The withdrawal of the special preferences under the Everyting But Arms (EBA) scheme by the European Union is likely to cause long-term negative effects in Cambodia and undermine years of effective advocacy work, said the European Chamber of Commerce in Cambodia (EuroCham).
Seeing the role it plays to represent the growing European business community and increase investment in Cambodia, the withdrawal could have a direct effect on European business competitiveness, it said.
“It could also diminish the competitive advantage of European businesses in a context where China is increasing its presence in Cambodia and the region,” EuroCham said in an Oct 15 letter to European Union (EU) Trade Commissioner Cecilia Malmstrom.
The letter was jointly signed by EuroCham president Arnaud Darc, French Chamber of Commerce and Industry chairman Guillaume Massin, German Business Group chairman Tassilo Brinzer, NordCham chairman Kjeld M Dlsen, and Italian Business Association chairman Aurelio Fiacco.
EuroCham represents the European private sector here, which is made up of 335 businesses employing more than 50,000 workers.
The letter was copied to European Parliament president Antonio Tajani, European Commission (EC) president Jean-Claude Juncker, and EC High Representative of the Union for Foreign Affairs and Security Police, and vice president Frederica Mogherini.
EuroCham joins a band of concerned groups over Malstrom’s announcement on Oct 5 over the start of the process to remove the single market preference that enables Cambodia to export tax-free into the European market, making up 40% of its overall exports.
It said suspending the EBA or initiating a short-term unilateral sanctions are not efficient tools to improve the democratic process, rather cooperation is the right tool.
In Cambodia, the suspension would be counterproductive to EU’s trade agenda, and its spread of European principles with trade as an essential vector of democratic values, EuroCham said.
“This is a view shared by many international representatives with considerable first-hand experience in Cambodia,” EuroCham added.
It also said the perception of a link between the situation in Cambodia and Myanmar could also mislead the public as the alleged violent condition in the latter nation posed a different set of challenges for the EU to evaluate.
“Referencing these circumstances together does a disservice to the progress made by Cambodia in rebuilding the economy and consolidating peace after the devastation of the Khmer Rouge, and the conflict of the 1980s and 1990s. This may unnecessarily push the Cambodian government from further engagement,” it added.
Noting the EU has made no decision yet, it however hoped that a dialogue takes place to identify better ways to address the concerns of the EC, and urged an in-depth assessment of the implications of the suspension of the EBA status.
It also called for EU to include the group in discussions on the assessment of the suspension in order to glean an accurate and complete view of the economic environment in Cambodia.
“EC should also state clearly the objectives and measures it wants to see implemented in Cambodia as it seems uncertain and confusing,” EuroCham added.