U.S. restricts exports to China’s ZTE Corp.

Citing violations of federal export control regulations, the U.S. Commerce Department’s Bureau of Industry and Security has added a Chinese technology company and three of its affiliates to a list of entities prohibited from receiving U.S.-made exports.

   Citing violations of federal export control regulations, the U.S. Commerce Department’s Bureau of Industry and Security on Tuesday added a Chinese technology company and three of its affiliates to a list of entities prohibited from receiving U.S.-made exports.
   BIS said in a final rule published in the Federal Register that ZTE Corp. “planned and organized a scheme to establish, control, and use a series of ‘detached’ (i.e. shell) companies to illicitly re-export [U.S. exports] to Iran in violation of U.S. export control laws.” The agency added that this activity by the Shenzhen-based company was “contrary to the national security and foreign policy interests of the United States.”
   In addition to ZTE Corp., the other related companies added to the agency’s so-called “Entity List” include ZTE Kangxun Telecommunications Ltd. and Beijing 8-Star in China, and ZTE Parsian in Iran.
   Based on its investigation and allegations, BIS said “no license exceptions are available for exports, reexports, or transfers (in-country) of items subject to the EAR (Export Administration Regulations) to the entities being added to the Entity List.”
   The move by BIS is considered extremely significant to numerous U.S. electronics component and technology exporters to China, as well as other overseas manufacturers who use American components and then export them to ZTE. ZTE is a sizable producer of Chinese smartphones. 
   “It is going to have a large ripple effect. It’s very significant to many companies both in the U.S. and (outside the) U.S.,” Washington trade attorney Douglas N. Jacobson told Reuters on Monday.
   “They have to scrub and screen their customers lists – pending orders and future orders – to make sure that any transactions with ZTE are flagged and stopped,” he warned.