US sets restrictions on China’s ZTE over Iran violations

US sets restrictions on China’s ZTE over Iran violations

Washington: The United States said today it is placing trade restrictions on Chinese telecommunications equipment giant ZTE due to violations of US sanctions on Iran.

The Commerce Department said in an order to be officially published tomorrow that ZTE Corp and related companies set up a scheme to circumvent US sanctions and “illicitly export” controlled items to Iran, violating US laws.

The company will be forced to apply for permission on its exports and reexports from the United States in the future due to actions “contrary to the national security or foreign policy interests of the United States,” the order said.

ZTE, China’s second-biggest telecom equipment maker, confirmed earlier that it will be hit with the restrictions, though it did not provide any background or reason.

Trade in ZTE shares was halted in Hong Kong and Shenzhen as it notified the exchanges of the “United States Commerce Department’s proposal to implement export restrictions on the company.”

China’s Global Times newspaper today quoted a ZTE statement as saying: “ZTE closely complies with international industry rules as well as the laws of foreign countries.”

The order could hamper ZTE’s ability to purchase technology hardware and software in the United States.

The company is one of the world’s largest suppliers of telcommunications equipment and services, from networks to popular cellphones.

The case dates back to 2012 when the Commerce Department first began investigating the transfers of US technology to Iran, according to reports.

Under the Commerce Department order, ZTE Corp and three other companies — ZTE Kangxun Telecommunications, Beijing 8-Star, and Iran-based ZTE Parsian — were placed on the export restrictions list.

The order said the latter three were identified in ZTE documents for a scheme specifically aimed at circumventing US export controls.

Asked about the ZTE case, Beijing criticized US government actions against Chinese companies.

“China is always opposed to US sanctions on Chinese enterprises citing domestic laws,” foreign ministry spokesman Hong Lei told reporters in Beijing.

“We hope that the US side can stop such erroneous practices so as to avoid further damage to Sino-US economic cooperation and bilateral relations.”

Washington in January eased several restrictions on doing business with Iran, following an international agreement over the country’s nuclear program.