Cambodia is the fifth biggest supplier of garment and textile products to the European Union. It’s behind China, Bangladesh, Turkey and India. Cambodia’s garment exports to the EU grew 14 per cent in 2016. EU market growth was largely as a result of preferential treatment under the ‘Everything But Arms’ (EBA) agreement, which allows garment products to enter the EU market duty-free due to its status on the list of least developed countries.

The EU’s Everything But Arms arrangement (EBA) was born in 2001 to give LDCs duty-free and quota-free access to the EU for all their exports with the exception of arms and armaments. This makes it the most generous form of preferential treatment to LDCs globally. There are currently 49 beneficiaries under this arrangement.

Entry into the EBA is automatic and, unlike other GSP arrangements, the EBA has no time-limit. With the per capita income of Cambodia already surpassing the middle income economy’s threshold, sooner or later Cambodia will lose its LDC status as classified by the United Nations. Once Cambodia loses this status, it will surely affect the garment industry. Therefore Cambodia will have to diversify its economic foundations as well as increase its productivity.