Suspension of trade privileges is a key external risk that could negatively impact Cambodia’s economic prospects this year and slow export growth. This is true especially of Cambodian textile and footwear exports. If buyers stop buying products, Cambodia will lose hundreds of thousands of jobs.

Buyers say the labor and human rights situation in Cambodia is posing a risk to trade preferences for Cambodia and that trade privileges could be suspended. In February, the European Union announced the launch of a six-month monitoring period to determine whether Cambodian exports should continue to enjoy tax-free entry into the European market under the Everything But Arms scheme. A similar measure was proposed by the US.

Prime Minister Hun Sen has ignored international criticism of his rights record and shrugged off the risks of losing markets in Europe or North America. Apparently China has expressed willingness to help Cambodia in part through additional investment in the country. Foreign companies, concerned over Cambodia’s rights record, have made it clear they will not stop now until their demands are met and until Cambodia improves its human rights record. They say Cambodia exhibits a declining respect for labor standards, including freedom of association, and other issues.