Partial tariff-free trading rights withheld as punishment . . .
The European Union has partially withdrawn preferential trade privileges, known as ‘Everything But Arms’ (EBA), from Cambodia. EBA grants duty and quota-free access into the EU market for everything except arms and ammunition to countries considered the world’s poorest. This is the first time that the EU has suspended such privileges and is doing so in protest over Cambodia’s human and labour rights violations. This revocation will test whether suspending trade privileges is an effective tool in pressuring governments to improve domestic adherence to human rights and labour laws.
EU is Cambodia’s largest export market . . .
The risk of the EU’s “punish to seek improvement” strategy, according to Cambodian officials, is that it will end up harming the very constituents the EU is seeking to protect – vulnerable populations such as working women. The European Commission announced in February that it was planning on withdrawing tariff preferences amounting to approximately one-fifth of the value of Cambodia’s exports to the EU. This announcement was made following a decision by the European Commission that the EU could not continue to offer tariff-free access until Cambodia made significant human rights progress. The EU is Cambodia’s largest trading partner, accounting for 45 per cent of the economy’s exports in 2018.
A test case: trade as punishment . . .
This test case against Cambodia will be an important one as Canada pursues a trade agreement with the Southeast Asian country and as neighbouring Vietnam brings into effect human and labour rights standards that allow it to participate in the CPTPP, of which Canada is a member. Vietnam’s adherence to new standards – and gaining market share as a result – demonstrates what Cambodia stands to gain if it adheres to EU standards, or lose market share to Vietnam if it does not. The EU is also reviewing whether to revoke Myanmar’s EBA privileges over its alleged genocidal acts against the Rohingya. The EU’s actions in Cambodia and potentially in Myanmar may mark a new trend in trade and human rights.
- The New York Times: EU slaps duties on Cambodia exports over rights concerns
- Nikkei Asian Review: Cambodia loses EU trade privileges as it rushes FTA with China
- The Phnom Penh Post: VN entering TPP ‘may bring challenges for the Kingdom’