The European Union's withdrawal of trade preferences for Cambodia

Following Cambodia's violation of human and labour 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 the EU import of affected goods. These effects are heterogeneous across knitted garments, woven garments, and footwear products.