No.829 The European Union’s Withdrawal of Trade Preferences for Cambodia
Following Cambodia’s violation of human and labor rights, the European Union (EU) decided in February 2020 to withdraw trade preferences for the country temporarily from August 2020. This paper estimates the short-run impact of preference withdrawal on EU imports from Cambodia. As the EU withdrew preferential tariffs only for certain products and maintained duty-free quota-free access for others, I adopt a difference-in-differences regression framework and provide supporting evidence for the parallel trend assumption. The results show that preference withdrawal has a significantly positive impact on EU import of affected goods from Cambodia in July 2020, consistent with a last-minute shipment effect to avoid tariff increases. Subsequently, tariff increases have a significantly negative impact on EU import of affected goods. These effects are heterogeneous across knitted garments, woven garments, and footwear products.
Keywords: GSP, EBA, Export, Cambodia, European Union
JEL classification: F14, F63
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.