A senior Labour Ministry official said a withdrawal of the preferential Everything But Arms (EBA) trade agreement with the EU would not hurt the Kingdom’s economy.
Ministry spokesman Heng Suor said the government had prepared plans in the event of an EBA withdrawal. However, he declined to provide details for now but said it would be released step by step.
“There is a joint effort by all [relevant] ministries. We are ready and will release [the plans] step by step. It is not the final stage of EBA withdrawal. Therefore, it is not necessary to prematurely release our future plans."
“We are working closely with relevant ministries for 2021,” he said, referring to the year when Cambodia automatically loses the tax-free status as it becomes an average lower-middle-income country.
Suor was quoted by the Information Ministry as saying that an EBA withdrawal would actually make Cambodia stronger as the country would need to strengthen state institutions, productivities and human resources in the garment sector to stay competitive.
Ath Thon, president of the Coalition of Cambodian Apparel Workers’ Democratic Unions, said trade unions had raised concerns about a potential EBA removal as some factories could shut down due to higher production cost and taxes.
“In 2017, the garment sector exported more than 40 per cent of its products to the EU. Currently, it’s 100 per cent free of tax, but without the EBA deal, it will levy between nine and 12 per cent tax."
“In early 2017, the Commerce Ministry said the tax levy could cost the garment sector more than $730 million. So it’s possible that some factories may shutter because of higher production cost and taxes,” he said.
Thon expressed grave concerns on mass employment following an EBA removal.
“We are so worried about garment workers because there are so many working in this industry. They could face unemployment and hardship,” he said.
Thon urged the government to continue a dialogue with the EU.
“Both the government and EU are key players. if there is no compromise between the two, an [EBA] removal is likely.
“As a union, we cannot do anything. We cannot create new jobs for workers. It would be tough for them so we urge the government to continue a dialogue with the EU. It would help our country a lot,” he said.
