The US Commerce Department has banned the sale of American-made parts or equipment to Chinese telecom equipment maker ZTE Corp. due to the latter’s alleged violation of Iran sanctions.
According to an announcement Monday, US firms will be banned from selling components to ZTE in view of the Chinese firm’s business dealings with Iran.
Also, foreign manufacturers will be prohibited from selling products containing a significant amount of US-made parts to ZTE, Reuters reported.
The Commerce Department accused ZTE of trying to use a series of shell companies “to illicitly re-export controlled items to Iran in violation of US export control laws.”
ZTE acted “contrary to the national security or foreign policy interests of the United States,” it said.
While ZTE suppliers can apply for an export license to ship any American-made equipment or parts, the Commerce Department said such license applications generally will be denied.
While the export restriction does not stop ZTE from selling handsets in the US, it is likely to disrupt the Chinese firm’s global supply chain and could create substantial parts shortages, experts said.
“It is going to have a large ripple effect. It’s very significant to many companies both in the US and [outside],” Doug Jacobson, an export attorney at law firm Jacobson Burton Kelley, told Reuters.
ZTE can appeal the Commerce Department decision.
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