US Urges Cambodia to Probe China-Owned Economic Zone on Tariff Dodging

June 28, 2019 Updated: June 28, 2019

PHNOM PENH—The United States on June 28 urged Cambodia to investigate a Chinese-owned special economic zone after uncovering efforts by firms operating there to evade duties on products destined for export to the United States.

The Sihanoukville Special Economic Zone (SSEZ), west of the Cambodian capital, Phnom Penh, has denied U.S. accusations that it allowed companies to transship goods through the zone, saying an internal investigation had found no such activity.

“The United States will aggressively pursue allegations of duty evasion and utilize all available legal tools, to deter violators of U.S. customs and trade laws,” embassy spokeswoman Emily Zeeberg said in a statement emailed to Reuters.

Such tools could include civil and criminal penalties or other enforcement actions, she added.

“We call on Cambodian government authorities to look closely at governance and compliance issues at the Sihanoukville SEZ,” she added.

The SSEZ did not respond to a Reuters request for comment.

A spokesman for Cambodia’s commerce ministry, Seng Thai, declined to comment.

The U.S. embassy in Cambodia confirmed on June 19 that U.S. authorities have fined several Cambodia-registered companies upon discovery that they transshipped China-made goods to the United States in a bid to assist Chinese exporters in dodging U.S. tariffs.

The embassy did not say how many companies were involved in the case, nor whether any had Chinese ownership. But all of them were based in the Sihanoukville Special Economic Zone (SSEZ), a key project of the Chinese regime’s One Belt, One Road (OBOR) initiative.

OBOR was launched in 2013 as China’s flagship foreign policy initiative, whereby it seeks to gain geopolitical influence through investing in infrastructure projects throughout Southeast Asia, Africa, and more.

Since 2017, there have been two cases of companies operating from the SSEZ having been found importing transshipped goods, such as the chemical glycine and steel pipe-fittings, and charged anti-dumping duties, the embassy added in its statement.

“In both cases, U.S. officials conducted on-site inspections in the Sihanoukville SEZ and determined that, although being represented as Cambodian, the goods in question were of Chinese origin on importation into the United States,” it added.

Vietnam’s customs this month said it had also found scores of cases of exporters illegally relabeling Chinese goods “Made in Vietnam” to avoid tariffs imposed in the U.S.-China trade war.

China is Cambodia’s largest trading partner and the largest source of the country’s imports. China is also the largest foreign investor and provider of foreign aid.

By Prak Chan Thul. Epoch Times reporter Nicole Hao contributed to this report.