Cambodian garment industry to suffer most from Brexit
today Feb 5, 2019
The UK’s EU exit won’t only hurt the economies of Britain itself and its (current) European partners, but will also hit developing economies, a new study shows.
The Guardian reported that simulations run by the German Development Institute shows that a no-deal Brexit could push millions of people into extreme poverty and that Cambodia would be the biggest suffer among developing economies.
Cambodia’s garment industry is a major supplier to the UK fashion industry and it has favourable entry terms under a deal known as EBA.
EBA stands for Everything But Arms and means 49 least-developed countries can export to the EU without any tariffs. But with the UK being one of the top three economies in the EU and a huge consumer market for fashion, tariff-free access to its roughly 60 million people will be cut off (at least temporarily) in the event of a no-deal Brexit.
Cambodia has the biggest trade with the UK of all the 49 countries and 7.7% of its exports go to Britain. The report authors said their estimates are conservative as they only include headline figures and don’t take into account factors such as UK consumers reining-in their spending post-Brexit.
Jayant Menon, lead economist at the Asian Development Bank, told The Guardian “longer term, Cambodia also needs to look beyond garments” as its economy has relied on the garment sector for too long.
But he also expects the UK to reach some kind of agreement with the 49 countries as not doing so could seriously disrupt its own economy.
However, the German study said that it’s unlikely any agreements will be reached fast enough to completely remove the chance of damaging disruption either to the UK or to the millions of workers in Cambodia’s garment sector.
And Stephen Higgins, managing partner at investment firm Mekong Strategic Partners, told the newspaper: “Given the UK is showing such a blatant disregard for its own economic welfare by pushing ahead with Brexit, it is probably a big stretch to expect it to put a high weighting on the economic welfare of others.”
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