Logo of Phnom Penh Post newspaper Phnom Penh Post - As Hun Sen goads West, minister quietly notes massive cost of sanctions

As Hun Sen goads West, minister quietly notes massive cost of sanctions

Commerce Minister Pan Sorasak speaks at an event earlier this year.
Commerce Minister Pan Sorasak speaks at an event earlier this year. Photo supplied

As Hun Sen goads West, minister quietly notes massive cost of sanctions

With Prime Minister Hun Sen publicly daring Western countries to impose sanctions in response to the recent dissolution of the country’s main opposition, the minister of commerce has quietly expressed concern at the staggering customs bill Cambodia would incur should the EU suspend its preferential trade treatment, a leaked letter to the premier shows.

International pressure on the Cambodian government has been mounting following the Supreme Court’s near-universally condemned decision last month to dissolve the Cambodia National Rescue Party – the only viable competitor to Hun Sen’s long-ruling Cambodian People’s Party. The EU and US have already pulled funding for Cambodia’s National Election Committee, with the US also announcing visa restrictions on individuals involved in “undermining democracy”.

The EU Parliament on Thursday passed a resolution calling for a review of Cambodia’s Everything But Arms (EBA) trade preferences, even suggesting a temporary withdrawal. The EBA allows tariff-free imports to the economic bloc on account of Cambodia’s least developed country status.

The resolution prompted a fiery response from Hun Sen, who on Sunday said he would not be a “dog that acts just for only a bone or a piece of meat”, and dared the EU to “cut it!”

However, in a leaked letter dated December 4, Commerce Minister Pan Sorasak informs the prime minister that removal of these preferences would incur a $676 million tariff cost based on the $6.2 billion in exports to the EU in 2016. Suspension of preferential access to the US market for certain goods would incur a $10 million bill, he added.

Reached yesterday, Sorasak did not deny the authenticity of the letter, but downplayed its significance.

“It is just an official document sent to Samdech [Hun Sen] for sharing some information,” he said, refusing to comment further on the contents of the letter.

Maintaining a sombre tone throughout, Sorasak notes in his letter that the tariff payments to the US are “just small”, but goes on to point to the exponentially higher payments to the EU, before noting that the sector employs more than 400,000 workers.

The minister also suggests that the government should lobby “friendly” EU member states.

“Cambodia should lobby any friendly countries that are members of EU through diplomatic and business networks, because the EU mostly has soft [response] and more understanding of Cambodia’s situation,” the letter reads.

Government spokesman Phay Siphan also declined to comment on the letter’s contents, but said removal of the EBA would be a slow process and that he did not expect the EU to take a knee-jerk decision. “As per my experience, we have never seen any [EU] resolution executed against Cambodia for many years,” Siphan said.

But political commentator Lao Mong Hay said it was noteworthy that the commerce minister was sounding off to the premier on the wide-ranging economic and employment effects of any sanctions, though he conceded it was unlikely Hun Sen would change his approach to the EU and US.

“He thinks he can say what he wants and there will be no cost,” he said.

Though some firms operating in Cambodia would be able to swallow additional EU tariffs, Stephen Higgins, managing partner of Cambodia-based investment firm Mekong Strategic Partners, said others would prefer to shut shop, causing a negative domino effect.

“While some businesses might absorb the tariff, others might close and move offshore, and then you have second and third round effects, as workers have less income to spend on local businesses and so on,” he said, via email.

This article has been updated to give the correct day that the European Parliament passed a resolution calling for a review of Cambodia’s Everything But Arms trade preferences.

MOST VIEWED

  • Ice cream, noodles flagged over carcinogen

    The General Department of Customs and Excise of Cambodia (GDCE) has identified three types of instant noodles and ice cream trademarks originating from Thailand, Vietnam and France that are suspected to contain ethylene oxide, which poses a cancer risk to consumers. The general department has

  • Exclusive interview with Josep Borrell Fontelles, High Representative of the EU

    CAMBODIA is hosting the 55th ASEAN Foreign Ministers’ Meeting (AMM) and Related Meetings this week with top officials from the US, China, and Russia and other countries in the region slated to attend and to meet with face-to-face with their counterparts on the sidelines. In

  • Rise in Thai air routes to Siem Reap fuels travel hopes

    Local tourism industry players are eager for regional airline Bangkok Airways Pcl’s resumption of direct flight services between the Thai capital and Siem Reap town on August 1 – home of Cambodia’s awe-inspiring Angkor Archaeological Park – which is expected to boost the growth rate of

  • ASEAN Foreign Ministers’ meet commences, Taiwan issue possibly on table

    The 55th ASEAN Foreign Ministers’ Meeting (AMM) and related meetings hosted by Cambodia kicks off in Phnom Penh on August 3, with progress, challenges, and the way forward for the ASEAN Community-building on the table. Issues on Taiwan, sparked by the visit of US House Speaker

  • NBC eyes KHQR payments in Laos, Vietnam

    The National Bank of Cambodia (NBC) is working with Lao and Vietnamese authorities to expand the use of KHQR code cross-border payment systems to promote trade and investment as well as increase the scope of regional economic linkages, and in particular, facilitate remittances from overseas

  • Recap of this year’s ASEAN FM meet and look ahead

    This year’s edition of the ASEAN Foreign Ministers’ Meeting (AMM) hosted by Cambodia comes against the backdrop of heightened global tensions and increasing rivalry between major powers that have been compared to the animosity of the Cold War era. The following is The Post’