The US Department of State has issued a final rule amending the International Traffic in Arms Regulations (“ITAR”) at 22 CFR § 126.1 to remove the embargo on defense trade with Cambodia, following its announcement effective October 26, 2025 that it would review ITAR license applications for Cambodia on a case-by-case basis (see here and here). Cambodia had been subject to a US arms embargo since December 2021, as discussed in our previous blog post. This change reflects a strategic shift in US foreign policy and defense cooperation priorities.
Background
Cambodia had previously been listed under ITAR § 126.1(d)(2) and was subject to the licensing policy in ITAR § 126.1(o), which included a licensing review policy of denial for export, reexport, and transfer of defense articles and services as a general matter. These restrictions were part of broader US concerns regarding regional stability and alleged human rights violations.
However, the US Department of State has now determined that Cambodia’s “diligent pursuit of peace and security,” including renewed engagement with the US government on defense cooperation and efforts to combat transnational crime, warrants a policy revision.
Key Changes
- The final rule removes Cambodia from Table 2 of § 126.1(d)(2). This table lists countries subject to a policy of denial for defense exports. Cambodia’s removal means it is no longer subject to a licensing review policy of denial.
- The final rule deletes Paragraph (o) of § 126.1. This paragraph previously outlined specific defense trade restrictions for Cambodia, which is now deleted in its entirety.
- Requests for defense article and service transfers to Cambodia will now be reviewed on a case-by-case basis, and exemptions that were unavailable for transfers to Cambodia are now available, provided the relevant requirements are met.
This regulatory shift potentially opens new opportunities for companies engaged in defense trade related to Cambodia, but all relevant requirements should be carefully reviewed, including potential dealings with restricted parties in Cambodia.
