The EU’s tax free status partially withdrawn today

From today, 12 August, Cambodia’s annual $7 billion garment and textile sector will see the partial loss of a preferential zero-tax trade deal provided by the European Union (EU).

Since the EU announced the withdrawal of Cambodia’s preferential tariff measures (EBA) in February this year, Cambodian people from all walks of life have strongly opposed the EU’s withdrawal of EBA. The Garment Manufacturers Association of Cambodia (GMAC), Cambodian Footwear Association (CFA) and the European Chamber of Commerce have repeatedly called on the EU The postponement of part of the Everything Except Arms (EBA) trade agreement, but the results were disappointing. On August 12, the European Union announced the formal launch of the procedure to withdraw Cambodia's EBA treatment.

According to the Cambodian Textile and Apparel Association, Cambodia is the sixth largest source of textile and apparel exports from the EU. The EU abolishes Cambodia's EBA treatment, the export tax rate of Cambodian textiles and clothing to the EU will increase by 12%, and the footwear industry tariff will increase by 8% to 17%. For more than ten years, Cambodia has been taking the route of Asian Factory, mainly manufacturing garments and footwear. The clothing and footwear industry is the pillar industry of Cambodia's economy. The export of related products accounts for about 80% of its total exports, and there are about 800,000 workers in the industry.

In the first half of this year, more than 40,000 employees in the footwear industry were affected by the epidemic. So far, there is no improvement in this field. With the changes in the epidemic and the declining demand in footwear industry, the EU's policy to cancel some EBA tariff preferences has come into effect. The situation of the industry will be more difficult.