits.

“If the commission allows the EBA withdrawal to take effect in August 2020, this could in fact result in a near-collapse of the already pandemic devastated apparel, footwear and travel goods industry in Cambodia,” the statement read. 

“If the withdrawal goes forward, more orders and jobs will be lost or will never come back. The EU must not ignore the gravity of the situation and the devastating impact of removing EBA benefits in August, as the damage of an unprecedented pandemic is still being felt by our sector,” Sou Leng Van, chairman of the Garment Manufacturers Association in Cambodia. 

When contacted for comment on whether the government has any plans to negotiate with the EU regarding a possible postponement of the EBA withdrawal, Foreign Affairs Ministry spokesperson Koy Kuong simply replied “No.”

Meanwhile, Executive Director of Transparency International Cambodia Pech Pisey said “Due to recent incidents, such as the decision to withdraw EBA, the severe impacts of COVID-19, and Cambodia’s potential listing as a high-risk country for money laundering by the EU, the potential loss of an estimated 1.76 million jobs, potentially massive credit defaults and the mass repatriation of newly-unemployed migrant workers, this emergence of economic ramifications will test our social harmony.”