Cambodia’s Prime Minister, Hun Sen, has taken a defensive stance after the European Commission launched a procedure to withdraw the country’s preferential access to duty-free trade benefits over human and labour rights violations.

The Commission made the announcement on Friday (5 October). The move could see Cambodia lose access to the duty-free Everything But Arms (EBA) preferential trade programme; a decision that could also be imposed on Myanmar for similar violations.

Trade Commissioner Cecilia Malmström told journalists last week she had notified Cambodia that the process to withdraw EBA has been launched as a result of its “severe restrictions on political rights.”

The review period will take six months and the country could face tariffs on garment and textile exports to the European Union (EU) within 12 months. If withdrawn from the EBA programme, Cambodia will revert to basic WTO rules.

Speaking to students on Sunday as part of a trip to Japan to meet with Prime Minister Shinzo Abe, Hun Sen said Cambodia must defend its sovereignty. “No matter what measures they want to take against Cambodia, in whatever way, Cambodia must be strong in its defence of its sovereignty,” he said. “I say it again and again: don’t exchange national sovereignty with aid, don’t exchange the peace of the country with aid.”

Cambodia is the second biggest EBA beneficiary and 95.5% of its EBA-eligible exports were made under EBA preferences. In turn, garments account for some 75% of Cambodia’s exports to the EU.

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The EBA programme allows exporters in least developed countries to ship products duty-free to the EU. However, these trade preferences can be temporarily withdrawn in case of serious and systematic violations laid down in a list of fundamental human rights and labour right conventions in accordance with the provisions of the EU GSP (Generalised System of Preferences) regulation.

The EU first raised its concerns at the end of last year following crackdowns by Prime Minister Hun Sen in the run-up to the general election on 29 July. In July, the bloc said it was assessing Cambodia’s eligibility for key preferential trade access.

The move comes as it has been announced that garment and footwear workers in Cambodia will see monthly wages increase by 7% to US$182 from the beginning of next year.