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The European Union decided to impose trade sanctions against Cambodia as a result of alleged human-rights violations, making good on a year-long threat with tariffs on around 1 billion euros ($1.1 billion) of imports from the country.

The European Commission, the EU’s executive arm, cleared the way for a partial suspension of a policy that lets Cambodia export all goods except weapons duty-free and quota-free to the bloc.

The move will automatically introduce EU tariffs on sugar, travel goods, some footwear and selected garments from Cambodia as of Aug. 12 unless member-country governments or the European Parliament object during the six-month countdown. The duties will affect around a fifth, or 1 billion euros, of Cambodia’s annual exports to the EU, according to the Brussels-based commission.

“Our aim is that the Cambodian authorities end human-rights violations, and we will continue working with them in order to achieve that,” EU Trade Commissioner Phil Hogan said in an emailed statement on Wednesday.

The EU is trying to prod changes in the political behavior of Cambodian Prime Minister Hun Sen while being wary of damaging the country’s economy, where a $5 billion garment industry employs three-quarters of a million people and is the biggest exporter.

‘Unjust Decision’

Cambodia’s ministry of foreign affairs called the move an “unjust decision” based on misconceptions of the reality on the ground in the Southeast Asian country.

“Despite grounding on the EU’s values and principles of human rights and democracy, the decision is politically driven and is devoid of objectivity and impartiality, two fundamental principles which are to be expected from” the European Commission, the ministry said in a statement issued Tuesday evening.

In a separate sign of how the 27-nation EU uses its economic heft to pursue broader policy goals, the European Parliament on Wednesday approved a free-trade agreement with Vietnam after winning commitments from Hanoi to bolster labor rights in the country.

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Hun Sen extended his 33-year rule over Cambodia in July 2018 when his party won a boycotted election. He has struck a defiant tone with the European side, courted several Eastern European countries for support and vowed to turn to China for help should Cambodia lose its EU trade benefits.

‘Democracy Eroded’

Cambodia is being nudged out of the EU’s “Everything But Arms” initiative, the most generous part of the bloc’s Generalized Scheme of Preferences for poor countries around the world.

EU imports from Cambodia in 2018 were worth 5.4 billion euros ($5.9 billion), with clothing and textiles accounting for around three-quarters of the total, according to the commission.

The EU decision on Wednesday marks the outcome of a 12-month process during which the commission monitored the situation in Cambodia and produced a report on human-rights violations there.

“The European Union will not stand and watch as democracy is eroded, human rights curtailed and free debate silenced,” EU foreign-policy chief Josep Borrell said on Wednesday.

The move partially to revoke general trade benefits for Cambodia is separate from a decision by the bloc in 2019 to impose tariffs on Cambodian rice for three years as a result of a surge in imports deemed to have hurt European rice producers.

(Updates with comment from Cambodian government in 6th, 7th paragraph)

--With assistance from Philip J. Heijmans.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Brendan Murray, Ruth Pollard

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