Cambodian rice manufactures find buyers in China as EU increases pressure

Cambodian rice exports to China have surged after the European Union imposed duties on imports of the grain from the Southeast Asian nation, the World Bank said on Monday.

The EU in January imposed tariffs for three years on rice from Cambodia and Myanmar to curb an increase in imports from those two countries and to protect EU producers such as Italy. Cambodia has filed a challenge with the European Court of Justice against the duties, saying the so-called "safeguard" measure did not relate to any unfair behaviour and was based on broad generalisations and flawed use of data.

After the tariffs were imposed, Cambodia's milled rice exports to the EU in February reached only 10,080 tons, a 57.8 per cent decline from the previous month, the bank said in its country economic update. Cambodia exported 270,000 tones or 43 per cent of its total milled rice exports to the EU in 2018, the World Bank said.

"Overall, the decline of Cambodia's rice exports to the EU was more than offset by the increase in the country's rice exports to the Chinese market," the bank said in its report. Cambodia's rice exports to China grew by 45.6 per cent, the bank said, and it managed to increase its overall exports of rice by 2 per cent during the first two months of the year.

Cambodia at present gets a trade preference from the EU known as Everything But Arms (EBA), making all Cambodian exports duty free except arms. The EU accounts for more than one-third of Cambodia's exports, including garments, footwear and bicycles.

In February, the EU started an 18-month process that could lead to a suspension of Cambodia's EBA status over its record on human rights and democracy. The World Bank said if the EBA is suspended, Cambodia would see a maximum decline in exports to the EU of $654 million.

(With inputs from agencies.)