Reports
Discussion Papers
No.1018 Does the EU’s Withdrawal of Tariff Preferences Induce Trade Redirection? Evidence from Cambodia
by Ponhahwatey Snameas, Kiyoyasu Tanaka, Kenmei Tsubota
November 2026
ABSTRACT
The European Union (EU) partially withdrew tariff preferences for Cambodia in August 2020 amid concerns over democratic backsliding. This paper examines whether Cambodia redirected its exports from the EU to third-country markets following the EU’s withdrawal. Because the EU removed tariff preferences only for selected garment and footwear products, we employ a difference-in-differences strategy that compares changes in Cambodia’s exports to non-EU markets between affected and unaffected products. Using Cambodian export data from 2017 to 2024, we find no evidence that exports of affected products increased to non-EU destinations, suggesting the absence of trade redirection. Instead, exports of affected footwear products declined by approximately 50%. These findings suggest that Cambodia’s response to the EU’s withdrawal was characterized by export contraction rather than export redirection. One potential explanation is that Cambodia’s integration into buyer-driven global value chains may have limited exporters’ ability to reallocate sales across markets.
Keywords: Trade redirection, trade preferences, EU, Cambodia
JEL classification: F13, F14, F15, F51
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