Cambodia has signed a free-trade deal with China and secured a £1.07 million funding package from Beijing just two months after Brussels imposed sanctions on the cash-strapped south east Asian country. Prime Minister Hun Sen and Chinese Foreign Minister Wang Yi oversaw the signing of the Cambodia-China Free Trade Agreement (CCFTA) and agreements for loans and grants at the Peace Palace in Phnom Penh.
Cambodian Minister of Commerce Pan Soraksak said the CCFTA “signifies an even stronger tie between the two countries and marks another key historical milestone for Cambodia-China relations”.
He said: “The agreement will provide a more robust economic partnership through a higher degree of market access, liberalisation for goods, services, and investments.”
The move comes after Brussels suspended Cambodia’s tariff-free access to the European market under its “Everything But Arms” (EBA) scheme over democracy and human rights concerns.
The sanctions are expected to result in a £840 million hit to the Cambodia’s annual £4.45 billion in exports to the EU – 75 percent of which are made up of clothing and textiles from an industry that employs a million people.
The EU stripped Cambodia of its preferential trade terms following the arrest of opposition Cambodia National Rescue Party (CNRP) President Kem Sokha in September 2017 and the Supreme Court’s decision to ban his party for its role in an alleged plot to topple the government two months later.
The ban, along with a wider crackdown on NGOs and the independent media, paved the way for Hun Sen’s CPP to win all 125 seats in parliament in the country’s July 2018 general election.
Hun Sen has said EU demands to maintain the EBA, which include dropping charges of treason against Kem Sokha and reinstating the CNRP, were unreasonable and an encroachment on Cambodia’s internal affairs.
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The Cambodian leader shrugged off the sanctions but unions warned tariffs on exports to the EU could leave 80,000 workers from more than 1,000 factories without jobs if buyers from the bloc stop placing orders because of higher costs.
The prime minister said the EBA was “always going to end” when the country’s economy developed, but the CCFTA will “exist forever”.
He said: “China continues to provide strong support for Cambodia to defend its own sovereignty and dignity.”
Cambodian Ministry of Commerce spokesman Seang Thai said the CCFTA was “not meant to substitute for the EBA,” but to bring additional benefits to the country.
But unions leaders and Asia analysts fear the deal with China will leave the country poorer and beholden to Beijing.
Duong Chentra, an opposition activist who fled to Thailand to avoid arrest, said small corrupt countries such Cambodia never gained from deals with China, and usually ended with huge debts.
He warned the CCFTA would see China get free access to Cambodia’s natural resources.
He said: “I want to send a message to Hun Sen that China has never considered the interest and welfare of the Cambodian people or respected the concept of human rights.
“China has only its own interests in mind.”