The EU has decided to withdraw one-fifth of the Everything But Arms (EBA) for Cambodia covering Cambodia’s exports of garment and footwear products, travel goods, and sugar. Without EBA, Cambodia will find it difficult to continue the necessary transformation of the textile industry. It will negatively impact future investments, as well as predictability and trust, two crucially important elements of a well-functioning industry. It will also make it difficult for Cambodia to create a modern and competitive industry, with a skilled workforce, and where labor rights are fully respected. With EBA gone, Cambodian products will be less competitive. Due to the tax which will be applied, Cambodian products in the EU market will cost more than those from other countries that still have EBA. Consumers will naturally opt for the cheaper product. In addition the economy will be hit by global challenges, including Covid-19, world security and external trade wars.

In response Cambodia is planning steps like creating jobs for those who may lose their jobs and encourage them to look for overseas jobs depending on their capacity; improving infrastructure and reducing unnecessary expenses for the private sector; and organising the budget so it can be spent effectively and efficiently.