https://asia.nikkei.com/Economy/Trade/Cambodia-loses-EU-trade-privileges-as-it-rushes-FTA-with-China Sanctions will hit nation's $10 billion garment and footwear sector A garment factory in Phnom Penh. The sector has already suffered mass job suspensions after global consumer demand collapsed amid the COVID-19 pandemic. SHAUN TURTON, Contributing WriterAugust 12, 2020 13:14 JST PHNOM PENH -- The European Union on Wednesday enforced trade sanctions against Cambodia in response to its government's oppression of political opponents, among other human rights violations. EU tariffs will now be levied on about 20% of Cambodia's exports to the bloc, or about $1.1 billion of shipments in dollar terms. The punitive measures, certain to exacerbate Cambodia's unfolding economic crisis precipitated by the coronavirus pandemic, stem from a year-long review concluded in February. The review, triggered in 2018 after Cambodia's main opposition party was banned and its leader Kem Sokha was charged with treason, recommended partially suspending Cambodia's privileges under the Everything But Arms (EBA) scheme. The scheme grants developing nations duty-free access to the bloc for all exports except weapons and ammunition, but requires beneficiary countries to abide by human rights conventions. The preferences are vital for Cambodia's $10 billion garment and footwear sector, which has already suffered mass job suspensions after global consumer demand collapsed amid the pandemic. Cambodia sent about 25% of its exports to Europe in 2019, according to the World Bank. The country is the second-largest beneficiary of the scheme after Bangladesh, one of its biggest rivals in the low-cost apparel export sector. The country will now face tariffs of up to 12% on 40 items it exports to the EU, including travel goods, sugar, and some garment and footwear products. Workers make garments at a factory in Phnom Penh. Cambodia now faces tariffs of up to 12% on 40 items it exports to the EU, including travel goods, sugar, and some garment and footwear products. Despite the six-month window following the recommendation, Cambodia's longtime Prime Minister Hun Sen has remained defiant and refused to make the concessions demanded by Brussels, such as dropping the case against Sokha. Instead, the government has turned to its close ally China for support and is expected soon to sign a bilateral free trade agreement with Beijing. Analysts, however, say the FTA, which focuses on agricultural exports and was completed in less than six months, appears symbolic rather than practical and will do little to help Cambodia's apparel sector, which employs more than 900,000 workers. "It won't be enough. China is just not as big an export market for Cambodian apparel" said Riley Walters, an economist at the Heritage Foundation's Asian Studies Center. "Cambodia's deteriorating trade relationship with the EU is tangent with its deteriorating human rights record," Walters said. "It's a shame though that these types of broad sanctions will end up hurting Cambodians more than those in power." Economist Intelligence Unit analyst Imogen Page-Jarrett said the organization forecast Cambodia's goods exports to contract 13.4% this year. The downturn, she said, would principally stem from weak demand, but would be exacerbated by the partial EBA loss. Ramifications, she added, could be serious. "We expect the factory closures and subsequent job losses in the manufacturing sector to contribute to rising unemployment in Cambodia," Page-Jarrett told the Nikkei Asian Review. "We expect rising redundancies to spark demonstrations against employers and the government. The security forces will launch swift and harsh responses, which will stop protests from spreading. However, there is a risk that unrest could spread into a widespread movement and threaten political stability." Sheng Lu, an associate professor at the University of Delaware's department of fashion and apparel studies, said the suspension would result in a "significant and lasting" impact on Cambodia's apparel sector. "For those apparel categories directly targeted by the EBA suspension, EU fashion brands and retailers may quickly shift sourcing orders from Cambodia to other supplying countries to avoid paying the additional tariffs," Lu told Nikkei. "Chasing the low price, including taking advantage of the EBA duty-saving benefits, is the predominant reason why EU fashion companies choose to source from Cambodia."
That's ok. They will just turn to US to export their clothes especially that US is having a trade war with China. China won't help Cambodia much in the garment sector considering that China itself is a heavy apparel exporter (just count the number of clothes in your closets that carries the "Made in China" label). And notice the trade agreement that it signed with China is a bilateral one, not even an unilateral one which means China is getting something in return. Poor Cambodia. If US plays its card right and steps in to help Cambodia, Cambodia might become an ally to go against China considering its proximity to China.
They are already exporting to the US, I'm not seeing a dramatic spike in US demand. And US won't play its cards right, that just won't happen. But US does have a history of supporting violent dictators as long as they are financially or politically beneficial. In this sense Russia, China and US are exactly the same.
The US would probably prefer to promote Textile investments in Vietnam who has been mentioned to be a potential winner of a supply chain realignment. No mention of the Philippines anywhere which seems weird. What's your take?
US leaving Subic was a good thing. What they left behind is pollution and spiking cancer rates in the area. But yes, Duterte is connected to the Marcos family and just preparing the son to become president. redacted
I think Philippines is not far from Cambodia's situation. Election time is not here yet though. redacted Philippines doesn't need are sanctions. China won't be a mass consumer of PH manufactured goods like the western countries are. It's interesting to see if China can really buy off the whole of Southeast Asia.
Indonesia is another country of interest to China. https://www.smh.com.au/world/asia/m...ut-a-pragmatic-president-20200812-p55kyx.html
Ah they will come crawling back to us once China commandeers all of the islands off their coast and start pumping oil and polluting their land even more. You think the pollution left behind by the US base was bad wait until the Chinese take over these islands. It will be an eye-opener to them! LOL
That's the whole idea that China had all along, the entire continent of Asia united under China, all serving as colonies err resource providers to China while China makes it big by exporting to aliens out of space since all the other countries are having trade wars with China and then turns around and takes care of all of the other Asian countries while leaving all the other "white" countries like Australia, New Zealand, Russia all floating off on their own.