PHNOM PENH, Feb. 12 (Xinhua) -- The European Chamber of Commerce in Cambodia (EuroCham) has expressed its regret over the formal investigation taken by the European Commission into a withdrawal of trade preferences granted to Cambodia under the Everything But Arms (EBA) agreement.

EuroCham represents more than 350 companies in Cambodia.

"As the main representative of the large European investment and business community in Cambodia, EuroCham is deeply concerned about the possible negative consequences of this decision on current and future business between the European Union and Cambodia," said its statement released late on Monday.

The statement said the decision not only jeopardized the past and future achievements of this partnership but also other development initiatives funded by the European Union (EU) over the last two decades which have helped to vastly improve the socio-economic status of millions of Cambodians.

"We are very concerned that this investigation will send wrong signals about the prospects of the market to potential manufacturing investors during 2019, and that a possible withdrawal in 2020 will have a terrible impact on the employment of hundreds of thousands -- often women -- and many more of their dependents," said Arnaud Darc, EuroCham Cambodia's chairman.

EuroCham viewed the decision as counterproductive to the aims of the EU's General Scheme of Preferences (GSP) that seeks to eradicate poverty in vulnerable developing nations by improving their export competitiveness via an opening of its markets to them, the statement said.

"This decision by the European Commissioner, whose responsibility is foremost on trade matters and who, in our view, has stepped into the geopolitical area, directly endangers European business interests in Cambodia," said Darc.

"However, this is not yet a confirmation for a withdrawal. EuroCham will in the coming years support the Royal Government and Cambodia's exporters in improving relevant industries, legislation, and production or export processes to mitigate the effects of this investigation or, in the worst case, a withdrawal of the EBA in 2020," he said. "At the same time, we continue to fight for the EBA to remain in place."

The statement said EuroCham insists that constructive dialogue and cooperation are the most effective tools to address concerns of the European Commission on human rights and democratization, rather than confronting the issues via unilateral economic pressure, which will not further the European cause in the country.

The statement came after the EU on Monday started an 18-month process that could lead to the temporary suspension of Cambodia's preferential access to the EU market under the EBA trade scheme due to concerns over human rights and labor rights in the country.

EU is a major trading partner for Cambodia, especially for textiles and footwear sector. As a least developed country, Cambodia has enjoyed exports of all products, except arms and ammunition, to European markets with zero percent tariff since 2001.

According to an EU's data, Cambodia exported products to the bloc worth about 4.9 billion euros in 2018.