Commerce, State Departments Restrict Exports to Cambodia, Citing Corruption, Human Rights Violations, Chinese Influence | Wiley Rein LLP

On December 9, 2021, the Commerce and State Departments issued rules restricting a range of exports to Cambodia, citing “significant evidence of corruption, human rights violations and an exclusive deal with the Republic People’s Republic of China (PRC) on military expansion into Cambodia by the Cambodian government. The Bureau of Trade, Industry and Safety (BIS) has imposed new restrictions, including end-use and end-user bans, on exports to Cambodia of certain sensitive items subject to the China Regulations. the export administration (EAR). At the same time, the State Department amended the International Trafficking in Arms Regulations (ITAR) to add Cambodia to its list of prohibited countries.

The actions are part of an evolving US policy to address Cambodia’s “democratic setback” and growing ties to China, including the construction of facilities at Ream Naval Base in Sihanoukville. In addition to the new export controls, in November 2021, the Departments of State, Treasury, and Commerce issued a business advisory “to warn US companies currently operating or planning to operate in Cambodia from be aware of interactions with entities involved in corruption cases. business practices, criminal activity and human rights violations. The Treasury also designated two “corrupt military officers” as specially designated nationals under the regulations of the Global Magnitsky Human Rights Accountability Act, which targets human rights violations and corruption.

New restrictions in the AEOI

Regarding the new export controls, BIS made the following four changes restricting Cambodia’s access to commercial, dual-use and less sensitive military / satellite items:

1. Cambodia is subject to a more restrictive licensing policy for products controlled by national security.

Applications for a license to export to Cambodia products, software and technologies controlled by national security were previously approved as long as the BIS determined, on a case-by-case basis, that the items were for authorized use in Cambodia and no ‘were not liable to be used for any use contrary to national security or the interests of United States foreign policy.

Going forward, Cambodia is now subject to the same licensing review policy, which is less favorable than Burma, China, Russia and Venezuela. Under the new policy, the BIS will review requests to determine the likelihood that items will be diverted for military end use or to a military end user. While the BIS will generally approve end-use / civilian user item licenses, requests for items that would make a material contribution to weapon systems or assemblies are subject to a denial policy.

2. BIS has added Cambodia to its military end-user / end-user rule.

BIS has added Cambodia to the list of countries subject to military end-use and end-user (MEU) controls in section 744.21 of the EAR. MEU’s export controls prohibit, without a license, the export, re-export, or knowingly transfer of items subject to EARs – which include products of American origin, products exported from the United States, and certain products manufactured in the foreigner containing above de minimis US content controlled or produced from sensitive US technology or software – which are identified in Supplement No. 2 to Part 744 of the EAR to Military End Users (for example, national armed services, national guard and police, government intelligence or reconnaissance agencies, and businesses / others who develop, produce, maintain or use military items, including, but not limited to , those designated on the BIS MEU list) in Burma, China (including Hong Kong), Russia, Venezuela, sanctioned countries and now Cambodia or for military purposes in those countries.

3. BIS restricts exports for end-uses / end-users of military intelligence in Cambodia.

BIS has also added Cambodia to the list of countries subject to Military Intelligence End-Use and End-User Controls (EARU) in section 744.22 of the EAR. These controls restrict exports, re-exports, and transfers (within the country) of all items subject to the AEOI (including EAR99 items), as well as support activities by U.S. persons, which are intended for end uses. intelligence and end-users in Burma, Cambodia, China, Russia, Venezuela and sanctioned countries. End-users of military intelligence are defined as intelligence or reconnaissance organizations of the armed forces or the National Guard, including the General Department of Research and Intelligence (GDRI) of Cambodia.

4. BIS added Cambodia to country group D: 5.

In accordance with the ITAR amendment discussed below, BIS has added Cambodia to the list of countries subject to a United States arms embargo in country group D: 5, “United States Arms Embargo Countries” In Supplement 1 to Part 740 of the AEOIs. Countries listed in country group D: 5 are subject to additional restrictions in the AEOI, including on de minimis US content, availability of license exceptions, and license policy for certain items. For example, license applications to export satellite items or EAR controlled military products of the “600 series” to Cambodia will now be considered in accordance with US arms embargo policies, which for the purposes of practices, usually means a denial policy. Exporters to Cambodia also cannot use the EAR licensing exceptions for these items, except in limited circumstances.

New restrictions in ITAR

Along with BIS actions, the Department of State’s Defense Trade Controls Directorate (DDTC) amended ITAR Section 126.1 to include Cambodia in the list of countries subject to a denial policy. export of defense articles and services. Cambodia’s formal designation as a country under an arms embargo under Section 126.1 has many implications for US business. For example, most license applications are subject to a denial policy, with the exception of exports destined for the destruction of conventional weapons or for humanitarian mine action activities. Most ITAR exemptions also cannot be used for exports to Cambodia. In addition, even proposals or presentations to sell defense items or provide defense services in Cambodia require prior authorization from the DDTC, and companies are subject to a notification obligation if they become aware of a sale. or other proposed or actual transfer of an item or item controlled by ITAR. service in Cambodia.

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