ZTE will find it hard sourcing US parts with Commerce Department notice

American sanctions may have lightened up on Iran as the country continues to wind off nuclear production of potentially fissile material, but the Commerce Department is ready to tack on a major penalty to Chinese telecommunications company ZTE.

The department plans on beginning export restrictions on all of ZTE’s global suppliers which will make it nearly impossible for them to ship any US-made parts to the Shenzhen-based manufacturer, according to documents as obtained by Reuters. The company can appeal the decision which will go in effect on Tuesday.

ZTE was made aware of the restrictions from media reports and says that:

ZTE has been working with associated U.S. government departments on investigations since 2012 and maintains constant communication with associated departments and is committed to fully address and resolve any concerns.

Those concerns lay back to a 2012 investigation by the Commerce Department that ended up with the agency alleging that ZTE agreed to ship products with US-made hardware and software components from companies like Microsoft, IBM, Oracle and Dell to Iran’s largest carrier and another subsidiary of the consortium that controls it — an act that would violate US sanctions.

The department gained access to “Top Secret” ZTE documents that supposedly detailed how to avoid such sanctions by acquiring parts through shell companies. ZTE initially reacted in March 2012 by saying it would reduce, then zero-out any new business in Iran. Another “Top Secret” document said that the company “has ongoing projects in all five major embargoed countries – Iran, Sudan, North Korea, Syria and Cuba” that had all had a dependence to some extent on US-sourced parts.

The company would have to work hard to avoid investigation to prevent an action such as the one being taken against it this week by the Commerce Department.

Chinese compatriot Huawei has had its own struggles with the US as its business practices were questioned.

Source: Reuters
Via: PhoneArena

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Jules Wang
Jules Wang is News Editor for Pocketnow and one of the hosts of the Pocketnow Weekly Podcast. He came onto the team in 2014 as an intern editing and producing videos and the podcast while he was studying journalism at Emerson College. He graduated the year after and entered into his current position at Pocketnow, full-time.