US fines firms transhipping via Cambodia to dodge Trump's China tariffs

Prak Chan Thul, Reuters

Posted at Jun 19 2019 06:48 PM

PHNOM PENH - The United States has fined several companies for exporting goods via a Chinese-owned special economic zone in Cambodia in a bid to dodge President Donald Trump's tariffs on Chinese imports, a US Embassy official told Reuters on Wednesday.

Earlier this month, Vietnam's customs department said it had also found scores of cases of exporters illegally relabelling Chinese goods as "Made in Vietnam" in order to avoid tariffs imposed as a result of the ongoing US-China trade war.

"The Department of Homeland Security has inspected and fined a number of companies for evading tariffs in the United States by routing goods through Cambodia," US Embassy spokesman Arend Zwartjes told Reuters in an emailed statement.

"These companies are located in Cambodia's Sihanoukville Special Economic Zone," said Zwartjes, who did not name or say how many companies had been fined for avoiding the tariffs, how large the fines were, or what goods the companies had been exporting.

Zwartjes referred further questions to the US Department of Homeland Security, which did not immediately respond to a request for comment sent outside of office hours.

Cambodia's customs department and foreign ministry did not immediately respond to a request from Reuters for comment.

China is Cambodia's biggest aid donor and investor, pouring in billions of dollars in development assistance and loans through the Belt and Road initiative, which aims to bolster land and sea links with Southeast Asia, Central Asia, the Middle East, Europe and Africa.

The Sihanoukville Special Economic Zone (SSEZ), 210 kilometres (130 miles) west of the capital, Phnom Penh, is a Chinese and Cambodian joint venture in the Belt and Road initiative which produces textiles, garments, bags and leather products, according to its website.

The zone did not immediately respond to an emailed request for comment.

Under a trade agreement that was expanded in 2016, the Generalized System of Preferences (GSP) allows Cambodia to export travel goods such as bags, luggage and accessories, to the United States duty free.

Kaing Monika, Deputy Secretary General of the Garment Manufacturers Association of Cambodia (GMAC), which represents 600 garment factories in Cambodia, said he was unaware of the transhipments.

The $7-billion apparel industry is the largest formal employer in the Southeast Asian country. Cambodia's economy grew 7.5 percent last year, a four-year high, compared with 7 percent in 2017, helped by rising exports to the United States, the World Bank said in April. 

(Reporting by Prak Chan Thul Editing by James Pearson & Simon Cameron-Moore)