BRUSSELS – The European Union has announced it will undertake a dedicated mission to Cambodia this summer to monitor its Generalised Scheme of Preferences (GSP), an agreement whereby Cambodian goods reach the crucial European market tariff-free. Loss of some or all of its trading benefits with the EU would be a catastrophe for the country’s garment export sector.
Responding to questions by EU parliamentarians about the increasingly fraught political situation in Cambodia, European Commission Vice President, Federica Mogherini, this week said, “respect of human rights and fundamental freedoms is part of the EU’s trade policy and underpins the legal basis of our trade preferences … a dedicated GSP monitoring mission is foreseen in 2018.”
The GSP grants Cambodian exports tax-free entry into the European market under the Everything But Arms (EBA) scheme. However, both the US and EU have suggested Cambodia could be hit with economic sanctions following the ruling party’s decision to dissolve the opposition Cambodia National Rescue Party. Local reports suggest CNRP and its leaders are accused of conspiring with foreign powers to overthrow Prime Minister Hun Sen’s government.
A group of US politicians has also drafted a bill – the CARI Act – which if implemented would see future investment in Cambodia tied to human rights progress. The Cambodia Accountability and Return on Investment (CARI) Act includes conditions on new assistance to Cambodia, a visa ban on more Cambodian officials, asset freezes, opposition to all new loans and assistance from international financial institutions, and the prohibition of debt relief.
The US and EU are Cambodia’s largest markets for garment exports.