Cambodia's garment industry concerned over EU trade pressure

Following the EU’s decision to increase trade pressure on Cambodia, ripples of concern are spreading through the country’s garment industry and trade unions.

The industry - which employs approximately 700,000 people - is a key contributor to the Cambodian economy, making the implications of the decision a national concern. The garment industry accounts for about 40 percent of Cambodia’s GDP.

The European Chamber of Commerce in Cambodia (EuroCham) voiced “serious concerns” to the European Commission on Monday over the EU’s decision to remove the country’s access to the preferential Everything but Arms (EBA) agreement. As Cambodia’s biggest export market, the EU is a key component to Cambodia’s economical health.The EBA agreement saw Cambodia exporting 5 billion euros (5.8 billion US dollars or 4.4 billion pounds) worth of exports to the European Union last year, EU data shows. Gap , H&M, Nike, Puma, and Adidas are among the brands that are supplied by Cambodia's factories.

A big blow for Cambodia’s garment industry

The decision comes as a punitive measure in relation to the country’s move away from democracy, following the July election win for prime minister Hun Sen which some Western countries saw as flawed. Commenting on the EU’s decision in a statement, At Thon, the president of the Coalition of Cambodian Apparel Workers' Democratic Union, said: “The European market is an important one. If factories close their doors, it will be hard.”

In a letter, the body representing Cambodia’s private sector, said: “We would suggest a different course of action to foster the EU's core values, through cooperation activities rather than by implementing a suspension or sanctions.”

Despite the news, the Garment Manufacturers Association of Cambodia (GMAC) - which represents 600 factories - remains optimistic, as the threatened tariffs are still months away and would be subject to a sixth-month EU review before taking effect.

The group’s deputy secretary general, Kaing Monika, told Reuters: “At this point, nobody can guarantee what the outcome will be and whether it will result in a substantial loss. What we are more concerned about is the media speculation leading to reduced confidence from buyers and investors...the actual situation might be much less frightening.”

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