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

  • With herd immunity likely in 2022, is Cambodia ready to reopen for tourism?

    The government aims to inoculate 80 per cent of the target population by June next year, giving it a head start among regional peers to reboot the sector but first, it has to do a few things to up its game A sign on a glass

  • Quarantine still a must for all arrivals, in next Covid chapter

    Since early May, an average of five to 10 Cambodian people have died from Covid-19 a day with many others testing positive amid the ongoing community outbreak. At the same time, however, hundreds of patients also recovered a day. The first Covid-19 case in Cambodia was

  • US wants 'full access' to Ream Naval Base

    On June 11, the US embassy's Defense Attaché Colonel Marcus M Ferrara visited Ream Nava Base in coordination with Cambodian officials following the recent approval of Prime minister Hun Sen to allay the concerns on Chinese military presence at the base as raised by US Deputy

  • Jab drive heading to 5 provinces

    The government is set to vaccinate more than 1.2 million people in five provinces after finishing with Phnom Penh and neighbouring Kandal in an ongoing campaign administered by the ministries of Health and National Defence. The five provinces are Preah Sihanouk, Kampong Speu, Takeo, Kampong Cham

  • New immigration bill targets illegal foreigners in Kingdom

    General Department of Immigration (GDI) officials are discussing revisions to the new draft law on immigration to prevent foreigners from entering Cambodia illegally and to supervise those living in the Kingdom more effectively. The revisions draw wide support among civil society organisations. GDI director-general Kirth

  • First commercial gold mine online

    Australian miner Renaissance Minerals (Cambodia) Ltd on June 21 began the commercial operation of its $120 million Okvau Gold Project in the northeastern province of Mondulkiri, becoming the Kingdom’s first gold producer. Located in the Okvau area in southwestern Mondulkiri province’s Keo Seima district, the