As EU suspended EBA, Japan and other Asian countries to strengthen cooperation with Cambodia

During a meeting between Foreign Minister Toshimitsu Motegi and Cambodian Prime Minister Hun Sen in Phnom Penh, Japan and Cambodia agreed last week to reopen their borders for each other’s expatriates, possibly starting from early September, according to the Japanese Foreign Ministry. Japan has also decided to ease entry restrictions for foreign students, government sources said.

This could be coincided as the step to strengthen the relations between the two countries. Because of the discussed topics the visit was more than just a normal regional trip undertaken to boost bilateral diplomatic ties and to reflect solidarity in difficult times. During the diplomatic meetings of Japanese Minister Motegi, who is the first foreign dignitary to embark on an official visit to Cambodia amid the COVID-19 pandemic, both sides exchanged views on a number of regional and international issues of common and strategic interest, including the South China Sea, the denuclearization of the Korean peninsula, the concept of ASEAN Outlook on Indo-Pacific and Free and Open Indo-Pacific initiated by Japan.

Japan discussed the implementation and progress of some major projects in Cambodia such as the development of Sihanoukville Port, the most important port of the country, new container port at Sihanoukville and to expand investment activities increasing the trade between the two countries. Tokyo seems to look at Cambodia as a strategic partner in the area also to counter Chinese influence in South East Asia. China remains the largest investor in Sihanoukville and Chinese companies account for a majority of the province’s investment projects under construction, worth a total of $30 billion. More widely, Chinese economic and trade influence is growing in the region and it is now Southeast Asia’s leading force in trade. It is the third-largest source of investment in the region. It has had a free trade agreement with the Association of Southeast Asian Nations (ASEAN) since 2010 and is set to be the largest economy in the ASEAN-centred 15 nation Regional Comprehensive Economic Partnership (RCEP). Parallel to this growing economic position, since the early 1990s, China has become deeply involved in the full range of ASEAN’s diplomatic activity. It has also long cultivated close state-to-state relationships across the region. For these reasons, before visiting Phnom Penh, Japanese Foreign Minister also visited Laos and Myanmar, two other potential allies for Tokyo to counter the Chinese expansion. Motegi clearly explained to his Cambodian counterpart, Prak Sokhonn, that Cambodia has become more important than ever for the Free and Open Indo-Pacific concept to be further reinforced as the international landscape has been considerably shifting as a result of the COVID-19 pandemic. Also U.S. is quite worried about growing Chinese influence. U.S. policy toward the region is driven by an understanding of China’s accumulated and growing influence and, for example, the administration of President Donald Trump is building on the security and diplomatic commitments of its predecessor – the “Asia rebalance,” and dispersal of military deployments south.

Not only China

The Japan visit could represent one result of Cambodia’s effort to keep and to boost multilateralism also with other regional partners. China is indeed the biggest economic and investor partner of Cambodia but Phnom Penh diplomacy tries its best to keep good relations even with China’s competitors such as Japan, the United States, and Vietnam. Cambodia has made great efforts to sign free-trade deals not only with China, but also with South Korea, Japan, the United Kingdom, and the Eurasian Economic Union. More noticeably, Cambodia has finalised its free-trade deal with China and is negotiating trade deals with South Korea. Cambodia has also stepped up its international cultural diplomacy by hosting the Asian Cultural Council (ACC) in 2019 in Siem Reap and international recognition has been granted to Cambodia for its experience in protecting, restoring, and preserving historical temples such as Angkor Wat and Preah Vihear Temple.

The European Union’s position

In February, the European Commission decided to withdraw part of the tariff preferences granted to Cambodia under the EBA trade scheme due to “the serious and systematic violations of the human rights principles enshrined in the International Covenant on Civil and Political Rights.” Cambodia was a major beneficiary of the EU’s Everything But Arms’ (EBA) tariff-reducing trade preference system for developing nations in recent years.

The EU is Cambodia’s largest trading partner, accounting for 45% of Cambodian exports in 2018. Exports to the EU from Cambodia reached €5.4 billion in 2018, more than double the €2.5 billion recorded in 2013. 95.7% of these exports entered the EU market under EBA tariff preferences (i.e. €5.2 billion out of the €5.4 billion in total).

But with the suspension of the EBA, the European Union risks to get far away from Cambodia. The question is to understand whether Brussels was right to suspend the EBA or the EU will lose its influence and soft power in favour of other regional actors, such as Japan for instance, that see in Phnom Penh a strategic economic partner.