News article

H&M Group comments on EU trade preference withdrawal for Cambodia

The EU has taken the decision to partly withdraw Cambodia’s duty-free access to EU markets under the Everything but Arms scheme (EBA). The trade preferences are given to nearly 50 developing countries and are conditional on compliance with the UN/International Labour Organization conventions on core human and labour rights.

12 Feb, 2020

H&M Group strongly agrees with the EU’s aim to address serious human and civil rights violations in Cambodia. We have had consultations with the government on labour rights and freedom of association, and also to express concerns about the human rights situation. We are, together with local and international stakeholders, as well as other brands, continuously working to develop a sustainable textile industry. While there are clear signs of progress, challenges remain.

Cambodia is an important production market for H&M Group. We placed our first orders in the country in the 90s and have been driving different social programmes on the ground to improve the livelihood and working conditions of garment workers. We are doing this together with our suppliers and multiple stakeholders, such as local and international NGOs, trade unions, UN bodies, as well as other brands. The programmes focus on training and capacity building for well-functioning industrial relations and workplace dialogue, as well as dispute resolutions, occupational health and safety, gender equality, and employee rights awareness. Since 2013, H&M Group has provided 24 factories with training on industrial relations and ensured that garment workers are represented by democratically elected representatives. In addition, we have implemented improved wage management systems at 29 factories to ensure that suppliers have transparent and fair systems in place and that garment workers are aware of how their wages are set and can be increased.

The partial withdrawal of the EBA will have a negative impact on the employment of the people in the textile industry. The textile industry employs around 1,000,000 people and is a key driver for the Cambodian economy. Over the years, the EBA has helped to improve living conditions in the country and is important for the competitiveness of the Cambodian textile industry. Without an EBA, it will be difficult for Cambodia to create the necessary transformation of the textile industry, such as the development of an industry-wide collective bargaining agreement. It will negatively affect future investments, as well as predictability and trust, two crucially important elements of a well-functioning industry. It will also make it difficult for Cambodia to create a modern and competitive industry, with a skilled workforce, and where labour rights are fully respected.

We fully recognise the complexities for the EU in balancing the need to influence Cambodia towards becoming a country where human and civil rights are respected, and to support job creation and poverty alleviation through inclusive economic growth.

If Cambodia had complied with the EU’s requirements, as well as launched strategic initiatives essential for a modernised textile industry, such as Cambodia’s Garment and Footwear Sector Development Strategy*, the country would continue to be a very attractive sourcing destination. This includes developing an industry where labour rights are fully respected, and where stability and competitiveness are safeguarded. H&M Group wants to continue to play a part in developing Cambodia in a positive way, including reducing poverty and strengthening human rights.

However, due to a lack of adequate initiatives in developing the Cambodian textile industry, and a partial withdrawal of the EBA privileges, we will now further evaluate how the EU’s decision will impact our business and production strategy in Cambodia.

* Cambodia's Garment and Footwear Sector Development Strategy 2018-2025, by Ministry of Economy and Finance

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