ZTE banned from purchasing US technology for 7 years.

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ZTE Corporate Campus in Shenzhen, China; Photo Credit: Brücke-Osteuropa from Wikipedia

On Monday, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) imposed a denial of export privileges against ZTE, composed of Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (“ZTE Kangxun”).

Background

In March of 2017, ZTE agreed to pay civil and criminal penalty and forfeitures totaling $1.19 billion for shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice by preventing disclosure to and misleading the U.S. Government. In 2017, ZTE also agreed to a seven-year denial of export privileges if ZTE committed additional violations.

Commerce found ZTE made several violations such as making false statements to BIS in 2016 and making false statements about disciplinary actions against employees involved in the shipment of equipment to Iran and North Korea.

Result

By activating the seven-year denial of export privileges, ZTE is prohibited from participating in any way in any transaction subject to the EAR. The prohibition also makes it unlawful for businesses and individuals to participate in an export transaction subject to the EAR with a denied person (ZTE).

If you have any questions about how the recent ZTE order may effect your business, or have any other BIS, EAR or export compliance issues – contact experienced trade attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.