On December 9, 2021, the US government announced an arms embargo on Cambodia, driven by a litany of issues, including concerns about the country’s military cooperation with China and human rights abuses.  The arms embargo is implemented through the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), under amendments made by the Department of State’s Directorate of Defense Trade Controls (DDTC) and the Department of Commerce’s Bureau of Industry and Security (BIS), respectively.

The State Department final rule adds Cambodia to Section 126.1 of the ITAR, which imposes a unilateral US arms embargo. The BIS final rule similarly adds Cambodia to EAR Country Group D:5 (US arms-embargoed countries).  The BIS rule also imposes a more restrictive review policy for license applications for dual-use items controlled for national security reasons and subjects Cambodia to the EAR’s broad military and military-intelligence end-use and end-user restrictions.

Together, these actions restrict trade in defense articles and services with Cambodia, along with a broad array of dual use technologies.  The additional due diligence that may be needed to comply with the military end-use/user restrictions may be particularly onerous for some companies. The risks of trading and investing in Cambodia will escalate as US policy and regulation become more stringent.

The ITAR and EAR amendments follow the November 2021 designation by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) of two Cambodian military officials as Specially Designated Nationals (SDNs) for alleged corruption in connection with a military construction project. The same day, the Departments of State, Treasury, and Commerce issued the “Cambodia Business Advisory on High-Risk Investments and Interactions” to “caution US businesses currently operating in or considering operating in Cambodia to be mindful of interactions with entities and sectors potentially involved in human rights abuses, criminal activities, and corrupt business practices.”

U.S. Arms Embargo on Cambodia

Under DDTC’s final rule, Cambodia has been added to the list of US arms-embargoed countries under Section 126.1 of the ITAR. As a result, DDTC will deny requests to provide defense articles and services to Cambodia, except that it may review requests on a case-by-case basis for conventional weapons destruction or humanitarian demining activities.

Consistent with the State Department’s imposition of an arms embargo on Cambodia under the ITAR, the BIS final rule adds Cambodia to Country Group D:5 under the EAR.

New Export Restrictions and Licensing Requirements

The BIS final rule makes a number of significant changes to US export controls on Cambodia.

First, it adds Cambodia to the list of countries subject to the licensing policy in EAR § 742.4(b)(7), under which BIS will review all license applications for items controlled for national security reasons to determine the risk of diversion to a military end user or for a military end use.  This will often require that a company conduct additional due diligence prior to exporting such items to Cambodia and explain to BIS the basis for the company’s determination that an export will be used for commercial purposes only.  This replaces the previous, less onerous policy for such exports to Cambodia, under § 742.4(b)(6) of the EAR (still applicable to Laos), under which BIS would grant license requests if it determined the items are not likely to be unlawfully diverted to another country or end use.

Second, BIS has added Cambodia to the list of countries subject to military end use and end user restrictions in § 744.21 of the EAR – which also apply to Myanmar, China, Russia, and Venezuela.   For additional background on this rule, see our earlier blog post.

Third, BIS has added Cambodia to the list of countries subject to the military-intelligence end use and end user restrictions in § 744.22 of the EAR – which also apply to Myanmar, China, Russia, Venezuela and countries subject to US comprehensive sanctions (i.e., Cuba, Iran, North Korea, and Syria).   For more background on this rule, see this article by Steptoe lawyers published in WorldECR.

For more information on how these Cambodia-related changes to the EAR and ITAR may apply to your organization, contact a member of Steptoe’s Export Controls team.


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