{"id":464,"date":"2021-12-15T13:58:15","date_gmt":"2021-12-15T18:58:15","guid":{"rendered":"http:\/\/exportcompliancesolutions.com\/blog\/?p=464"},"modified":"2021-12-15T13:58:15","modified_gmt":"2021-12-15T18:58:15","slug":"new-export-restrictions-cambodia-%c2%a7-126-1-prohibited-destination-ear-military-end-user-rule-now-apply","status":"publish","type":"post","link":"https:\/\/exportcompliancesolutions.com\/blog\/2021\/12\/15\/new-export-restrictions-cambodia-%c2%a7-126-1-prohibited-destination-ear-military-end-user-rule-now-apply\/","title":{"rendered":"New Export Restrictions for Cambodia: \u00a7 126.1 Prohibited Destination and EAR Military End User Rule Now Apply!"},"content":{"rendered":"<p><strong>Cambodia Added to ITAR \u00a7126.1 Prohibited Destinations<\/strong><\/p>\n<p>On December 9, 2021, the Department of State, Directorate of Defense Trade Controls (DDTC) issued a new rule (<a href=\"https:\/\/www.federalregister.gov\/documents\/2021\/12\/09\/2021-26590\/international-traffic-in-arms-regulations-addition-of-cambodia-to-list-of-proscribed-countries\">86 FR 70053<\/a>) that adds Cambodia to the International Traffic in Arms Regulations (ITAR) \u00a7 126.1 list of prohibited destinations.\u00a0 After <a href=\"https:\/\/exportcompliancesolutions.com\/blog\/2021\/03\/14\/russia-burma-face-new-export-sanctions\/\">Russia<\/a> and <a href=\"https:\/\/exportcompliancesolutions.com\/blog\/2021\/11\/23\/controls-emerging-bis-cybersecurity-brain-computer-interface-technology-controls-save-one\/\">Ethiopia<\/a>, this is the third country added to \u00a7 126.1 this year.<\/p>\n<p>The primary rationale of the new listing is the military presence and other activities in Cambodia by the People\u2019s Republic of China, particularly the construction of exclusive-use facilities on the Gulf of Thailand.\u00a0 Corruption and human rights abuses were also identified as concerns leading to the \u00a7 126.1 listing (see the OFAC advisory below for more background).<\/p>\n<p>Cambodia is now listed in \u00a7 126.1(o) with case-by-case exceptions related to conventional weapons destruction and humanitarian demining activities.<\/p>\n<p>While the main effect of this change will be that defense articles may no longer be exported or reexported to or imported from Cambodia, there are a number of follow-on effects of the \u00a7126.1 listing that companies need to be aware of, including:<\/p>\n<ul>\n<li><strong><em>Proposed and final sales<\/em><\/strong>: Broad prohibition includes proposals and presentations as well as actual sales and exports.<\/li>\n<li><strong><em>Disclosures<\/em>:<\/strong> An affirmative duty to <u>immediately<\/u> inform DDTC of any \u201cproposed, final, or actual sale, export, transfer, reexport, or retransfer of articles, services, or data.\u201d<\/li>\n<li><strong><em>Exemptions<\/em><\/strong>: Most exemptions are not available for \u00a7 126.1 countries.<\/li>\n<li><strong><em>Dual\/Third Country Nationals<\/em><\/strong>: \u00a7 126.18(c)(2) will require screening for substantive contacts with Cambodia.<\/li>\n<li><strong><em>Brokering<\/em>:<\/strong> Additional restrictions under Part 129.<\/li>\n<\/ul>\n<p>The listing was effective on the date of publication, December 9<sup>th<\/sup>.\u00a0 Cambodia had previously been <a href=\"https:\/\/www.federalregister.gov\/documents\/1994\/04\/04\/94-8003\/amendment-to-the-international-traffic-in-arms-regulations-proscribed-list\">removed<\/a> from the list of prohibited destinations in 1994.<\/p>\n<p><strong>Cambodia Faces New EAR Restrictions<\/strong><\/p>\n<p>Also on December 9, the Department of Commerce, Bureau of Industry and Security (BIS) issued a new rule (<a href=\"https:\/\/www.federalregister.gov\/documents\/2021\/12\/09\/2021-26633\/revision-of-controls-for-cambodia-under-the-export-administration-regulations\">86 FR 70015<\/a>) making parallel changes to the Export Administration Regulations (EAR).<\/p>\n<p>Based on the same rationale provided in the \u00a7 126.1 notice, Cambodia has been added to the following EAR lists:<\/p>\n<ol>\n<li>Countries subject to the licensing policy in EAR \u00a7\u2009742.4(b)(7) (review policy for national security controlled items, based on risk of diversion to military end user or end use),<\/li>\n<li>Countries subject to military end use and end user controls in \u00a7\u2009744.21,<\/li>\n<li>Countries subject to military intelligence end use and end user controls in \u00a7\u2009744.22, and<\/li>\n<li>Countries subject to a U.S. arms embargo under Country Group D:5.<\/li>\n<\/ol>\n<p><strong>Five Countries Now Subject to MEU<\/strong><\/p>\n<p>Cambodia joins Burma, China, Russia, and Venezuela as subject to the military and military intelligence end use and end user controls.\u00a0 Although no entity in Cambodia has yet been identified as a \u201cMilitary End User\u201d (MEU) in <a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/regulations-docs\/2714-supplement-no-7-to-part-744-military-end-user-meu-list\/file\">Supplement No. 7 to Part 744<\/a>, it is important to note that the <a href=\"https:\/\/ecscreening.com\/index.php\/blog\/65-new-commerce-and-ofac-sanctions-lists-include-communist-chinese-military-companies-entity-list-expanded\">MEU List<\/a> is not an exclusive list of parties subject to the MEU restrictions.\u00a0 Careful evaluation of potential exports to those five countries is advised.\u00a0 Even business entities may be considered \u201cmilitary end users\u201d which are defined broadly to include \u201cany person or entity whose actions or functions are intended to support \u2018military end uses.\u2019\u201d<\/p>\n<p>Although apparently due to oversight, BIS has not formally added Russia or Ethiopia to Country Group D:5, they are both considered D:5 countries because the ITAR \u00a7 126.1 list is controlling (<a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/regulation-docs\/2255-supplement-no-1-to-part-740-country-groups-1\/file\">see Footnote 1 to Country Group D<\/a>).<\/p>\n<p><strong>OFAC Publishes Cambodia Business Advisory<\/strong><\/p>\n<p>In a related development, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) <a href=\"https:\/\/home.treasury.gov\/policy-issues\/financial-sanctions\/recent-actions\/20211110_33\">published a business advisory<\/a> for Cambodia on November 10, 2021.<\/p>\n<p>The \u201cCambodia Business Advisory on High-Risk Investments and Interactions\u201d was issued \u201cto caution U.S. 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.\u201d\u00a0 Specific business sectors include financial, real estate, casino, infrastructure, manufacturing, and timber as well as entities involved in trafficking persons, wildlife, and narcotics.\u00a0 Forced labor is a particular concern for manufacturing.<\/p>\n<p>The advisory details known problems in Cambodia, as well as relevant U.S. laws and regulations related to financial and supply chain and links to a number of U.S. government reports on the situation in Cambodia.\u00a0 This report preceded the ITAR and EAR actions described above, but remains relevant for activities that are not specifically prohibited.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cambodia Added to ITAR \u00a7126.1 Prohibited Destinations On December 9, 2021, the Department of State, Directorate of Defense Trade Controls (DDTC) issued a new rule (86 FR 70053) that adds Cambodia to the International Traffic in Arms Regulations (ITAR) \u00a7 126.1 list of prohibited destinations.\u00a0 After Russia and Ethiopia, this is the third country added [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[7,3],"tags":[],"class_list":["post-464","post","type-post","status-publish","format-standard","hentry","category-all","category-compliance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New Export Restrictions for Cambodia: \u00a7 126.1 Prohibited Destination and EAR Military End User Rule Now Apply! - Export Compliance Solutions<\/title>\n<meta name=\"description\" content=\"Cambodia added to 126.1 prohibited destination list, EAR Military End User rules also apply.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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