Can Cambodia Trade its Way out of LDC Status?

By Michelle Tolson

BATTAMBANG, Cambodia, Jan 3 2013 (IPS) - As one of the world’s 48 least developed countries (LDCs), Cambodia is afforded the most beneficial trade ranking to the European Union (EU) under the generalised scheme of preferences (GSP) known as the Everything But Arms (EBA) scheme.

The EBA allows those countries ranked as LDCs to export products duty-free to the EU, except arms and ammunition.

Cambodia’s largest exports to the EU are textiles, such as garments and shoes, comprising 89 percent of exports, valued at over 1.1 billion euros, according to a report released by the European Commission.

Agricultural products such as rice, sugar cane, fruits and vegetables, fish, peppers and cashews account for 5.8 percent of exports, valued at 75 million euros.

Introduced in January of 2011, the EBA has resulted in a 53 percent upsurge of exports to the EU from Cambodia in 2011, with the EU becoming Cambodia’s second largest export partner.

The intention of the agreement has been to elevate Cambodia from LDC status, encouraging the country to process its own products rather than have neighbouring countries benefit.

The trade treaty has boosted exports in various sectors, but experts have questioned the impact of increased trade on producers across this country of 14 million people. Of particular concern have been the rural peasants, considering that 92 percent of Cambodia’s poor live in the countryside.

For example, despite an increase in sugar cane exports to the EU, critics question the benefits to small-scale farmers, since land concessions to corporations have spiked and local farmers have been displaced from their land. Activists have called for a sugar boycott to raise awareness.