Phnom Penh - A European Union decision to revoke preferential trade conditions for 20 per cent of Cambodia’s exports to the bloc came into effect on Wednesday.

Partial suspension of trade benefits

Under the Everything But Arms (EBA) trade programme for developing countries, Cambodia previously enjoyed unlimited duty-free access to the European Union for all exports except weapons and ammunition.

The European Commission decided in February to partially suspend Cambodia's EBA participation over "systematic" human rights violations.

Cambodia was given six months to show significant progress in improving political and civil rights to avoid the penalty, which ends tariff preferences on selected clothing and footwear products and all travel goods and sugar.

It applies to around one-fifth of Cambodia's 1 billion euros (1.09 billion dollars) worth of annual exports to the EU, the commission said previously.

Economy to be negatively impacted

Cambodia’s longtime Prime Minister Hun Sen has remained defiant and refused to meet Brussels’ demands, such as dropping a case against opposition leader Kem Sokha, who was charged with treason after his party was banned in 2018.

Hun Sen has turned to China for support and is expected to sign a free trade agreement with Beijing soon. The deal, however, appears more symbolic than practical, according to analysts.

The partial EBA loss is certain to exacerbate Cambodia’s economic problems.

Weak global demand amid the global health crisis has seen more than 400 garment and footwear factories employing more than 150,000 workers suspend operations, and the Asian Development Bank predicts Cambodia’s gross domestic product could contract by 5.5 per cent this year.

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