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ZTE Export Privileges Rescinded

In a move that affects U.S. tech suppliers to Chinese company ZTE, Commerce Department officials say ZTE has violated the terms of its settlement agreement with the U.S. over illegally shipping telecom equipment to Iran and North Korea and will be blocked from exporting its telecom equipment as a penalty.

As a result it has been denied export privileges, said Commerce officials speaking on background.

A commerce official said it was a regulatory action--not another trade imbalance shot across the bow at China--after ZTE made false statements during 2016 settlement discussions--which resulted in a criminal plea--and a 2017 probation period for disciplining the executive involved.

ZTE had been operating under a suspended denial of privileges order, suspended contingent on not lying to the government, said a Commerce official.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” said Secretary of Commerce Wilbur Ross.

ZTE told Commerce it was taking action against four employees who had circumvented export controls, but that did not happen, said Commerce.

The denial is not about products exported from the U.S. but about technology that U.S. companies are sending to ZTE to incorporate in their products, then re-exported to Iran and North Korea.

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Another China-based telecom vendor, Huawei, has also faced U.S.-focused scrutiny.

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--Jeff Baumgartner contributed to this story