Cambodia

Cambodia benefits from the "Everything but Arms" arrangement of GSP for least developed countries (LDC's). With a per-capita income of $1.690 in 2022, Cambodia is classified as a lower-middle income country. Since March 2017, Cambodia is part of the European Commission's "enhanced engagement", which further incentivises and facilitates beneficiary country's progress with regard to the 15 core international conventions covered in the GSP regulation. The enhanced engagement includes inter alia a close dialogue between public officials, the presentation of a "list of issues" to which beneficiaries are asked to respond and monitoring missions by the European Commission. In February 2019, Cambodia's preferential access to the European market was suspended because the government failed to address the EU's human rights concerns.

What is the EBA?

The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements. Within the EBA, the EU has intensified its engagement with three EBA beneficiaries: Bangladesh, Cambodia, and Myanmar. This enhanced engagement includes a systematic approach to address shortcomings in fundamental human rights and labour standards. The enhanced engagement countries account for about 87.3% of preferential imports from all EBA beneficiaries.

Cambodia flag

At a glance: EBA beneficiaries' preferential imports to the EU

group

16,77 M

Population

account_balance
Parliamentary Constitutional Monarchy

Government

trending_up

5.20%

GDP Growth

equalizer

3.00%

Inflation

money

$ 29,50 B

GDP

23 v

Freedomhouse index

5 -

ITUC Global Rights Index

30.1 v

Environmental Performance Index

Facts about Cambodia's economy

Economic Growth

Cambodia can look back on two decades of substantial economic growth. The economic growth rate averaged 8% annually in the last 20 years, which makes the Cambodian economy one of the fastest-growing economies in the world.

Export Products

Cambodia's most important export goods are articles of apparel and clothing (predominantly pullovers, trousers, and t-shirts), footwear, products made from leather and gold.

Trade Partners

Cambodia's most important trading partners are China, the US, the EU, which together account for a share of 53.3 % of total trade. Most of Cambodia's imports originate from regional trading partners- China, Thailand and Singapore. Important export markets for Cambodian products are the US and the EU.

Economic Structure

Agriculture remains the mainstay of the economy. The most important crops include rice, coconuts, cassava, corn, sugarcane, and soybeans as well as a variety of fruits. Manufacturing industries mainly focus on the domestic market and include beverages, paper, building materials, cigarettes, and, most importantly, garments. The garment sector was a main driver of economic growth and accounts for the vast majority of Cambodia’s exports.

Usage of EBA Preferences

Cambodia is the second biggest beneficiary from the EBA arrangement. About 76% of Cambodia's total exports make use of the duty suspensions granted under the EBA.

Trade with the EU

Total trade with the EU amounted to € 6,319 million in 2022. The EU is Cambodia's third most important trading partner with a share of 9%. More than 18% of Cambodia's exports go to the European market. Imports from the EU, on the other hand, play a less important role. Only 2.1% of Cambodia's imports originate from the EU.

Cambodia and the EU (2022)

Imports from Cambodia by product section

Imports from Cambodia over time (in € m)

CAMBODIA AND THE EU’s GSP

Economic Impact

During the twenty years preceding the COVID-19 pandemic, Cambodia experienced a notable transformation, achieving lower middle-income status in 2015 and setting its sights on reaching upper middle-income status by 2030. Likewise, the poverty line fell from 47.8 per cent in 2007 to 17.8% in 2019. Cambodia's economic growth has been mainly fuelled by the industrial sector, more particularly the apparel and footwear industry which remains the backbone of the Cambodian economy. Apparel and footwear account for about 70% of Cambodia's total exports and for 81% of overall EU imports from Cambodia, which are facilitated by free access to the European market.

84%

With 84% most of Cambodia's exports to the European market are eligible for duty suspensions under the EBA scheme.

91%

Cambodia takes considerable advantage of GSP preferences. About 91% of eligible products are imported using EBA preferences.

Preference utilisation and export diversification

Cambodia's imports to the EU

Preference Utilisation vs. total eligible imports

Cambodia's preference utilisation rate, which indicates the ratio of eligible to preferential imports, has been consistently high over the past years and currently stands at about 91%. Likewise, eligible imports increased constantly over time . Looking at individual product sections, Cambodia makes good use of the duty suspensions granted under the EBA scheme for its two dominant import groups apparel and footwear. Regarding the third largest import section- transport equipment and parts- preference utilisation has been constantly decreasing since 2016 but recovered since 2020 and stands now at 96%.

The largest product sections under EBA

Apparel and footwear products together account for about 84% of preferential imports, indicating that the Cambodian economy remains heavily reliant on these two sectors. Further economic diversification can support the economy's resilience to shocks on international markets and reduce the overall fragility of the economy. Thus, in the "Industrial Development Policy 2015 - 2025", the government has identified a number of priority sectors which are supposed to support the diversification of the product range. These priority sectors include inter alia electronics and automotive parts, which record a dynamic development and an increasing share in overall industrial production.

SUSTAINABLE DEVELOPMENT

The EU has started the "enhanced engagement" with Cambodia due to concerns with the country's overall adherence to human and labour rights as covered by the 15 core conventions included in the GSP regulation. The unilateral trade preferences under the GSP are conditional on the adherence to and the respect of fundamental human and labour rights as specified in the 15 fundamental conventions included in the GSP regulation. Despite that Cambodia has ratified all 15 conventions, the EU has noticed shortcomings in the respect of the convention’s core principles. Areas of concern include a deterioration of democracy, narrowed space for political opposition, media and civil society which manifests itself for example in the arrest of political opponents. Journalists face repressive actions and intimidation when trying to exercise their right to free expression. Furthermore, in line with ILO requests, the EU urged Cambodia to address anti-union discrimination and to strengthen the position of trade unions. Due to lacking progress in the focus areas of the enhanced engagement, the EU launched a temporary withdrawal procedure in February 2020, which led to the temporary suspension of preferences for a number of products originating from Cambodia on 12 August 2020.

Core international conventions on human rights and labour standards

Ratified

  • Convention on the Prevention and Punishment of the Crime of Genocide (1948)
  • International Convention on the Elimination of All Forms of Racial Discrimination (1969)
  • International Covenant on Civil and Political Rights (1976)
  • International Covenant on Economic Social and Cultural Rights (1976)
  • Convention on the Elimination of All Forms of Discrimination Against Women (1981)
  • Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
  • Convention on the Rights of the Child (1990)
  • Convention concerning Forced or Compulsory Labour, No 29 (1930)
  • Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
  • Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
  • Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
  • Convention concerning the Abolition of Forced Labour, No 105 (1957)
  • Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
  • Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
  • Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Additional Conventions

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
  • Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
  • Convention on Biological Diversity (1992)
  • The United Nations Framework Convention on Climate Change (1992)
  • Cartagena Protocol on Biosafety (2000)
  • Stockholm Convention on persistent Organic Pollutants (2001)
  • Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
  • United Nations Single Convention on Narcotic Drugs (1961)
  • United Nations Convention on Psychotropic Substances (1971)
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
  • United Nations Convention against Corruption (2004)

EU-Cambodia Bilateral Development Assistance

DG INTPA

Access all info about EU-Cambodia relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/cambodia_en

Opportunities in Cambodia

  • The diversification strategy implemented by the government opens up opportunities in a number of priority sectors. These include a number of light industries, including automotive parts, electrical appliances and bicycles.
  • Substantial need for foreign investment to improve the country's infrastructure, energy supply, transport sector, and logistics
  • Young and growing population with an emerging middle class

Contact points