"The EU is reluctant to take action against Cambodia and Myanmar, who continue to enjoy duty-free market access to the EU, despite being accused of severe human rights violations. The Cambodian government, under longtime ruler Hun Sen has squelched democracy, while the Myanmar military has committed horrible atrocities against the Rohingya ethnic minority. Both these countries enjoy the ‘Everything But Arms’ trade preferences, as a part of a development policy intended to improve livelihoods by encouraging exports. European officials are worried frequently changing the eligibility of these preferences would not only increase political risk but also undermine those goals by discouraging investment in the countries affected."

The EU is reluctant to take action against Cambodia and Myanmar, who continue to enjoy duty-free market access to the EU, despite being accused of severe human rights violations. The Cambodian government, under longtime ruler Hun Sen has squelched democracy, while the Myanmar military has committed horrible atrocities against the Rohingya ethnic minority.

Both these countries enjoy the ‘Everything But Arms’ trade preferences, as a part of a development policy intended to improve livelihoods by encouraging exports. European officials are worried frequently changing the eligibility of these preferences would not only increase political risk but also undermine those goals by discouraging investment in the countries affected.

Major employment generators

Cambodia and Myanmar together account for a little over a fifth of total imports into the EU under the Everything But Arms program. Both these countries have developed their successful apparel export industries that primarily rely on low wages. Until recently, both had seemed to be moving toward a more democratic future. Myanmar received the EU trade benefits only after restoring democracy and releasing Nobel Peace Prize winner Aung Suu Kyi from house arrest. Since then, the country’s exports to the EU have increased tenfold.

While exports enrich factory owners and corrupt government officials they also employ hundreds of thousands of poor workers, especially young women. Although apparel factories are known for exploitation of workers but they offer alternatives to the poor in these countries. Especially for the young women who dominate sewing jobs in these factories, the only other alternatives are subsistence agriculture, domestic service, or marriage and motherhood at a young age.

EU adopts a cautious approach

The EU is cautious about enforcing the eligibility conditions of Everything But Arms since it could hurt the very people the program is designed to help. The new tariffs would hit exports from Cambodia and Myanmar hard, along with the workers in those factories.

EU officials, over the next year, will investigate the allegations and engage with officials in both governments to see if they will take steps to protect democracy in Cambodia and ensure a safe return for the Rohingya, nearly a million of whom have fled Myanmar for refuge in neighboring Bangladesh. If they do not, both countries could lose some or all of the duty-free market access they currently enjoy in Europe.

The threat of losing duty-free access to the EU is serious and credible enough to persuade these countries to reform. That will be harder in Cambodia and Myanmar, where the problems are deeply rooted in politics and the desire to hold onto power. If the EU suspends Everything But Arms benefits, thousands of people in Cambodia and Myanmar could lose their jobs and be thrown back into dire poverty.