By Amy Sawitta Lefevre and Prak Chan Thul
PHNOM PENH (Reuters) - The United States promised "concrete steps" against Cambodia and the European Union raised a threat to vital trade preferences after the main opposition party was banned ahead of elections.
The Cambodia National Rescue Party (CNRP) was dissolved by the Supreme Court on Thursday at the request of the government of Prime Minister Hun Sen, whose rule of more than three decades faces a major challenge at next year's general election.
The ban on the CNRP followed the arrest of its leader, Kem Sokha, for treason. He is accused of plotting to take power with American help.
Hun Sen's critics called the CNRP dissolution an attempt to steal the election and the death knell for democracy after Western donors have spent billions of dollars since 1993 trying to build a multiparty system following decades of war.
"On current course next year’s election will not be legitimate, free, or fair," a White House statement said, promising to take "concrete steps".
The first of those was to end support for the Cambodian National Election Committee ahead of the 2018 election, it said.
In Brussels, an EU spokesman said the election could not be legitimate without the opposition and noted that respect for human rights was a prerequisite for Cambodia's access to EU trade preferences under its "Everything But Arms scheme."
That scheme giving tariff free access - and similar trade preferences in the United States - have helped Cambodia build a garment industry on low cost labor. Between them, EU and U.S. markets take some 60 percent of Cambodia's exports.
There was no immediate government response to the reaction from the United States and European Union.
In a symbolic step, the U.S. Senate passed a resolution calling on the Treasury and State Departments to consider placing Cambodian officials implicated in abuses on a watch list for asset freezes and travel bans.
WAR OF WORDS
Hun Sen has been in a deepening war of words with the U.S. embassy and State Department over a crackdown on his critics, but at the weekend posed with U.S. President Donald Trump at a regional summit and praised his policies of non-interference.
The fact that the threat of action came from the White House gave it greater weight than previous statements from the State Department calling for the release of Kem Sokha.
So far Western countries have shown little appetite for sanctions and the opposition itself has shied away from calling for steps to restrict garment exports because of the hundreds of thousands of workers who depend on them.
But leaders of the CNRP now say they support some sanctions.
"Sanctions are the best leverage for negotiation for free, fair and inclusive elections," said Mu Sochua, a deputy to CNRP leader Kem Sokha who fled Cambodia fearing arrest.
There have been no protests over the ruling and many people in the capital, Phnom Penh, said they were afraid to speak out.
There were no party members at the CNRP headquarters, only security guards. "They are worried about their safety," said security guard Chin Savy.
The central market was full of its usual bustle and one man told Reuters he was glad to see the back of the opposition.
"Hun Sen has a lot of help from China. If he just depended on the U.S. we wouldn’t be anywhere," said Khen Kong, 69, a businessman.
China is by far the biggest single donor to Cambodia and its biggest investor. It voiced support for the government after the arrest of Kem Sokha.
In a televised address on Thursday, Hun Sen told Cambodians the election would go ahead "as normal" and appealed to politicians from the CNRP who had not been banned to join his Cambodian People's Party (CPP).
U.S.-based campaign group Human Rights Watch said the court ruling should lead Cambodia's donors and trade partners to impose targeted sanctions, including asset freezes and travel bans on Hun Sen's inner circle.
(Writing by Matthew Tostevin; Editing by Michael Perry)