US suspends export control deal with China's ZTE

Xinhua
US Department of Commerce on Monday suspended an export control settlement deal with Chinese telecom equipment maker ZTE Corporation.
Xinhua
Imaginechina

A ZTE Logo is seen at the Mobile World Congress in Barcelona, Spain, on February 27, 2018.

US Department of Commerce on Monday suspended an export control settlement deal with Chinese telecom equipment maker ZTE Corporation.

"US Department of Commerce's Bureau of Industry and Security has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation (ZTE Corporation), of Shenzhen, China," it said in a statement.

In response to the decision of US Department of Commerce, China's Ministry of Commerce urged the United States to create fair, just, and stable legal and policy environment for Chinese companies.

ZTE said in a statement that it is aware of the export-denial-order activated by the US Department of Commerce.

"At present, the company is assessing the full range of potential implications that this event has on the company and is communicating with relevant parties proactively in order to respond accordingly," ZTE said.

In March last year, the Chinese company reached settlements with US authorities over US export controls and sanctions charges.

The ZTE agreed to pay a criminal and civil penalty of about US$892 million and an additional penalty of US$300 million which will be suspended during a seven-year probationary period to deter future violations.

At that time, the Department of Commerce recommended ZTE be removed from the Entity List under the Export Administration Regulations. But it will be subject to ZTE's compliance with the settlements during the seven-year probation period.

In Monday's statement, the Department of Commerce claimed that the ZTE made false statements regarding supervision of its staff and senior management.

With this claim, the Department of Commerce decided to suspend the export privileges of ZTE for a period of seven years until March 13, 2025. This decision suggests that ZTE could be unable to import high-tech components from the United States in these years.

ZTE has 14 offices and six research centers in the United States and supported nearly 130,000 high-tech jobs in the country.

Shares of big ZTE suppliers in the United States dropped following the department's announcement. Shares of Acacia Communications Inc plunged to a new low for the year in Monday morning trading.


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