World News
European Union Tariffs and Trade Sanctions Threaten to Flatten Cambodia
PHNOM PENH – Months after Cambodia held what many observers saw as a badly rigged election, the European Union (EU) is ramping up trade pressure in punitive response to the move away from rights and democracy.
The EU announced on October 5 that Cambodia would lose its special access to European markets under the so-called Everything But Arms (EBA) preferential trade scheme after it conducts a six-month review of its duty-free status launched last week.
The EU is currently Cambodia’s largest export market. The announcement came as a surprise to Cambodian officials, many of whom had publicly doubted the EU would withdraw Cambodia’s privileged market access despite numerous warnings from Brussels.
The economic repercussions of higher tariffs on Cambodia-produced goods could be immense. Cambodian exports to the EU were worth US$5.8 billion last year, the majority of which came from the country’s crucial garment and footwear sectors. Garment exports account for around 40% of Cambodia’s gross domestic product (GDP).
Asia Times analysis of official trade statistics shows that higher European tariffs could reduce garment sector revenues by as much as 11% per annum, a decline that could send the sector into free-fall and impact on the livelihoods of millions of Cambodians. The process for removing Cambodia from the EBA scheme is lengthy and incremental, and is not expected to fully begin for another six-months.
At that time, if there are “no clear and evident improvements on the ground” then it “will lead to the suspending of the trade preferences that they currently enjoy,” European Commissioner for Trade Cecilia Malmström wrote in a blog post on October 5.
By starting that process, the EU has laid down what it considers the “red line” the Cambodian government crossed last year when a compliant Supreme Court forcibly dissolved the nation’s only viable opposition party, the Cambodia National Rescue Party (CNRP).
Additionally, the EU has criticized the government’s attacks on independent media and nongovernmental organizations, and its alleged widespread disregard for human rights.
With the CNRP forced off the ballot, the ruling Cambodian People’s Party (CPP) easily won July’s general election, sustaining its consecutive rule over the country beginning in 1979. The CPP now also controls all but four seats in the Senate and almost all locally elected positions.
Sophal Ear, associate professor of diplomacy and world affairs at Occidental College at Los Angeles, says he was “stunned” by the EU’s decision as he previously thought it didn’t have “the guts to do it.”
“I’m so proud of Europe for standing for what’s right…they’re basically giving Phnom Penh six months to shape-up or ship out,” he added.
To avoid being removed from the EU’s EBA scheme, the CPP-led government must show clear improvement on rights and democracy. Despite the recent release of top political prisoners, there is no indication authorities intend upon allowing the CNRP to re-enter politics any time soon.
Speaking last month, European Commission Vice President Federica Mogherini called on the CPP to begin negotiations with the CNRP.
She also called on the government to drop all charges against CNRP members banned from politics and to reinstate the CNRP’s commune officials who were elected but stripped of their posts. It remains unclear if the EU has laid out a complete list of demands to avoid being sanctioned.
Earlier this year, Cambodia sent a lobbying mission to the EU led by lawyer and government adviser Sok Siphana, while there were rumors that China, Cambodia’s closest ally, was also lobbying European politicians on its behalf. These overtures, however, now appear to have failed.
With the ball now in the CPP’s court, the main question is whether Prime Minister Hun Sen’s government will allow Cambodia’s economy to become a victim of his party’s drive for political dominance.
Government sources told Asia Times that the EU’s decision was somewhat unexpected, though the more disgruntled officials claimed the government had been overly optimistic in thinking the EU was bluffing.
Indeed, as recently as late last month, CPP spokesman Sok Eysan told a local newspaper that he thought France, Germany and “all five superpower nations in the UN Security Council” supported the Hun Sen government.
“So, imposing sanctions is impossible because the EU decision won’t have consensus or support,” he added.
Not all government officials shared that view. A leaked letter by the Ministry of Commerce in December estimated that the imposition of tariffs on exports to Europe would incur an additional cost of US$676 million.
The figure is believed to be based on data from 2016, when total exports to the EU were worth US$6.2 billion.
Cambodia-based manufacturers already face rising costs that have put many factories out of business. When the government mandated minimum wage for garment workers was increased at the beginning of the year, many factory owners said they couldn’t afford the additional cost.
Those higher wages, which rose from US$153 per month in 2016 to US$170 per month this year, will cost employers an additional US$204 per worker per year – or roughly US$172 million per year for the entire sector.
EU-imposed tariffs will necessarily make Cambodia’s garment exports less competitive vis-a-vis its manufacturing rivals – especially Bangladesh – which are still afforded tariff-free treatment under the EBA scheme. In 2016, roughly 18% of all European imports under the EBA scheme came from Cambodia, with only Bangladesh selling more.
Kimty Seng, a lecturer of economics at the Royal School of Administration in Phnom Penh, says EU tariffs would compound the problem of Cambodia’s “very slowly diversifying” economy.
Kimty says that if Cambodia “cannot improve its trade competitiveness…the possible decrease in garment exports” as a result of EU tariffs “is very likely to destroy jobs” in the sector.
Considering that most manufacturing workers contribute part of their salaries to family members, any one person laid off work will impact the finances of at least another two or three people, analysts say.
A letter sent to the EU this year by five Cambodian trade unions claimed that imposing tariffs would directly affect as many as three million Cambodians.
The impact may or may not be that drastic. Last year, government spokesmen claimed Cambodia could simply diversify its export markets, shifting from Europe to other Asian nations, especially China. Independent analysts, however, say that’s easier said than done.
“In the short-run China will likely fill the void left by the application of tariffs. But in the longer term, China will have to clash in a trade war with [the US] as well as pass through an expected economic contraction,” says Paul Chambers, a political analyst at the College of Asean Community Studies at Naresuan University in Thailand.
“Very few exports go from Cambodia to China anyway. Only in the short term should we expect to see financial benefits for China in Cambodia,” he added.
Cambodia’s exports to China were worth US$609 million in 2016, and were thought to be slightly higher last year, but were still less than half of the value of exports to the United Kingdom, for example.
If European consumers stop purchasing Cambodian goods because of tariff-driven higher prices, it’s highly unlikely that China will have the political will or economic capacity to import several billion dollars worth of Cambodia-made goods to make up for the EU’s shortfall.
The EU’s announcement was made shortly before the Pchum Ben holiday in Cambodia so government spokespeople did not immediately respond. Asia Times’ calls to officials went unanswered.
But Hun Sen made a speech on Sunday in Japan in which he maintained his obstreperous stance against the EU.
“No matter what measures they want to take against Cambodia, in whatever way, Cambodia must be strong in its defense of its sovereignty,” Reuters quoted him saying.
“I say it again and again: don’t exchange national sovereignty with aid; don’t exchange the peace of the country with aid.”
Hun Sen has also already made clear on several occasions that he will not consider negotiating with the dissolved CNRP, meaning he’s likely on a collusion course with the EU.
But if the EU lifts Cambodia’s tariff-free status in the next six months, the impact will be felt most acutely by ordinary Cambodians, including those employed in the politically and economically important garments sector.
Government propagandists will no doubt try to pin the blame for the people’s hardship on European politicians. Hun Sen’s administration is already well-versed in presenting itself as the victim of foreign strong-arming, often dipping into the country’s colonial history for his oratory material.
Indeed, the CNRP was dissolved on the basis of the government’s specious allegation it was conspiring with the US to overthrow the CPP’s regime. But whether that narrative will sufficiently assuage out-of-work Cambodians is yet to be seen.
By David Hutt
Asian Times
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@DavidHutt is Southeast Asia-based political journalist and commentator. Columnist at @Diplomat_APAC and regular contributor to @asiatimesonline.
Exit polls in France showed that Marine Le Pen’s right-wing National Rally (RN) party made huge gains to win the first round of election on Sunday. However, the final outcome will depend on how people trade votes in the days before next week’s run-off.
Exit polls from Ipsos, Ifop, OpinionWay, and Elabe showed that the RN got about 34% of the vote. This was a big loss for President Emmanuel Macron, who called the early election after his party lost badly in the European Parliament elections earlier this month.
The National Rally (RN) easily won more votes than its opponents on the left and center, including Macron’s Together group, whose bloc was predicted to get 20.5% to 23% of the vote. Exit polls showed that the New Popular Front (NFP), a hastily put together left-wing alliance, would get about 29% of the vote.
The results of the exit polls matched what people said in polls before the election, which made Le Pen’s fans very happy. But they didn’t say for sure if the anti-immigrant, anti-EU National Rally (RN) will be able to “cohabit” with the pro-EU Macron in a government after the runoff election next Sunday.
Voters in France Angry at Macron
Many French people have looked down on the National Rally (RN) for a long time, but now it is closer to power than it has ever been. A party known for racism and antisemitism has tried to clean up its image, and it has worked. Voters are angry at Macron, the high cost of living, and rising concerns about immigration.
Fans of Marine Le Pen waved French flags and sang the Marseillaise in the northern French district of Henin-Beaumont. The crowd cheered as Le Pen said, “The French have shown they are ready to turn the page on a power that is disrespectful and destructive.”
The National Rally’s chances of taking power next week will rest on what political deals its opponents make in the next few days. Right-wing and left-wing parties used to work together to keep the National Rally (RN) out of power, but the “republican front,” which refers to this group, is less stable than ever.
If no candidate gets 50% of the vote in the first round, the top two candidates and anyone else with 12.5% of the registered voters immediately move on to the second round. The district goes to the person who gets the most votes in the runoff.
France is likely to have a record number of three-way runoffs because so many people voted on Sunday. Experts say that these are much better for the National Rally (RN) than two-way games. Almost right away on Sunday night, the horse trade began.
Macron asked people to support candidates who are “clearly republican and democratic.” Based on what he has said recently, this would rule out candidates from the National Rally (RN) and the hard-left France Unbowed (LFI) party. Leaders on the far left and the center left both asked their third-placed candidates to drop out.
Minority government
Jean-Luc Melenchon, leader of France Unbowed, said, “Our rule is simple and clear: not a single more vote for the National Rally.” But the center-right Republicans party, which split before the vote when some of its members joined the RN, didn’t say anything.
The president of the RN party, Jordan Bardella, who is 28 years old, said he was ready to be prime minister if his party gets a majority of seats. He has said he won’t try to make a minority government, and neither Macron nor the communist NFP will work with him.
“I will be a “cohabitation” Prime Minister, respectful of the constitution and of the office of President of the Republic, but uncompromising about the policies we will implement,” he said.
A few thousand anti-RN protesters met in Paris’s Republique square on Sunday night for a rally of the leftist alliance. The mood was gloomy.
Niya Khaldi, a 33-year-old teacher, said that the RN’s good results made her feel “disgust, sadness, and fear.”
“This is not how I normally act,” she said. “I think I came to reassure myself, to not feel alone.”
Election Runoff
The result on Sunday didn’t have much of an effect on the market. In early Asia-Pacific trade, the euro gained about 0.23%. Fiona Cincotta, a senior markets expert at City Index in London, said she was glad the outcome “didn’t come as a surprise.”
“Le Pen had a slightly smaller margin than some of the polls had pointed to, which may have helped the euro a little bit higher on the open,” she noted. “Now everyone is waiting for July 7 to see if the second round supports a clear majority or not. So it does feel like we’re on the edge of something.”
Some pollsters thought the RN would win the most seats in the National Assembly, but Elabe was the only one who thought the party would win all 289 seats in the run-off. Seat projections made after the first round of voting are often very wrong, and this race is no exception.
On Sunday night, Reuters reported there were no final results for the whole country yet, but they were due in the next few hours. In France, exit polls have usually been very accurate.
Voter turnout was high compared to previous parliamentary elections. This shows how passionate people are about politics after Macron made the shocking and politically risky decision to call a vote in parliament.
Mathieu Gallard, research head at Ipsos France, said that at 1500 GMT, nearly 60% of voters had turned out, up from 39.42% two years earlier. This was the highest comparable turnout since the 1986 legislative vote. It wasn’t clear when the official number of people who voted would be changed.
(CTN News) – Pakistan’s Ambassador to the United States, Masood Khan, has urged Washington to provide Pakistan with sophisticated small arms and communication equipment to ensure the success of Operation Azm-e-Istehkam, a newly approved counter-terrorism initiative in the country.
The federal government recently approved the reinvigorated national counter-terrorism drive, which comprises three components: doctrinal, societal, and operational.
Ambassador Khan noted that work on the first two phases has already begun, with the third phase set to be implemented soon.
Addressing US policymakers, scholars, and corporate leaders at the Wilson Center in Washington, Khan emphasized the importance of strong security links, enhanced intelligence cooperation, and the resumption of sales of advanced military platforms between Pakistan and the US.
He argued that this is crucial for regional security and countering the rising tide of terrorism, which also threatens the interests of the US and its allies.
“Pakistan has launched Azm-i-Istehkam […] to oppose and dismantle terrorist networks. For that, we need sophisticated small arms and communication equipment,” said Ambassador Khan.
Pakistan–United States relations
The ambassador observed that the prospects of Pakistan-United States relations were bright, stating that the two countries “share values, our security and economic interests are interwoven, and it is the aspiration of our two peoples that strengthens our ties.”
He invited US investors and businesses to explore Pakistan’s potential in terms of demographic dividend, technological advancements, and market opportunities.
Khan also suggested that the US should consider Pakistan as a partner in its diplomatic efforts in Kabul and collaborate on counterterrorism and the rights of women and girls in Afghanistan.
He stressed that the bilateral relationship should be based on ground realities and not be hindered by a few issues.
“We should not base our engagement on the incongruity of expectations.
Our ties should be anchored in ground realities, even as we aim for stronger security and economic partnerships. Secondly, one or two issues should not hold the entire relationship hostage,” said the ambassador.
China has reassured Taiwanese citizens that they can visit the mainland “without the slightest worry”, despite Taiwan raising its travel alert to the second-highest level in response to Beijing’s new judicial guidelines targeting supporters of Taiwanese independence.
Last week, China published guidelines that could impose the death penalty for “particularly serious” cases involving “diehard” advocates of Taiwanese independence.
In response, Taiwan’s government urged the public to avoid “unnecessary travel” to mainland China and Hong Kong, and raised its travel warning to the “orange” level.
However, Zhu Fenglian, a spokeswoman for a Chinese body overseeing Taiwan affairs, stated that the new directives are “aimed solely at the very small number of supporters of ‘Taiwan independence’, who are engaged in malicious acts and utterances”.
She emphasized that “the vast majority of Taiwan compatriots involved in cross-strait exchanges and cooperation do not need to have the slightest worry when they come to or leave mainland China”.
“They can arrive in high spirits and leave fully satisfied with their stay,” Zhu added.
What’s Behind The China-Taiwan Tensions?
The tensions stem from the longstanding dispute over Taiwan’s status. Mainland China claims Taiwan as part of its territory and has refused to rule out using force to bring the democratic island under its control, while Taiwan sees itself as a sovereign state.
Beijing has not conducted top-level communications with Taipei since 2016, when the Democratic Progressive Party’s Tsai Ing-wen became Taiwan’s leader. China has since branded her successor, President Lai Ching-te, a “dangerous separatist”.
“The DPP authorities have fabricated excuses to deceive the people on the island and incite confrontation and opposition,” Zhu said in her statement.
Despite the political tensions, many Taiwanese continue to travel to mainland China for work, study, or business.
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