Cambodia to Be Hit Next Week by EU Trade-Sanctions Verdict

(Bloomberg) --

The European Union is poised to make good on a threat to impose trade sanctions against Cambodia as a result of alleged human-rights violations.

The European Commission, the EU’s executive arm, intends next week to decide on suspending a policy that lets Cambodia export all goods except weapons duty-free and quota-free to the bloc, according to an official familiar with the plan.

The move, tentatively scheduled for Feb. 12, would prompt the introduction of EU tariffs on goods from Cambodia six months later unless member-country governments or the European Parliament objected during the countdown, the person said on the condition of anonymity. The commission is likely to opt for a partial, rather than a full, suspension of the bloc’s trade preferences for Cambodia, according to the official.

“Any possible measures will of course be balanced to effectively address the human rights’ violations,” a spokesman for the Brussels-based commission said in an emailed statement on Thursday. “This process is being conducted in close consultation with the European Parliament and EU member states.”

The EU is trying to prod changes in the political behavior of Cambodian Prime Minister Hun Sen while being wary of damaging the country’s economy, where a $5 billion garment industry employs three-quarters of a million people and is the biggest exporter.

Hun Sen extended his 33-year rule in July 2018 when his party won a boycotted election. He has struck a defiant tone with the European side, courted several Eastern European countries for support and vowed to turn to China for help should Cambodia lose its EU trade benefits.

At stake is Cambodia’s place in the EU’s “Everything But Arms” initiative, the most generous part of the bloc’s Generalized Scheme of Preferences for poor countries around the world.

EU imports from Cambodia in 2018 were worth 5.4 billion euros ($5.9 billion), with clothing and textiles accounting for around three-quarters of the total, according to the commission.

The planned EU decision on Feb. 12 will mark the outcome of a year-long process during which the commission monitored the situation in Cambodia and produced a report on human-rights violations there.

©2020 Bloomberg L.P.

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