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Exporters seek delay of EBA withdrawal

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Revoking the EBA scheme will dramtically impact the nation’s garment industry and cost Cambodia around $1.1 billion. Photo supplied

Exporters seek delay of EBA withdrawal

The Garment Manufacturers Association in Cambodia (GMAC) is coordinating with the European Branded Clothing Alliance (EBCA) to request a postponement of the EU’s partial withdrawal of its Everything But Arms (EBA) scheme in light of the Covid-19 pandemic.

In a letter to European Commission president Ursula von der Leyen on March 30, the EBCA said the coronavirus outbreak has disrupted production and demand as government-imposed lockdowns paralyse global trade and economies.

It said the pandemic has posed unprecedented challenges in a world where goods, services and capitals are traded through global value chains which contribute to development, job creation and economic growth as a whole in and outside the EU.

“The disruption caused by Covid-19 risks many jobs in and outside the EU. In the EU, sales in our sector has already dropped by approximately 90 per cent and about 90 per cent of employees are currently supported financially by their employers in addition to state support, in order not to lose their jobs. Such a sharp decline in sales has an inevitable impact on orders.

“To enhance certainty and allow us to keep on supporting our employees in the EU, as well as the workers in the manufacturing countries, we would like to ask the EU and EU member states to support our industry, also in the long-term since the road to recovery will be lengthy.

“We ask the EU to temporarily reduce VAT and customs duty rates on imports in the EU on clothing and apparel, in order to provide relief along the entire supply chain, including in the manufacturing countries,” it said, adding that the EU should introduce automatic 90-day deferral of duty payment across its member states.

It also asked the EU to postpone the partial withdrawal of Cambodia’s EBA status in light of the “exceptional circumstances and already severely impacted global industry”.

On February 12, the European Commission partially withdrew the EBA scheme from the Kingdom, citing a serious and systematic violation of principles in the four core human and labour rights.

The withdrawal would affect about one-fifth of Cambodia’s exports including garments, footwear and travel goods. The move is expected to cost the Kingdom around $1.1 billion in revenue.

The withdrawal will take effect on August 12, unless objected by the EU Parliament.

GMAC secretary-general Ken Loo told The Post on Thursday that the association had been working with the EBCA to request the EBA withdrawal postponement amid the Covid-19 pandemic.

“We hope the EU will consider and agree to the request. For now, we are trying to settle the immediate issue of Covid-19 and how to survive in the next few months.

“We also respectfully solicit the EU for a possible extension of the effective date for implementation. If approved, this would be very helpful for some factories that produce non-seasonal items.

“Due to the coronavirus, many customers are rephasing the April- June shipments to August onwards, which would be affected by the duty issue. Postponing the withdrawal will definitely help in this situation,” he said.

Cambodia’s total exports to the EU reached €5.4 billion ($5.87 billion) in 2018, €5.2 billion of which entered the EU market under the EBA scheme.

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