Commerce bars United States companies from selling to ZTE

Marcus Newton
April 17, 2018

The US government has banned sales by American companies to China's ZTE Corp to punish the Chinese telecommunications equipment supplier after it allegedly made false statements during an investigation into sales of its equipment to Iran and North Korea. ZTE's false statements only were reported to the U.S. Government after BIS requested information and documentation showing that employee discipline had occurred.

ZTE is now banned from purchasing components from companies in the United States, according to a ruling from the U.S. Department of Commerce.

The US government's assault in Chinese electronics makers continued today with news that the US had slapped ZTE with a 7-year ban for violating an agreement between the two.

Naveed Saeed of Engro Foods said the company will be able to reduce its energy consumption by 10 per cent, resulting in significant carbon emission reduction. "Many banks and companies even outside the USA are not going to want to deal with them", said Eric Hirschhorn, a former US undersecretary of commerce who was heavily involved in the case.

"This will be devastating to the company, given their reliance on USA products and software", said Jacobson. The U.S. court ruled that ZTE had to pay $890 million in penalties with a possible additional penalty of $300 million. The company can resume purchasing these components from the USA after seven years. According to Levy, adding ZTE into the mix would make it impossible to manage the security risks and "the result would be an unacceptable national security risk to the United Kingdom telecoms infrastructure environment". This could prevent ZTE from purchasing the Qualcomm Snapdragon chipsets that power its smartphones.

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The move will sever business dealings between ZTE and US firms for up to seven years.

The UK's National Cybersecurity Centre (NCSC) has written to UK telcos warning them that using network equipment manufactured by Chinese firm ZTE would negatively impact the UK's national security.

"Instead of reprimanding ZTE staff and senior management, ZTE rewarded them", Commerce Secretary Wilbur Ross said.

The company was supposed to take disciplinary action against multiple individuals at ZTE. According to according to USA officials, ZTE failed to punish employees who destroyed and concealed evidence related to the violations, and some were rewarded with bonuses.

The new restrictions stem from a January 16 report by a USA monitor appointed by a federal judge in Texas who accepted the guilty plea in March 2017.

Other reports by MaliBehiribAe

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