On December 9, 2021, the US Departments of State and Commerce amended their regulations to strengthen US export controls targeting Cambodia. According to the Federal Register notices announcing these final rules, these enhanced export control measures were adopted in response to the expanded Chinese military presence in Cambodia, as well as the corruption and human rights abuses allegedly committed by the Cambodian Government. This action builds on various public statements from the US Government this year expressing concerns about Cambodia and warning US business about conducting business in or with that country, as described in more detail below.
US export controls have been revised by imposing a US arms embargo and other military-related restrictions on Cambodia through (1) a final rule issued by the State Department amending the International Traffic in Arms Regulations (“ITAR”) administered by the Directorate of Defense Trade Controls (“DDTC”) (the “DDTC Final Rule”) and (2) a final rule published by the US Department of Commerce’s Bureau of Industry and Security (“BIS”) (the “BIS Final Rule”) amending military-related provisions in the Export Administration Regulations (“EAR”).
The DDTC Final Rule amends ITAR § 126.1 by adding Cambodia in Table 2 Paragraph (d)(2) and paragraph (o) to that provision. As a result, exports and imports of defense articles and defense services destined for or originating in Cambodia are now prohibited, with limited exceptions. Cambodia’s inclusion in § 126.1 means that ITAR violations that involve Cambodia or Cambodian nationals could trigger a mandatory reporting requirement to DDTC. The agency could also bring more scrutiny to bear on deemed export authorizations for persons considered Cambodian nationals under the ITAR. Furthermore, parties making use of the exemption in ITAR § 126.18 will need to screen for an employee’s “substantive contacts” with Cambodia.
The BIS Final Rule implemented the following significant amendments to the EAR:
- Cambodia was added to the countries subject to the “military end use” and “military end user” restrictions in EAR § 744.21 alongside Burma/Myanmar, China, Russia, and Venezuela. As a result, a BIS license will now be required for the export, reexport, and transfer (in-country) of items specified in Supplement No. 2 to EAR Part 744 to Cambodia when the exporter, reexporter, or transferor has knowledge that the item is destined for a “military end use” or “military end user” in Cambodia. Applications to BIS for the export, reexport, or transfer (in-country) to Cambodia of items identified in Supplement No. 2 will be reviewed with a presumption of denial. Consistent with this amendment, a reference to Cambodia was added to the “Military End User List” in Supplement No. 7 to EAR Part 744, although with no Cambodian entity added yet.
- Cambodia was also added to the countries subject to the “military-intelligence end use” and “military-intelligence end user” restrictions in EAR § 744.22 (the “MIEU Rule”). The MIEU Rule imposes an additional licensing requirement on the export, reexport, and transfer of any items subject to the EAR (even if EAR99/not controlled) to Burma/Myanmar, China, Russia, Venezuela, a country listed in EAR Country Groups E:1 or E:2 (i.e., Cuba, Iran, North Korea, Syria), or now Cambodia when the exporter, reexporter, or transferor has knowledge that the item is destined for a “military-intelligence end use” or “military-intelligence end user” in any of these countries. BIS’s changes also identified the “General Department of Research and Intelligence (GDRI)” as a military-intelligence end-user in Cambodia. Applications submitted under the MIEU rule for the export, reexport, or transfer (in-country) of EAR items to Cambodia will be reviewed with a presumption of denial.
- With the addition of Cambodia to countries subject to the MIEU Rule, BIS revised EAR § 744.6(b)(5) to restrict “US persons” from “supporting” a “military-intelligence end use” or “military-intelligence end user” in Cambodia.
- Finally, to reflect its addition to the list of countries subject to a US arms embargo (i.e., ITAR § 126.1), Cambodia was added to Country Group D:5 in Supplement No. 1 to EAR Part 740. This means that Cambodia is now subject to additional military-related restrictions in the EAR, including with respect to license exception availability and licensing policy for certain “600-series” items.
While the BIS Final Rule is effective immediately, it provides a savings clause for items that, pursuant to actual orders, will be on dock for loading, on lighter, already loaded, or already en route aboard a carrier on January 10, 2022.
Recent US Government Statements About Cambodia
These enhanced export control measures targeting Cambodia build on recent US Government actions against Cambodia. For background, on June 1, 2021, the State Department published a media note expressing concerns about China’s expanded military presence and other activities in Cambodia. On November 10, 2021, the US Departments of State, Treasury, and Commerce issued a Joint Advisory (“Advisory”) cautioning US businesses of the risks of dealing with Cambodian entities and in sectors potentially involved in human rights abuses, criminal activities, and corrupt business practices. On that same day, the Treasury Department’s Office of Foreign Assets Control and the State Department also imposed sanctions on two Cambodian government officials for their roles in corruption in Cambodia. Please see our prior blog post for more details on the Advisory and the sanctions.