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Chinese Company Requests Suspension of Export Ban

Wednesday, May 09, 2018
Sandler, Travis & Rosenberg Trade Report

Zhongxing Telecommunications Equipment Corporation has asked the Bureau of Industry and Security to stay its order banning exports to ZTE for seven years for violating U.S. export controls. According to press reports, ZTE believes the ban could threaten its financial viability and recently provided additional information to BIS outlining its compliance efforts. Easing the ban was one of the requests China reportedly made of the U.S. during bilateral trade talks in Beijing last week.

Under the BIS order, the following are prohibited with respect to ZTE through March 13, 2025.

- exports or reexports to or on behalf of ZTE of any item subject to the Export Administration Regulations

- any action that facilitates the acquisition or attempted acquisition by ZTE of the ownership, possession, or control of any item subject to the EAR that has been or will be exported from the U.S., including financing or other support activities related to a transaction whereby ZTE acquires or attempts to acquire such ownership, possession, or control

- any action to acquire from or facilitate the acquisition or attempted acquisition from ZTE any item subject to the EAR that has been exported from the U.S.

- obtaining from ZTE in the U.S. any item subject to the EAR with knowledge or reason to know that the item will be, or is intended to be, exported from the U.S.

- engaging in any transaction to (a) service any item subject to the EAR that has been or will be exported from the U.S. and that is owned, possessed, or controlled by ZTE or (b) service any item, of whatever origin, that is owned, possessed, or controlled by ZTE if such service involves the use of any item subject to the EAR that has been or will be exported from the U.S. (servicing means installation, maintenance, repair, modification, or testing)

To ensure compliance with this broad export ban, companies that have conducted business with ZTE should consider implementing a comprehensive compliance response plan. Among other things, this plan should identify and prohibit any potential export activity with ZTE, including shipments (either direct or through third parties), release of technical data or software, and access to support sites, and address how to effectively communicate within and outside the company on ZTE business and related questions.

For more information, please contact ST&R’s Export Controls and Sanctions Practice lead Steven Brotherton at (415) 490-1430.

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