In the first nine months of last year Cambodia’s exports of garment, textile and footwear products were up 13.18 per cent. However, the country may lose its Everything But Arms (EBA) benefits for exports to the EU. If that happens the EU will initially impose 20 per cent tariffs on garments imported from Cambodia and 30 per cent on footwear.
It is estimated Cambodia will incur $500 million loss in exports from the withdrawal of EBA. Cambodia is confident of overcoming this loss. A rise in exports to the US and a boom in non-garment sectors are expected to generate many jobs and help absorb the impact of a potential withdrawal. So losing around 35,000 jobs is seen as no big deal since other industries can make up for the losses. The possible withdrawal of the EBA scheme by the EU would reduce many companies’ profits but would not hurt the garment industry as a whole. Though tariffs imposed by the EU would remove some of Cambodia’s attractiveness for investors, garment and footwear will have new destination markets aside from the EU, like the US and Asean countries. So losing EBA does not mean that Cambodia will lose investors altogether.