When the European Union announced it would slice $1 billion worth of annual trade perks off Cambodian exports Prime Minister Hun Sen, the decision was far from unexpected. Indeed, the government had already been previewing statements of outrage and caution about the potential implications of the EU’s decision.
Reality is a little different. Amounting to one-fifth of total EU exports, the partial withdrawal of trade preferences under the Everything But Arms (EBA) policy was at most a slap on the wrists for the ruling Cambodian People’s Party (CPP).
While its impact is not insignificant, it pales relative to the embarrassment of being slapped down in the international diplomatic arena for its behavior in the lead up to the 2018 election which the opposition National Cambodian Rescue Party (CNRP) was barred from contesting.
The numbers support this as well. The EBA ruling won’t cost that much for Cambodia, according to Director of the Center for Policy Study Chan Sophal. He reckons it will cost Cambodia about $100 million a year.
“This is only 0.35 percent of the Kingdom’s total GDP. Thus it does not severely affect the Kingdom’s economy,” he said.
“I think it is a good opportunity for Cambodia (government, private, and garment workers) to start being independent and living without the need for special arrangement.”
Even the Cambodian Chamber of Commerce acknowledged: “Looking forward Cambodia will continue to benefit from trade preferences for 80 percent of its exports to the European Union.”
Hun Sen is also a skilled political tactician and not shy at playing the headline game in managing Cambodia’s alignments. While the flak from the EBA ruling was minimal, his continued cultivation of ties with China – as evidenced by his efforts to show solidarity with China amid the coronavirus when it is facing scrutiny from other quarters – reflects the fact that he understands how Cambodia can manage the fallout from developments such as the EBA ruling.
For Sam Rainsy, the interim leader of the CNRP in exile, and many others who would like to see the CPP pay for the sins of the past, the partial removal or preferences fell short of what they wanted.
Expectations that the West would impose sanctions and remove trade preferences all together were the subjects of much hype in the aftermath of the 2018 poll when a crackdown on dissent resulted in the CPP winning all the seats in the National Assembly.
Trying his best not to be critical of the EU decision to withdraw EBA only partially, Rainsy wrote:
“Allowing Cambodia’s industry to rely on EU trading advantages to resist competition would be to subsidize and reward the corruption and poor governance of Cambodia’s current regime.”
Luke Hunt can be followed on Twitter @lukeanthonyhunt