US denies ZTE export privileges for seven years

The US Department of Commerce’s Bureau of Industry and Security (‘BIS’) has renewed a previously suspended denial of export privileges on ZTE Corporation for a period of seven years (15 April).

In March 2017, China-based telecoms manufacturer ZTE agreed to a record combined civil and criminal penalty of $1.2bn for illegal shipments of US-origin electronics to Iran and North Korea in violation of the Export Administration Regulations (‘EAR’) and the Iranian Transactions and Sanctions Regulations (‘ITSR’). As part of the settlement, ZTE and BIS agreed to suspend a seven-year denial of export privileges, subject to ZTE complying with the terms of the settlement agreement.

BIS has determined that ZTE made ‘false statements’ to BIS both during settlement negotiations in 2017 and during its post-settlement probationary period, concerning disciplinary actions taken against employees of the company. The false statements were not corrected until March 2018. In reaching its decision to enforce the denial of export privileges, BIS cited a ‘pattern of deception, false statements and repeated violations’ in ZTE’s dealings with the US government.

ZTE is now a denied party and is excluded from all transactions subject to the EAR. US businesses and individuals are prohibited from participating in any export transaction subject to EAR with ZTE.

The UK’s National Cyber Security Centre (‘NCSC’) has issued advice to the UK telecommunications sector over the possible use of ZTE equipment and services.

BIS’s denial order can be found here:
https://www.commerce.gov/sites/commerce.gov/files/zte_denial_order.pdf

NCSC’s advice is at:
https://www.ncsc.gov.uk/news/ncsc-advice-telecommunications-sector-about-zte