The EU Commission has partially withdrawn the Everything but Arms trade benefit Cambodia had access to, under which it exported goods to the EU duty-free.

The EU Commission has partially withdrawn the Everything but Arms trade benefit Cambodia had access to, under which it exported goods to the EU duty-free.

The organisation representing garment manufacturers in Cambodia (GMAC) has urged the European Commission to reconsider its decision to partially suspend the Everything But Arms (EBA) trade benefit under which it exports goods duty-free to the EU.

The major beneficiaries of the programme have been the country's garment and travel goods sectors represented by GMAC. These industries account for some 75% of Cambodia's total merchandise exports and some 90% of exports to the EU, which is the largest market for the goods that are produced by the manufacturers that GMAC represents.

Last week, the Commission decided it would withdraw some of the country's preferential access to the EU market in a move that means from mid-August the country will be charged duties on some garment and footwear products and all travel goods at the WTO's Most Favoured Nation (MFN) rate.

The withdrawal amounts to around one-fifth, or EUR1bn (US$1.09bn), of Cambodia's annual exports to the EU and will be effective from 12 August.

The decision followed concerns over alleged human rights violations. EBA preferences can be removed if beneficiary countries fail to respect core human rights and labour rights.

The move has been supported by trade associations and brands including H&M, which says Cambodia is "an important production market for the group" and where it has had a presence since the nineties.

"H&M Group strongly agrees with the EU's aim to address serious human and civil rights violations in Cambodia. We have had consultations with the government on labour rights and freedom of association, and also to express concerns about the human rights situation. We are, together with local and international stakeholders, as well as other brands, continuously working to develop a sustainable textile industry. While there are clear signs of progress, challenges remain," a statement on the retailer's website reads.

"The partial withdrawal of the EBA will have a negative impact on the employment of the people in the textile industry... over the years, the EBA has helped to improve living conditions in the country and is important for the competitiveness of the Cambodian textile industry. Without an EBA, it will be difficult for Cambodia to create the necessary transformation of the textile industry."

The retailer adds: "If Cambodia had complied with the EU's requirements, as well as launched strategic initiatives essential for a modernised textile industry, such as Cambodia's Garment and Footwear Sector Development Strategy, the country would continue to be a very attractive sourcing destination. This includes developing an industry where labour rights are fully respected, and where stability and competitiveness are safeguarded. H&M Group wants to continue to play a part in developing Cambodia in a positive way, including reducing poverty and strengthening human rights.

"However, due to a lack of adequate initiatives in developing the Cambodian textile industry, and a partial withdrawal of the EBA privileges, we will now further evaluate how the EU's decision will impact our business and production strategy in Cambodia."

Commenting today (17 February), GMAC, which represents more than 580 garment, footwear and travel good production facilities in Cambodia, said employment in the garment and travel goods sectors supported by EBA trade preferences now exceeds 750,000 and has contributed to "lifting millions of Cambodians out of poverty."

"We urge the European Commission and members of the European Parliament to reconsider their decision by taking into account the values and goals that the programme was based on when it was put in place nearly 20 years ago: development assistance, poverty reduction and the dignity of employment. The EBA programme has been a clear success in Cambodia in meeting these objectives. The partial withdrawal will lead to nothing more than job losses and affect the workers' livelihoods, especially women.

"As part of our reciprocal commitment to the EBA programme, GMAC has established a culture of transparency and accountability in labour compliance and working conditions. In what became known as the 'Cambodia model', the GMAC was the first association in the world to welcome the UN International Labour Organisation (ILO) to establish a monitoring programme to inspect our factories for compliance with national and international labour requirements. No sector in any other country that benefits from preferential access to the EU market has a better record of cooperation with the ILO."

It added: "The GMAC respects and supports the EU's engagement to improve its human rights policies. Unfortunately, summarily pulling the rug from under the feet of hundreds of thousands of Cambodians is not the way to proceed.  

"The EU's decision is bound to cause confusion with respect to our trade status. It will incentivise buyers to source from countries with far weaker legacies of trade union rights. It is likely to cause the loss of employment for tens of thousands of our workers, most of whom are trade union members. It will increase poverty in our country and make it more difficult to improve wages and benefits for other workers.   

"We urge the EU to act quickly to restore full EBA benefits for our sectors for the sake of sustainable development and for the hundreds of thousands of Cambodians who have risen from poverty to gain employment, advance their rights and support their families."