ZTE gets further export relaxation from US

Alan Burkitt-Gray
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Department of Commerce issues another 90-day suspension of ban on ZTE’s use of US hardware and software

The US government has lifted its restrictions on Chinese vendor ZTE until late February 2017.

This is the latest relaxation of an initial outright ban on ZTE, first imposed in March 2016, when the US Department of Commerce (DOC) discovered evidence that the vendor had been selling equipment that included US hardware and software to Iran.

The move means that international operators will be able to continue to source equipment from ZTE until 27 February without any restrictions because it includes US-owned technology. ZTE said that it intends to "strictly comply" with US law. 

ZTE welcomed the move at the weekend. “We are encouraged as a result of the extension of the temporary general license (TGL) for another 90 days.” The TGL allows ZTE to continue to use US-sourced products in its equipment sold to worldwide customers.

In early March 2016 the DOC added ZTE to its so-called entity list, which lists restricted companies, after it uncovered evidence that the company had been breaking sanctions. But the department relaxed the move with the first TGL only days later after ZTE offered a number of concessions, including replacing the CEO, Shi Lirong, with a new top executive, Zhao Xianming.

“The US government has decided to extend the temporary general license until February 27, 2017,” said the Department of Commerce. This “restored, for a specified time period, the licensing requirements and policies under the Export Administration Regulations for exports, re-exports, and transfers” on ZTE and an associate company, ZTE Kangxun.

The move comes just days after ZTE appointed a US-based chief export compliance officer. Matthew Bell will be responsible for global compliance with export control laws and economic sanctions and will serve as the chief compliance officer and legal counsel for the company’s US subsidiary.

ZTE said about the new temporary lifting of the ban: “We are working toward resolving the investigation, which will include both removal from the entity list as well as conclusion of the investigation. ZTE will be committed to working with the US government to achieve a timely resolution.”

“The extension provides more time for both sides to try and resolve the issue,” ZTE spokesman David Dai Shu told the South China Morning Post in Hong Kong. 

In a filing to the Hong Kong stock exchange, which lists ZTE's shares, the company said: "The company will continue to be cooperative with the relevant US governmental departments, actively communicate with the US governmental departments to reach a final solution on the matter and strictly comply with relevant US laws and regulations on export restrictions."