US Com­merce Depart­ment to place re­stric­tions on China's ZTE

The Pak Banker - - COMPANIES/BOSS -

The U.S. Com­merce Depart­ment is set to place ex­port re­stric­tions on Chi­nese tele­coms equip­ment maker ZTE Corp for al­legedly vi­o­lat­ing U.S. ex­port con­trols on Iran, ac­cord­ing to doc­u­ments seen by Reuters.

The re­stric­tions will make it dif­fi­cult for the com­pany to ac­quire U.S. prod­ucts by re­quir­ing ZTE's sup­pli­ers to ap­ply for an ex­port li­cense be­fore ship­ping any Amer­i­can-made equip­ment or parts to ZTE. Ac­cord­ing to a Com­merce Depart­ment no­tice that will be pub­lished next week in the U.S. Fed­eral Reg­is­ter, the li­cense ap­pli­ca­tions gen­er­ally will be de­nied.

The re­stric­tions will take ef­fect Tues­day, Reuters has learned, and ap­ply to any com­pany world­wide that wants to ship U.S.-made prod­ucts to ZTE Corp in China. Those com­pa­nies are not the tar­get of the ex­port curbs on ZTE.

"This is a sig­nif­i­cant new bur­den on trade with ZTE," a se­nior of­fi­cial at the Com­merce Depart­ment told Reuters. The of­fi­cial de­clined to com­ment on whether the U.S. govern­ment might take fur­ther ac­tion against ZTE.

A spokesman for ZTE, based in Shen­zhen, China, could not be reached for im­me­di­ate com­ment. The com­pany can ap­peal the ac­tion.

The Com­merce Depart­ment in­ves­ti­gated ZTE for al­leged ex­port­con­trol vi­o­la­tions fol­low­ing re­ports by Reuters in 2012 that the com­pany had signed con­tracts to ship mil­lions of dol­lars worth of hard­ware and soft­ware from some of Amer­ica's best- known tech firms to Iran's largest tele­com car­rier, Telecom­mu­ni­ca­tion Co of Iran (TCI), and a unit of the con­sor­tium that con­trols it.

The U.S. prod­uct mak­ers - which in­cluded Mi­crosoft Corp, IBM, Or­a­cle Corp and Dell Inc have all said they were not aware of the Ira­nian con­tracts. It is not clear if any of th­ese com­pa­nies still do busi­ness with ZTE.

Wash­ing­ton has long banned the sale of U.S.-made tech prod­ucts to Iran. The Com­merce Depart­ment's in­ves­ti­ga­tion fo­cused on whether ZTE had ac­quired Amer­i­can prod­ucts through front com­pa­nies and then shipped them to Iran, a vi­o­la­tion of U.S. sanc­tions.

Com­merce Depart­ment in­ves­ti­ga­tors ob­tained in­ter­nal ZTE doc­u­ments - some marked by the com­pany "Top Se­cret" - out­lin­ing an al­leged sanc­tions-bust­ing scheme. Reuters re­viewed some of the doc­u­ments.

The se­nior Com­merce Depart­ment of­fi­cial de­clined to com­ment on whether ZTE had car­ried through with the al­leged scheme.

The day af­ter the first Reuters ar­ti­cle was pub­lished in March 2012, a ZTE spokesman said the com­pany would "cur­tail" its busi­ness in Iran. The com­pany later is­sued a state­ment say­ing: "ZTE no longer seeks new cus­tomers in Iran and lim­its busi­ness ac­tiv­i­ties with ex­ist­ing cus­tomers."

What ef­fect the new ex­port re­stric­tions will have on ZTE's cur­rent global busi­ness is not clear.

One un­dated in­ter­nal ZTE doc­u­ment ob­tained by Com­merce Depart­ment in­ves­ti­ga­tors and re­viewed by Reuters states: "Our com­pany has many tech­nolo­gies and com­po­nents that came from sup­pli­ers in the U.S." It also states: "Lots of chips or soft­ware used in the prod­ucts of our com­pany is from U.S. sup­pli­ers."

One of ZTE's web­sites also states that sev­eral ma­jor U.S. tech com­pa­nies, in­clud­ing Mi­crosoft, In­tel Corp, IBM and Honey­well In­ter­na­tional Inc, are "key strate­gic part­ners of ZTE." The terms of the part­ner­ships are not de­scribed.

A spokes­woman for Mi­crosoft said the com­pany had a li­cens­ing agree­ment with ZTE but could not con­firm if the Chi­nese com­pany pur­chases other prod­ucts, such as soft­ware. The other U.S. com­pa­nies did not re­spond to re­quests for im­me­di­ate com­ment.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.