Limited US-Cambodia Relations Pushing Phnom Penh to Beijing

Weak US-Cambodia economic ties and imposed sanctions are pushing the Kingdom further towards China, warns the head of the Southeast Asia US Chamber of Commerce in his latest blog post
US Embassy in Phnom Penh. Kiripost/Siv Channa
US Embassy in Phnom Penh. Kiripost/Siv Channa

Limited US-Cambodia economic relationships are impacting influence and pushing Cambodia further towards Beijing, writes a Southeast Asia US Chamber of Commerce executive, as he encourages Washington to engage more with Cambodia while arguing about the effectiveness of unilateral sanctions.

In his blog, John Goyer, Executive Director of Southeast Asia US Chamber of Commerce, wrote on August 11 that the less Washington is willing to invest in Cambodia, the more Phnom Penh will look to Beijing to fill the void.

Goyer brought up examples of multiple visits to Southeast Asia by senior US officials, including the Vice President. He welcomed this as a necessary demonstration of US commitment to the region.

Antony Blinken meets Prime Minister Hun Sen in Phnom Penh, August 4, 2022. Kiripost/ via government handout
Antony Blinken meets Prime Minister Hun Sen in Phnom Penh, August 4, 2022. Kiripost/ via government handout

For Cambodia, ASEAN, in which Phnom Penh chairs this year, will provide further opportunities to continue to build on this momentum and deepen US engagement in the region, Goyer wrote.

However, against this backdrop, Goyer added it was the July 19 Cambodia Democracy and Human Rights Act, which intended to support democracy and protect human rights, that will trigger a range of economic sanctions against individuals and entities involved in human rights violations.

“At a time when the US is trying to enhance its relations in the region, not weaken them, this bill raises three related concerns: timing, effectiveness, and geopolitics,” he wrote.

On the timing of the sanctions, Goyer said it is dissonant at best because Cambodia is chairing ASEAN with a possible visit by US President Joe Biden as Washington tries to expand bilateral ties.

On the effective front, Goyer questioned whether the US universal sanctions produce a better human rights environment.

Given the track record of many other unilateral sanctions against many countries, skepticism is warranted and public rebukes do not tend to induce better behavior on the part of the rebuked, Goyer said.

“More likely is that sanctions will prove an early Christmas present for Beijing, with whom Cambodia is already worryingly cozy.”

On the third issue of geopolitics, Goyer said this legislation correctly raises concerns over Cambodia’s relationship with China, requiring Biden to report to Congress on the activities of the Chinese government and military inside Cambodia.

Goyer added that while this monitoring is “vitally important”, sanctioning Cambodia will only lead to an increase in Chinese activity to monitor.

Commenting on Goyer’s blog, Anthony Galliano, president of the American Chamber of Commerce in Cambodia (AMCHAM), said the Cambodia Democracy and Human Rights Act, recent US State Department human trafficking report that ranked Cambodia the lowest, and other reports, are likely to discourage rather than encourage US investment.

“If the US wants to engage Cambodia and leverage that all-important trade relationship, then US foreign direct investment (FDI) needs to increase. The catalyst for this may very well be a more encouraging US government stance. However, understandably this will be balanced with progress on issues raised by the US government,” Galliano told Kiripost.

Galliano said China is Cambodia’s largest FDI, making it understandable why its relationship with Cambodia is flourishing. He added that not all of these investments are debt-trap investments.

Regional engagement by the US should be inclusive and Cambodia, given its strategic importance and current close relationship with China, is an important player, he said. He added that while the narrative regarding the US-Cambodia economic relationship generally minimizes Cambodia in the regional hierarchy, while the US remains one of the most important trade relationships.

The US currently represents a 43 percent share of Cambodia’s imports. This increased 62 percent during the first six months of the year compared to the same period last year.

AMCHAM Cambodia President Anthony Galliano (center) on a recent visit to Washington. Kiripost/supplied
AMCHAM Cambodia President Anthony Galliano (center) on a recent visit to Washington. Kiripost/supplied

Furthermore, Galliano added, China exports a substantial part of raw materials to Cambodia, where it is reworked and imported to the US.

Galliano said as Washington rolls out the Indo-Pacific Economic Framework (IPEF), it is evident that the US is seeking to engage more heavily in the Indo-Pacific economy, rejuvenate US credibility in the regional economy, and reinstate its economic leadership in the region as an alternative to China’s strong economic influence.

Washington has not had a trade pact in the region for more than a decade, and its withdrawal from the Trans-Pacific Partnership (TPP) in 2017, which is one of the primary engines of global economic growth, has further distanced its economic linkage in this “critical region”, Galliano said.

Cambodia, at least initially, is not a member of IPEF, as are 13 other Indo-Pacific states, and is looking only at the possibility of a bilateral trade agreement, which seems unlikely in the short-term. Galliano said this can place the current trade relationship at risk in the longer-term as IPEF is executed in the region.

“Save the Trump administration, successive US administrations have given greater prominence to the Indo-Pacific region, which is gaining greater importance. Therefore, I expect a renewed focus on building partnerships in the region as an alternative platform to the rapidly growing influence of China in the region,” Galliano said.

The US embassy in Phnom Penh said that Washington is a strong, consistent, and leading development and trade partner for Cambodia. In the last 30 years, it has provided more than $3 billion in assistance to support the Cambodian people.

“Cambodia has benefited greatly from access to the US market. The US is Cambodia’s largest export market by far, which drives economic growth and supports hundreds of thousands of jobs in the Kingdom,” Stephanie Arzate, the embassy’s spokeswoman told Kiripost in an email.

“The US-Cambodia trade relationship should be mutually beneficial, transparent, balanced, and adhere to the highest standards, including labor rights,” she added.

Government spokesman Phay Siphan could not be reached for comment for this story.

Naly Pilorge of rights group Licadho said that the US has a wide range of policy tools and instruments to push for accountability for human rights abuses, only part of which is targeted sanctions under the Global Magnitsky Act.

The EU also has accountability measures, such as the suspension of the EBA trade preferences for countries that violate human rights, Pilorge said.

"Business and investors should be calling for greater respect for human rights and ensuring their own investments are not contributing to or associated with such abuses, not seeking to limit accountability for the worst abuses in a country known for its impunity," Pilorge told Kiripost.