ASEAN Beat

Cambodia-EU Threat War Erupts Amid Trade Sanctions

The issue has heated up the country’s already contested and polarized politics.

Luke Hunt
Cambodia-EU Threat War Erupts Amid Trade Sanctions
Credit: Flickr/Prachatai

Over the past few weeks, Cambodia has been confronting the threat of further trade sanctions from the European Union (EU) amid continued democracy and human rights issues in the Southeast Asian state. Apart from the intricacies of the issue itself and the dynamics of EU-Cambodia ties, the issue has also further heated up the country’s already contested and polarized politics.

While political polarization and contestation is nothing new in Cambodia, the situation has no doubt heated up over the past few years as Cambodian Prime Minister Hun Sen and his ruling Cambodian People’s Party (CPP) have sought to consolidate power further and impose restrictions and crackdowns on the opposition. While there have been some shifts following last year’s elections, the broader realities remain largely unchanged, making it difficult to strike a middle ground.

It’s a mindset that is aggravated even further when big money is at stake, a point made clear by the European Union and its decision to revisit its Everything But Arms (EBA) preferences and impose taxes on imports of Cambodian rice, which follows a government crackdown on free speech.

On January 18, the EU imposed a duty of 175 euros ($200) per ton on Indica rice for one year. This will fall to 150 euros in the next 12 months and 125 euros in the third year. It follows a surge in cheaper Cambodian rice and a request for “safeguard” measures from Italy and Spain, where rice growers have lost out heavily on market share.

The EU noted in a statement that Cambodia was a beneficiary of the EBA, which remains a pillar of its Generalized Scheme of Preferences (GSP) of tariff reductions for developing countries. It said this “action is being taken using the safeguards mechanism of the GSP Regulation.”

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This is not just an issue for Cambodia: the same tax was also imposed on Myanmar. But for Cambodia, further hits are beckoning under EBA, which could impact the lucrative garment industry. Among other things, the loss of preferences and increased taxes will cost the coterie of government billionaires dearly.

Cambodia’s banned opposition has used the tax for political muscle from the moral high ground while the ruling CPP is crying poor while attempting a diplomatic, if somewhat naive, offensive to cut its losses.

As increased duties kicked in, the heads of 37 industry associations – local and international – released a joint statement to the EU expressing their “deepest concerns in respect to the process to withdraw preferences” as this decision “will impose serious economic damage.”

But the plea has not been helped by Hun Sen, who has warned he would “destroy the opposition members if the European Union decided to withdraw tax preferences on Cambodian goods.”

He also told EU parliamentarians to stop treating Cambodia “like a toy,” adding in a typically threatening tone that he was open for negotiations on democracy and human rights.

“If you want the opposition to die, do it. If you want the opposition to survive, let’s negotiate on an equal manner and with respect to sovereignty and independence,” he added.

Then Kong Mas, a member of the banned CNRP, was arrested and sent to pretrial detention for a Facebook post regarding the rice tax, charged with making a “public insult” and with “incitement to commit felony.”

If convicted, he faces up to two years in prison.

“This arrest clearly shows that the human rights situation inside Cambodia remains dire, and that the world cannot be fooled by any ‘concessions’ offered by Hun Sen since the election,” said Charles Santiago, from the ASEAN Parliamentarians for Human Rights.

“The Cambodian authorities would do better to respond to the serious human rights concerns raised by the EU in the first place, rather than trying to silence debate on the issue.”

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EBA is not a trade pact open to negotiations – it is a trade preference gifted to financially impoverished countries and designed to encourage democratic and social reforms more attuned with European standards, whose taxpayers are footing the bill.

As an act of generosity, the EU will have a hard time justifying Cambodian preferences to its own workers given the political crackdown ahead of last July’s election that ensured Hun Sen’s Cambodia was returned to a one-party state.

While the situation is an evolving one at this stage, there is no doubt that the gulf between Phnom Penh and Brussels remains as wide as ever, and that this is yet another variable that influences Cambodia’s domestic political situation as well.

Luke Hunt can be followed on Twitter @lukeanthonyhunt