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Cambodians Threaten to Relocate Bicycle Production to Neighboring Countries

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Cambodians Threaten to Relocate Bicycle Production to Neighboring Countries
The EU is currently considering a temporary withdrawal of tariff preferences for Cambodia which will result in import duties on all bicycles made in Cambodia. – Photo Bike Europe

BAVET CITY, Cambodia – EU’s biggest bike supplier Cambodia could lose its preferential trading terms. The EU is currently considering a temporary withdrawal of tariff preferences for Cambodia based on human and labor rights criteria. A decision is expected to be announced early in 2020. The Cambodian Bicycle Coalition is renewing its call for the European Commission to not withdraw the country’s ‘Everything But Arms’ (EBA) trade benefits.

The Cambodian Bicycle Coalition (CBC), representing A&J (Cambodia) Co. Ltd., Smart Tech (Cambodia) Co. Ltd., and SpeedTech Industrial Co. Ltd. stated today that, “our ability to competitively supply our EU customers is dependent upon continued market access under the EBA program.”

Relocation to Bangladesh, Myanmar and Vietnam

CBC Chairman Jon Edwards said, “It would be tragic for our work force and devastating for the communities in which we operate in Cambodia if we are forced to relocate to other countries that will still have duty free access to the EU, such as Bangladesh, Myanmar and Vietnam. We very much hope that the Commission will not take any action that makes our continued operations in Cambodia unsustainable.”

Duty free access to EU market

The ‘Everything But Arms’ (EBA) program provides for duty-free and quota-free access to the EU market for bicycles as part of the Generalized System of Preferences (GSP) Plus arrangement. The CBC states that “without it, the CBC manufacturers would face an EU tariff of 14 percent on their exports. Other regional suppliers such as Bangladesh and Myanmar would not, and a free trade agreement with Vietnam will soon give that country secure duty-free access to the EU. If EBA preferential trading terms were to be withdrawn for bicycles, the CBC companies, would be forced to relocate production for the EU market out of Cambodia, with the likely closure of the existing factories. All three companies represented by the CBC are Taiwanese-owned firms that were incentivized by the EBA program to invest in Cambodia.”

We have and will continue to engage with EU decision-makers to appeal for continued EBA eligibility for our Cambodian bicycle production,” the CBC continues. “The issue of worker rights is high on our agenda, as evidenced by rigorous independent audits for some of our ‘publicly listed’ customers. We firmly believe the members of CBC can pass every test when it comes to workers and human rights in Cambodia.”

In one decade from € 30 million to over €300 million

A&J (Cambodia) Co. Ltd., Smart Tech (Cambodia) Co. Ltd., and SpeedTech Industrial Co. Ltd. are all located in Bavet City in Svay Rieng Province, Cambodia. According to CBC these three companies provide “6,000 direct jobs in the region. Exports have grown in a little more than a decade from under € 30 million to over €300 million in 2018.”

Exports have grown from € 30 million to over €300 million in 2018 in less than a decade.

“Since the EU market accounts for 80 percent of our production, the withdrawal of EBA would require these companies to relocate production from Cambodia. We have provided the EU with information on the economic and social consequences that the loss of EBA benefits for the CBC would cause. The CBC, therefore, again urges the EU to ensure that EBA tariff benefits are maintained for bicycle exports from Cambodia to the EU.”

Already exempted from anti-dumping tariffs

“In an earlier stage the EU has recognized us for our fair-trade practices and as important suppliers to the EU market. Since May 2015, the EU has levied anti-dumping tariffs on bicycles from Cambodia. However, we are the only three bicycle manufacturers in Cambodia exempted by the EU from these anti-dumping tariffs and since 2015. We have played by the rules and want to continue to be able to supply our customers in the EU with quality bicycles at affordable prices,” states the CBC.

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