A Farewell To Everything But Arms

With the impending loss of its EU tariff benefits—a move sparked by the political theatrics of its ‘new’ old PM— Cambodia’s growing economy may find itself derailed, with implications for the country’s property sector.

- George Styllis

If everything has its season, then Cambodia’s sustained economic resilience of recent years—in the face of shrinking civilian freedoms and political turmoil largely driven by its strongman Prime Minister Hun Sen—could possibly be drawing to a close. The impending loss of its tariff-free access to the European Union via the Everything But Arms (EBA) scheme looks set to be a big blow for example.

In February this year, the EU announced it had begun an 18-month countdown to strip Cambodia of its trade benefit over its worsening human rights situation and an election last year widely seen as rigged.

The EU’s preferential trade agreement has been a lifeline for the country for nearly two decades, allowing exporters to pay no duty on everything from clothing and bicycles to rice. Only weapons and ammunition fall outside the agreement.

The move would hit the country’s garment industry hardest, which accounts for 16 percent of the gross domestic product, and whose trade with the bloc amounts to around EUR4.8 billion (USD5.35billion) a year. This would also affect the light manufacturing and agriculture businesses which depend on the EU for trade, along with the livelihoods of hundreds of thousands of workers.