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Cambodia, Myanmar Could Lose Special Trade Status With Europe

Cambodia could face potential economic collapse, leading to a devastating impact on garment manufacturing, if the European Union follows through on its threat this month to withdraw Cambodia’s special trade status with Europe due to human rights concerns.

The EU warned Cambodia in July that the southeastern Asian nation could lose its special access to Europe if elections returned Prime Minister Hun Sen to power and extended his 30-year rule.

Global observers, and the EU specifically, have criticized the Cambodian government for its attacks against critics and opposition parties, its crackdown on independent media and nongovernmental organizations, and its disregard for human rights. Observers also consider the most recent election to have been a rigged election after the opposition party, the Cambodia National Rescue Party (CNRP), was forcibly dissolved.

“In Cambodia … we are seeing very troubling developments with a clear deterioration of human rights and labour rights, without convincing improvements in sight,” wrote European Commissioner for Trade Cecilia Malmström in a blog post earlier this month. “Our recent EU mission to the country demonstrated serious and systemic violations of, for instance, freedom of expression, labour rights and freedom of association. This comes on top of longstanding issues as regards workers’ rights and land-grabbing.”

Cambodia enjoys tariff-free access to the European market, except for weapons and ammunition, and its exports to European countries account for roughly 40 percent of Cambodia’s foreign sales and generate nearly $6 billion, according to EU data. The majority of Cambodia’s exports come from its textile, garment and footwear industry, which employs an estimated 800,000 people.

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“However, this access is not without conditions. It comes with a responsibility to uphold and respect the values enshrined in 15 fundamental conventions of the United Nations and the International Labour Organisation,” Malmström continued. “As I have underlined many times as Commissioner for Trade, our EU trade policy must be led by our values. Accordingly, when we are faced with blatant disregard for those values, the EU must act.”

Malmström said the EU will conduct a six-month review of Cambodia’s duty-free status, and “Without clear and evident improvements on the ground, this will lead to the suspending of the trade preferences that they currently enjoy.”

Cambodia’s government last week lashed back at the EU, saying the action would destroy years of progress.

“The Cambodian government can only take this decision as an extreme injustice when the EU blatantly disregards the considerable progress made by the country, despite its recent tragic past,” Cambodia’s Ministry of Foreign Affairs said on Thursday in a statement. “By implementing these withdrawal measures, the European Commission risks negating twenty year’s worth of development efforts.”

The EU is also considering similar trade sanctions for Myanmar, accusing the country of “blatant violation of human rights” surrounding allegations of ethnic cleansing of Rohingyas, including revelations from a recent United Nations report accusing Myanmar’s military of gang rapes and mass killings with “genocidal intent.”

Malmström said a fact-finding team is being sent to Myanmar to assess the situation on the ground, saying, “There is a clear possibility that a withdrawal [from free trade access] could be the outcome.”

Malmström did leave a sliver of hope, though she said the ball is in the southeast Asian nations’ courts.

“We are not yet at the cliff edge and there is still time for Cambodia and Myanmar to draw themselves back from the brink,” she said. “However, the consequences of the course that these countries are on are now clearly in sight.”