Government, private sector and civil society representatives gathered on Friday to discuss the impact of a likely removal of Cambodia’s preferential trade status in the European Union and explore potential courses of action.
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At the roundtable meeting – which brought together representatives of the Ministry of Commerce, the Royal Academy of Cambodia, the Garment Manufacturers Association in Cambodia (GMAC) and the European Chamber of Commerce (Eurocham), among others – public officials claimed that Cambodia is prepared to survive without the Everything-but-arms (EBA) deal.
Sok Sopheak, secretary of state at the Ministry of Commerce, said the EBA will probably not be revoked, as the government still has six months to negotiate with the EU and defend its position. Mr Sopheak said the temporary suspension of the EBA is an 18-month process, giving the government plenty of time to debate its position.
If the suspension does happen, however, the government has already put in place a series of mechanisms and policies to minimise the impact on the manufacturing and export industries, he said.
“We have a whole six months to argue with the European Commission,” he said.
“Regardless, I believe the EBA will not be suspended because Cambodia has implemented all 42 articles in the EBA,” he said, adding that “there was only a small problem in implementing article 19.”
Article 19 of the EBA states that EBA preferences can be withdrawn in case of some exceptional circumstances, notably in case of serious and systematic violation of principles laid down in fundamental human rights and labour rights conventions.
“I don’t think this issue is so big that we cannot deal with it,” Mr Sopheak said.
He added that the country is ready to deal with the suspension.
“We have carried out structural reforms, given incentives to investors and businesses, removed obstacles in border gates, and cut electricity prices.
“Likewise, exporters are no longer required to present certificates of origin at local customs. These reforms have reduced operating costs for exporters by about $200 million,” Mr Sopheak said.
“These reforms will enable local products to compete with European goods in case the EBA is suspended. They have increased the competitiveness of Cambodian goods,” he added.
GMAC chairman Van Sou Leng stressed that removing the EBA does not mean the EU is closing its market to Cambodian goods. The removal of the preferential trade status simply entails that tax will be levied on Cambodian goods, he explained.
He said if the suspension goes into effect, buyers in the EU, who will have to pay tariffs, will put pressure on Cambodian exporters to reduce their prices.
“If the EBA is suspended, we need to make sure we remain competitive, particularly when compared to countries like Bangladesh, Vietnam, and Myanmar.”
Mr Sou Leng took the opportunity to criticise EU’s decision to launch the process to temporarily remove the EBA.
“What I really don’t understand is what the EU is basing its decision to suspend the EBA on. The garment and footwear sectors in Cambodia have worked with the International Labour Organisation (ILO) since 2000. The ILO has checked with each 600 garment and footwear factories and found that they respect the labour law and all international conventions.
“ILO wrote a report saying that 91 percent of the factories in the Kingdom obey eight international conventions and 13 other conventions of the United Nations.
“If we present this evidence to the EU and they still remove the EBA, the world will no longer believe in the EBA system,” Mr Sou Leng said.
He said the removal of the preferential trade status will have the biggest impact on the garment, footwear, rice, and bicycle sectors, adding that the effect on tourism and construction will be “quite limited.”
Arnaud Darc, chairman at Eurocham, said European firms will continue to invest in Cambodia even if the EBA is suspended because the country has great potential in a number of industries.
“A number of sectors will be impacted by the suspension of EBA, including tourism, construction, and agriculture. But Cambodia will remain an attractive destination for foreign investment.
“Cambodia now has to show other countries that it is a strong nation with plenty to offer,” Mr Darc added.