European Union Distances Itself from Cambodia

The European Union (EU) has begun the process to suspend Cambodia’s preferential access to the European market under the Everything but Arms (EBA) trade agreement, a provisional suspension, but one that does not entail an immediate removal of tariff preferences. The EBA with Cambodia is an initiative of the EU under which all imports to it from Cambodia are duty-free except arms and armaments. In response, Cambodia’s government condemned the EU move and rejected the EU’s accusations of serious human rights issues in Cambodia.

The EU move followed the European Commission’s findings earlier this month of serious and systematic violations of core human and labour rights in Cambodia, especially rights to political participation. Cambodian Prime Minister Hun Sen has been in power since 1985, with minor interruptions, and the president of a court-dissolved opposition party is currently on bail on treason charges. These charges, along with other political prisoners and land evictions, have in turn contributed to a drop in Hun Sen’s domestic support.

Amid these criticisms, the international community has begun ramping up pressure on Hun Sen’s government. Immediately after the EU announcement, the United States called on Cambodia to drop charges against political prisoners, allow independent unions and media organizations, and ease restrictions on civil society. Australia and Canada, which have in the past voiced concerns over political and human rights in Cambodia, could also follow the EU in revising trade agreements with Cambodia.

In the past, there were concerns that putting pressure on Cambodia would push the country into the arms of China, but Hun Sen has given strong indications of pivoting to China regardless, even favouring it over longtime ally Vietnam in that country’s dispute with China over the South China Sea. However, reliance on China may not be sustainable: Cambodia’s economically crucial garment industry is dominated mainly by Chinese ownership, but these owners have already begun to face rising competitiveness challenges and prospects of closed international markets.

The EU market now accounts for about 40 per cent of Cambodia’s exports, making the EU’s hard stance on all the more impactful at a time when Cambodia is searching for new opportunities. Even if hoped-for discussions between Cambodia and the EU lead to a path forward, the aforementioned economic changes in Cambodia may reduce Cambodia’s competitiveness and weaken foreign direct investment inflows, making any subsequent pivots to reform the economy all the more difficult.