Reuters says that the US Commerce Department is planning to place export restrictions on ZTE, meaning that any US companies shipping parts to the China-based ZTE will need to apply for an export license before doing so.
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HONG KONG, March 7 Trade in the Hong Kong-listed shares of Chinese telecommunication equipment maker ZTE Corp was suspended on Monday after news that the company faces US export restrictions.
The restrictions are to be imposed on U.S.-made products, but aren’t just limited to products that ship out from the USA, and will also apply to U.S.-made products that are shipped out from other countries. The official did not disclose whether the U.S. Commerce Department plans to take further action against the Chinese company. While it’s unclear how long these restrictions will last, it’s also unclear as to whether this will have any affect on ZTE products being exported out of China into the U.S., although there was no menton about those details from the U.S. Commerce Department in the report.
In 2012, U.S. Commerce Department launched an investigation into ZTE’s activities after Reuters reported that the company had signed contracts to ship millions of dollars worth of hardware to many Iranian companies, including Iran’s largest telecom company Telecommunication Co of Iran (TCI). While the suppliers are not the targets of the Commerce Department’s displeasure, any company that wishes to ship USA made product to ZTE in China will have to comply with the new regulations.
ZTE said yesterday it is communicating “aggressively” with all parties over the report.
The US firms which included Microsoft, IBM, Oracle and Dell have all said they were not aware of the contracts.
Reuters cites a 2011 document indicating that ZTE executives knew at that time it was at risk of violating United States sanctions via its projects in Iran, North Korea, Syria, Sudan and Cuba, all of which “depend on U.S.-procured items to some extent”.
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NOTE: The Reuters report points out that it’s unclear if ZTE ever implemented the proposal.
