US urges Cambodia to help stop firms using special economic zone to evade China tariffs

29-Jun-2019 Intellasia | South China Morning Post | 6:02 AM Print This Post

The US has urged the Cambodian government to help crack down on companies using a Chinese-backed special economic zone to evade US tariffs.

The US embassy in Phnom Penh said there had been two cases since 2017 where US officials found companies operating in the Sihanoukville Special Economic Zone (SEZ) an industrial park funded and jointly run by Chinese investors were shipping goods there to avoid US anti-dumping duties.

These products were found to have originated from China, and included glycine, a chemical compound used in food and pharmaceuticals, and steel pipe fittings.

Emily Zeeberg, an information officer at the US embassy, said the US would “aggressively pursue” allegations of duty evasion, using legal tools such as criminal and civil penalties and other enforcement actions.

“In both cases, US 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,” she said in a statement on Friday.

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

With Beijing and Washington locked in a year-long trade war, analysts have said the billions of goods that both sides have subjected to tariffs has accelerated a shift of supply chains from China to Southeast Asia. Vietnam has reported dozens of cases in which Chinese goods, including plywood, have been sent to the country and illegally labelled “made in Vietnam” to avoid tariffs when shipped to the US.

Vietnamese data suggests that exports of products such as machinery from China to Vietnam have increased this year.

Zeeberg referred additional questions on the cases to the US Department of Homeland Security, which did not immediately respond to a request for further information.

The US embassy in Cambodia said last week that a “number of companies” in the industrial park had been investigated and fined for evading US tariffs by routing goods through Cambodia but did not provide further details.

But the special economic zone insisted last week that this was “false”, saying it had conducted its own investigation and found that none of the 29 businesses in the zone exporting to the US had been “investigated or punished by US customs recently”.

It said it “resolutely opposes any illegal activities” adding: “In the future, we will continue to operate in accordance with the laws and regulations, further strengthen the management of enterprises in the SSEZ and operate the SSEZ well.”

The Sihanoukville Special Economic Zone, the Chinese embassy in Cambodia and Cambodian foreign ministry did not immediately respond to requests for comment.

Cambodian prime minister Hun Sen said in April that more than 160 companies were based in the zone, which he described as a “model of success for Chinese projects”.

The zone is located about 12km (7.5 miles) from Cambodia’s only deep-sea port, which accounts for about 70 per cent of the country’s imports and exports, and has been touted as a landmark project under Beijing’s signature Belt and Road Initiative.

Sihanoukville, formerly a sleepy beach town in southern Cambodia, has been transformed in recent years by an influx of Chinese investment and migrants.

On Saturday, a building funded by Chinese investors in Sihanoukville collapsed, killing at least 28 construction workers and injuring 26.

Seven people, including five Chinese nationals, were charged by a Cambodian court.


Category: Regional

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