A Cambodian garment worker gets pay for her lunch in front of a factory in Phnom Penh. Women in worksites such as these are often targets of sexual harassment. Photo: AFP/ Tang Chhin Sothy
The partial withdrawal of EU trade privilieges will hit Cambodia's garment workers hard. Photo: AFP / Tang Chhin Sothy

To Cambodia as well as the rest of the world, the Covid-19 pandemic has presented the worst form of challenges to fundamental human rights, ranging from the right to life to decent jobs, education, food and shelter. The loss of direct income due to the disruption of global production and supply chains has already forced 400 garment, footwear and travel-goods factories in Cambodia to suspend their operations, leaving more than 150,000 workers jobless.

Amid these challenges, Cambodia recently launched a large-scale cash transfer program for poor and vulnerable households to sustain the livelihoods of those hit hard by the Covid-19 crisis. The government is expected to spend US$25 million monthly, benefiting 560,000 households or 2.3 million Cambodian people.

Some critics say this social-security scheme is “too little” as it will not do much to help people cover their expenses, noting that residents of Phnom Penh need at least $300 a month to meet their needs while those in rural areas require at least $190.

Cambodia has received both punishment and assistance in this difficult time.

While Cambodia is trying to cope with the pandemic, the Swedish government decided to phase out development cooperation with the Cambodian government to refocus its support only on human=rights and democracy aspects.

Last year, then-European Trade Commissioner Cecilia Malmström, a Swedish national, launched a procedure to suspend Cambodia’s trade preference under the framework Everything But Arms (EBA), which would hit hard the multibillion-dollar garment industry in Cambodia. Ironically, it was she who also came all the way to Vietnam, a communist state, to sign the EU-Vietnam Free Trade Agreement in June of the same year.

In a contrasting position, the Swedish retailer Hennes & Mauritz (H&M) has pledged to continue placing orders to improve the garment industry’s situation. The differing approaches by Sweden’s government and its private sector represent different voices in a democratic country.

However, it is still difficult to understand when one hand is trying to help yet another is doing otherwise.

For example, while the European Union is mobilizing about $504 million to support Cambodia’s fight against the pandemic and mitigate its socio-economic impact, at the same time, it is about to eliminate trade preferences, which may cut off billions of dollars of direct incomes to a few million Cambodian garment workers and their dependents.

This is not to underestimate the EU’s development assistance, which has contributed significantly to Cambodia. But the lingering question would fall under the debate on “trade-not-aid.”

For Cambodia, trade represents direct income to its people. The more diversified the trade, the wider the demographic scope whereby the income can reach the people directly. For Cambodia, trade offers a stronger chance of economic independence and self-reliance. Cambodia’s weak point still lies on its small market power and production capacity as compared with its two larger neighbors, Thailand and Vietnam.

As far as aid is concerned, even if China and Japan are Cambodia’s largest donors, Cambodia’s exports to these two countries have remained small compared with those toward the US and the EU. For instance, Cambodia exported only $1.3 billion worth of goods to China in 2018, and $1.7 billion to Japan in 2019, as compared with $3.8 billion to the US in 2018 and $6 billion to the EU that year.

Cambodia is now trying to negotiate free-trade agreements with China and SouthKorea, while an FTA with Japan seems still to be far away. Some countries provide Cambodia a lot of trade preferences but only on items that it has no capacity to produce. Non-tariff measures have also been used to mitigate Cambodia’s ability to export, even though on the surface, it seems like those countries have provided many concessions.

In this debate, a piece written by the late secretary general of the United Nations, Kofi Annan, back in 1999 remains relevant even today.

“They are right to be concerned about jobs, about human rights, about child labor, about the environment, about the commercialization of scientific and medical research.… It seldom makes sense to use trade restrictions to tackle problems whose origins lie, not in trade, but in other areas of policy. By aggravating poverty and obstructing development, such restrictions often make the problems they are trying to solve even worse.…

“So it is hardly surprising if developing countries are suspicious of those who claim to be helping them by introducing new conditions or restrictions on trade. They have been told time and again that free trade is good for them, that they must open up their economies. And they have done so, often at great cost.”

At a time when the country is still climbing the development ladder, “trade-not-aid” should be the next feature of discourse between Cambodia and its foreign partners if they are truly supportive of Cambodia’s stronger self-reliance and sustainable development.

Sim Vireak

Sim Vireak is a strategic adviser to the Asian Vision Institute based in Phnom Penh. He has written articles on a variety of topics pertaining to Cambodia's political economy, development and foreign affairs. The views expressed are his own and do not represent those of his affiliation.