EU pledges economic help as EBA exit looms

Economists say the EU is acting more on humanitarian grounds as the world joins hands to fight COVID-19.

The EU announced last week that its Team Europe is mobilising $483 million in grants and loans to work with Cambodia in fighting the pandemic and mitigate its socio-economic effects.

The support focuses on three essential priorities, in line with the country’s COVID-19 master plan, including supporting health, supporting livelihoods and employment and supporting economic recovery.

The EU Ambassador to Cambodia Carmen Moreno says that the Coronavirus pandemic demands cooperation and solidarity.

“Team Europe stands together with Cambodia in these challenging times. We have to work together to ensure a sustainable and strong economic recovery and to help mitigate the impact of this pandemic on human lives, jobs and livelihoods.”

She says the support will contribute to strengthen key areas of the economy and involve public investments for economic development, energy efficiency and green recovery, contribute to build resilience in the private sector and support job creation to ensure a robust recovery and a more sustainable, inclusive and resilient economy, in keeping with its Agenda 2030 and the Paris Agreement.

The EU is Cambodia’s largest trading partner and in, February 2020, its administrative arm, the European Commission, recommended the partial withdrawal of the EBA scheme from August, citing a serious and systematic violation by Cambodia of principles in four core human and labour rights. The suspension affects one-fifth or €1 billion ($1.08 billion) of Cambodia’s annual exports to the EU’s 27-nation bloc and was accepted by the EU.

Hong Vannak, a business researcher at the Royal Academy of Cambodia, said that the EU’s pledge on supporting the Kingdom’s is more about humanity than sanctions in the context of the pandemic.

“Any sanction should be put aside because Cambodia will suffer a severe impact and I believe that during this pandemic time, the EU may also consider buying more goods from Cambodia as well,” he said adding that if the EU doesn’t delay the sanction, it will damage the EU’s policy to help poor countries.

“Both COVID-19 and EBA will hit hard Cambodia’s economy because hundred thousand of workers in the country will have no job and there will be an unemployment crisis,” he said.

Vannak said he was optimistic that the issue will be solved after the COVID-19 crisis ends.

“We will have commune elections in 2022 and 2023 for the general election so the situation could be changed at least by the end of 2021. The issue will be discussed and then I believe that the government will find ways to exit the problem with the EU so we will save the EBA trade deal and the US’ similar Generalized System of Preferences (GSP) as well,” he said.

Hiroshi Suzuki, CEO and chief economist at the Business Research Institute for Cambodia (BRIC) said that regarding the EU decision, it would be difficult to envisage whether it would change its mind or not. However, he hopes EU could consider the current situation.

“All of the world is facing a serious economic downturn. Cambodia is also facing a decrease of demand for garment products and a drastic decrease of incoming tourists. The negative impact will affect the most vulnerable poor people first and then many more,” he said. “From this point of view, it is very important for GMAC (the Garment Manufacturers Association of Cambodia) and other private sectors in Cambodia to continue to request that the EU implements a delay in the suspension of the relevant part of the EBA.”

The GMAC, the Cambodia Footwear Association (CFA) and the European Chamber of Commerce in Cambodia (EuroCham) earlier this month requested the EU to postpone its partial withdrawal of the EBA for 12 months because the COVID-19 pandemic has halted production and slowed global demand to a crawl, delivering a devastating blow to the country’s apparel, footwear and travel goods manufacturers and workers. Source from Khmertimes.