US government to implement multi-pronged export controls and sanctions measures against Cambodia
In light of growing corruption, human rights abuses and Chinese military influence in Cambodia, the Bureau of Industry and Security (BIS) and Department of State have coordinated to publish two final rules in tomorrow’s Federal Register amending the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) with immediate effect.
While not imposing a complete embargo on exports to Cambodia, these moves make five specific changes that together impose an arms embargo and significant restrictions on exports and re-exports to the nation. The restrictions will additionally apply to in-country transfers of items subject to the EAR.
Arms embargo under the ITAR
Acting through the US State Department’s Directorate of Defense Trade Controls (DDTC), the US has imposed an arms embargo on Cambodia. The embargo prohibits exports and sales of defense articles and defense services subject to the ITAR to Cambodia. It also prohibits the import of those defense articles and defense services originating in the country. License applications for the export, re-export or transfer of items subject to the ITAR will be reviewed by DDTC under a presumption of denial policy, with the exception of applications for conventional weapons destruction or humanitarian landmine remediation activities, which will be reviewed on a case-by-case basis.
Controls on certain “dual-use” and commercial items
A series of actions by BIS will also restrict exports, re-exports and transfers of “dual-use” and some commercial items to Cambodia.
First, commodities, software and technology controlled for national security reasons will be subject to a licensing review by BIS to determine the risk of diversion to a "military end user" or for a "military end use," pursuant to EAR § 742.4(b)(7). Covered items are identified on the Commerce Control List (CCL) with the designation “NS1” or “NS2” and include a wide range of hardware, software and technologies classified under various Export Control Classification Numbers (ECCNs). Under its newly announced licensing policy for Cambodia, BIS has stated that it may continue to approve exports of national security items for civil end users and civil end uses in Cambodia, but there will be a presumption of denial for other end users and end uses.
Second, the “military end use” and “military end user” export license requirements found in EAR § 744.21 – which currently apply to Myanmar, China, Russia and Venezuela – will be extended to certain exports, re-exports and in-country transfers to Cambodia. These controls apply to ECCNs identified in Supplement No. 2 to Part 744 of the EAR and include common items such as mass market encryption software and various electronics. A list of identified “military end users” has been published by BIS, but its “MEU List” is not exhaustive. Companies with questions about whether an end user or end use in Cambodia is subject to these restrictions should consider whether to apply for a license from BIS.
Third, and relatedly, BIS has extended the EAR’s existing “military-intelligence end use” and “military-intelligence end user” restrictions to Cambodia. These restrictions currently apply to qualifying end users and end uses in Myanmar, China, Russia and Venezuela as well as in sanctioned countries.
Fourth, in coordination with the Department of State’s imposition of an arms embargo on Cambodia under the ITAR, BIS has listed Cambodia as a Country Group D:5 country ("U.S. Arms Embargoed Countries"). D:5 countries are significantly restricted from benefiting from the use of any export license exceptions found in the EAR.
“Whole of government” approach
The latest changes by DDTC and BIS follow the US Department of the Treasury, Office of Foreign Assets Control’s (OFAC) listing of two Cambodian government officials on the Specially Designated Nationals and Blocked Persons List (SDN List) on November 10, 2021 as well as the concurrent issuance of a “Cambodia Business Advisory on High-Risk Investments and Interactions” issued jointly by the Departments of State, Commerce and the Treasury. Taken together, these recent measures demonstrate a “whole of government” approach that leaves room for additional export controls and sanctions should the measures fail to effect the change the US government desires to see in the Cambodian government.
If you have any questions about these developments, or US export controls and sanctions in general, please contact one of the authors.