Trade ties or moral high ground: tough choice for the EU in Asia
Jon Van Housen & Mariella Radaelli
With the US under President Donald Trump continuing to threaten the European Union (EU) with additional tariffs and China battling the coronavirus epidemic, Europe faces a rocky time ahead in trade. The world’s biggest exporter and importer of goods and services, the EU generates nearly a third of global trade, ahead of the US at 12 per cent and China with about 10 per cent of the total.
To better control its own fate, the European bloc is increasingly moving to seal free trade agreements that create business opportunities for European companies and jobs for workers while giving consumers more choices and lower prices.
Yet the EU is approaching a watershed as it considers human rights and the rule of law in Vietnam and Cambodia.
Two upcoming decisions will help define the EU through its ties with the Southeast Asian countries. The European Parliament is considering final passage of a free trade agreement with Vietnam while the European Commission – the executive branch of the EU government – is mulling whether to take Cambodia off a preferential trading programme that grants tariff-free access to almost all Cambodian exports. For ‘enlightened’ Europe, will it be trade or moral ground that triumphs?
Rights groups have long been ringing the alarm bell over Cambodia’s Hun Sen. Critics say Cambodia under Hun Sen has stifled the free press and crushed the democratic nation-building process set in motion after Pol Pot’s disastrous ‘revolution’ was brought to a halt.
Yet instead of continuing down the path of building free and open institutions, many say the country has become the most compliant client state China now has in Asia, if not the world, and is now following its repressive model.
In response to those alarms, Hun Sen, the strongman in power since 1985, recently claimed that “Europe today has unpleasant relations with Asean” as a whole, not only Cambodia.
Other Association of Southeast Asian Nations (Asean) member states have indeed already felt some of the EU’s sting as the bloc phases out imports of palm oil due to concerns about environmental damage caused by the oil’s plantations and production.
But Cambodia presents a special case. Lavished with care and funding by the world community following the disastrous years of the Khmer Rouge, the country held a special place in the hearts of many who saw it as a chance to show that good could rise from the ashes of evil. Yet under Hun Sen, it has quashed democratic challengers, closed down or forced ownership change in feisty newspapers due to ‘back taxes’ and allowed the Chinese a seemingly free hand in property development.
Its beach towns, once a draw for backpackers and the adventurous, are now lined with Chinese gambling casinos and it has come at a price. At least 36 people died last summer when workers were trapped beneath a collapsed Chinese hotel under construction in the coastal town of Kep, the latest in a string of construction disasters.
As part of efforts to help the country rise from poverty, the EU put in place a plan pointedly named Everything but Arms (EBA) that removes almost all tariffs on Cambodian imports, a crucial benefit in an economy reliant on low-tech textiles and handwork. As a result, the EU is Cambodia’s largest external market. Even though Hun Sen remains defiant, scrapping the EBA would seriously damage the fledgling economy.
The International Monetary Fund (IMF) predicts the EBA’s withdrawal could shave three percentage points off growth while and the World Bank estimates exports would fall by $654 million.
Meanwhile, the European Parliament will vote this month on whether to accept a free trade agreement with Vietnam. Another one-party government, the communists in Hanoi have waited nervously for years as the EU voiced its reservations. Last December, Hanoi pledged to allow independent trade unions to operate for the first time, but skeptics say that is a mere promise that the Communist Party will have to prove by action.
The European Parliament will likely approve the deal despite concerns over Vietnam’s human rights record, an agreement that expected to give a big boost to Vietnam’s economy by 2023.
If the deal with Vietnam is clinched, Cambodia will likely claim a double standard, but it seems Cambodia remains a special place, even to those in the hard world of geopolitics.
Perhaps the EU has given up on real democratic change – for now – in Vietnam, but see it as still possible in Cambodia. To keep its special status, the EU is asking the Cambodian government to return to political conditions as they were in early 2017 before the opposition Cambodia National Rescue party was dissolved and allow exiled politicians to return. The EU also wants a return to a more open civil society and says that EBA status carries explicit conditions on democracy and human rights.
They must be wary of driving Hun Sen even further into the arms of China, if that is indeed possible. But nurturing democracy in the fragile country will likely require both the carrot and the stick. Strongmen rarely respond to appeals to their high nature.