On December 9, 2021, the US Commerce Department’s Bureau of Industry and Security (BIS) imposed what amount to substantially more restrictive licensing requirements on exports, reexports, and transfers (in-country) to or within Cambodia, who now joins China, Russia, Venezuela, and Burma as one of five countries broadly subject to the end use / end user controls found in 15 CFR 744.21-22. Additionally, Cambodia has also now been added to the “Group D:5” list of countries subject to a US arms embargo in Supplement No. 1 to Part 740 of the EAR, and has been added to the list of countries subject to the licensing review policy found in 15 CFR 742.4(b)(7). According to the BIS this move serves as a response to widespread government corruption, human rights abuses, and “deepening Chinese military influence” within Cambodia.
With the changes made to 15 CFR 744.21, items subject to the EAR listed in supplement no. 2 to part 744 may no longer be exported, reexported, or transferred (in-country) to Cambodia without a license if, at the time of export, reexport, or transfer, there is knowledge that an item is intended for military end use or for a military end user (MEU), as defined in 744.21(f) through (g). With the changes made to 15 CFR 744.22 no items subject to the EAR may be exported, reexported, or transferred (in-country) to Cambodia without a license if there is knowledge that an item is intended for a military intelligence end use or for a military intelligence end user (MIEU), as defined in 744.22(f).
In light of these changes, the EAR definition of “knowledge,” found in 15 CFR 772.1(a), represents a critical consideration that must be carefully accounted for moving forward. Included within the EAR definition of knowledge, found in 15 CFR 772.1, is not only affirmative knowledge that the circumstance exists or is substantially certain to occur, but also “an awareness of a high probability of its existence or future occurrence.” Part 772.1 of the EAR continues on to state that the BIS will infer such awareness based on evidence of the conscious disregard of facts or a willful avoidance of facts.
As is currently the case with exports, reexports, and/or transfers falling within the scope of 15 CFR 744.21-22 to or within Russia, China, Venezuela, or Burma, the addition of Cambodia to this list imposes an affirmative requirement on industry to conduct and document heightened due diligence procedures before shipping many items to or within Cambodia. In order to clear the EAR “knowledge” requirement laid out in 15 CFR 744.21-22, exporters now must be capable of demonstrating to regulators that their compliance procedures extract enough information from customers to accurately conclude whether or not a purchase may fall within this broad MEU/MIEU net.
For those currently engaged with customers in Cambodia, the BIS will allow all exports, reexports and transfers now requiring a license as a result of these changes to proceed to their destinations under the previous eligibility as long as they are aboard a carrier to a port as of January 10, 2022.
If you have questions relating to the EAR, export controls, or compliance best practices do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.