Cambodia Inches Closer to Beijing as EU Reviews Preferential Trade Status

By Frank Fang, Epoch Times
May 1, 2019 Updated: May 1, 2019

Cambodia, facing the possibility of losing its preferential trade status with the European Union, has decided to seek support from and further bolster ties with Beijing.

It was Cambodian leader Hun Sen who disclosed that China would provide assistance, in a post on his official Facebook page on April 29. Hun said Chinese Premier Li Keqiang had promised support, although he gave no further details. Chinese authorities hadn’t confirmed the move as of press time.

Hun also disclosed that China will provide 600 million yuan (about $89 million) in military aid to Cambodia’s defense sector. He was recently in China on a five-day trip to attend the Belt and Road Forum that ended April 27.

Currently, Cambodia benefits from the “Everything but Arms” (EBA) initiative of the European Union. Effective since 2001, the initiative allows the world’s least developed countries to export any goods—except weapons—duty-free and quota-free to the EU market.

Locals have already expressed doubt that China could come to Cambodia’s aid.

“China is not capable of providing relief to Cambodia when it loses the EBA because China is an exporting country, not an importing one,” said Rong Chhun, president of one of the country’s biggest worker unions, the Confederation of Unions, in a recent interview with Radio Free Asia (RFA).

“China has its own motivations for ‘helping’ Cambodia,” he said.

Special Trade Status Under Threat

The EU is one of Cambodia’s biggest trading partners. In 2017, Cambodia exported roughly $5.8 billion worth of goods to the EU, accounting for about 40 percent of Cambodia’s total exports, according to EU data.

However, in February, the European Commission began an 18-month review process, which includes a six-month period of intensive monitoring and engaging with Cambodian authorities, to determine if Cambodia should be temporarily suspended from the EBA because of its human rights record, according to a Commission press release.

In 2017, Cambodia’s Supreme Court dissolved Cambodia’s main opposition party, Cambodia National Rescue Party (CNRP), which eventually paved the way for Hun to win his sixth term during a general election in 2018. Media have since reported that Hun’s government has jailed many political dissidents, and cracked down on independent media outlets in Cambodia.

RFA, in an April 30 report, reported that the Cambodian government refused to allow U.N. Special Rapporteur on Human Rights in Cambodia Rhona Smith to meet with Kem Sokha, leader of CNRP, during her April 29 to May 9 visit. Sokha has been under house arrest since being released from prison in September 2018.

China Relationship

China quickly has expanded its economic relationship with Cambodia. According to Chinese state-run media Xinhua, trade volume between the two countries was valued at $5.8 billion in 2017, an increase of 22 percent from a year earlier. At the same time, China has invested heavily in the Southeast Asia country, with $12.6 billion in fixed asset investments from 1994 to 2017.

However, trade with China is heavily imbalanced. According to UN trade data, China imported just $688 million worth of goods from Cambodia in 2017, compared to the United States’ purchase of $2.13 billion.

Cambodia is also heavily indebted to China. The country owes $3 billion, or almost half of its foreign debt, to China, according to multiple sources.

Hun’s government is one of the earliest supporters of the One Belt, One Road initiative (OBOR, also known as Belt and Road). Launched by Beijing in 2013, it’s the Chinese regime’s flagship project to build up geopolitical influence via investments across Southeast Asia, Africa, Europe, and Latin America.

According to Reuters, Hun struck several deals in his latest trip to China, including an agreement to have Chinese tech giant Huawei to develop Cambodia’s 5G—the next-generation of wireless communications.

Cambodian political analyst Kim Sok, who now resides in Finland after gaining asylum, said in a recent interview with RFA that Hun was “selling Cambodia to China” by supporting Beijing’s OBOR initiative.

“In return, [Hun Sen] gets nothing in terms of national interest from the Chinese … only protection for his personal power.”

Follow Frank on Twitter: @HwaiDer
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