The European Union will decide whether or not to revoke Cambodia’s preferential trade status. Following concerns over democratic and human rights setbacks in Cambodia, the EU has launched a process to temporarily suspend the Everything But Arms (EBA) deal that grants Cambodia preferential access to the European market. A number of sectors may be impacted by the suspension of EBA, including tourism, construction, and agriculture. However the EBA will probably not be revoked, as Cambodia has plenty of time to negotiate with the EU and defend its position. The temporary suspension of the EBA is an 18-month process.

EBA preferences can be withdrawn in case of some exceptional circumstances, notably in the case of serious and systematic violation of principles laid down in fundamental human rights and labor rights conventions.

Cambodia is expected to remain an attractive destination for foreign investment. It is no surprise if European firms continue to invest in Cambodia even if the EBA is suspended because the country has great potential in several industries. The EU is a key trading partner for Cambodia, especially for garments and footwear. Cambodia is expected to grow by seven per cent in 2019. Growth will be driven by garment exports, tourism, construction and real estate and agriculture.