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Chinese Company That Broke Iran Sanctions Gets Reprieve

The ZTE company logo is seen as a guest delivers a speech during the company's 15th anniversary celebration in BeijingThe ZTE company logo is seen as a guest delivers a speech during the company's 15th anniversary celebration in Beijing
The ZTE company logo is seen as a guest delivers a speech during the company's 15th anniversary celebration in Beijing April 18, 2013. REUTERS/Barry HuangPhotograph by Barry Huang — Reuters

The U.S. government will give Chinese telecom equipment and smartphone maker ZTE Corp. a three-month reprieve on tough export restrictions it imposed earlier this month, the Commerce Department said on Tuesday.

The department on March 8 imposed some of the toughest-ever U.S. export restrictions on ZTE for allegedly breaking U.S. sanctions against Iran.

The agency said it would ease the restrictions until June 30th.

Experts had said the restrictions would have caused disruption across ZTE’s sprawling global supply chain.

The restrictions would have banned U.S. companies from exporting to ZTE any technology, software or equipment such as chips and processors made in the United States.

The decision would also have prevented software makers from selling typical office applications like Microsoft Windows – or even providing updates.

The easing, which will suspend the restrictions as of Thursday, could be extended provided that ZTE was timely in performing undertakings and cooperates with the U.S. government in “resolving the matter,” the Commerce Department said. An agency spokesman declined to comment further.

The U.S. targeted ZTE through a very public show of evidence of the company’s efforts to sell telecommunications equipment to Iran despite U.S. sanctions placed on Iran for its nuclear weapons program.

 

Evidence from the U.S. Department of Commerce included a chart outlining the byzantine structure of ZTE’s business dealings.

zte flow chart

Other internal ZTE documents included ones detailing the company’s business with “Iran, Sudan, North Korea, Syria and Cuba”—all those under U.S. sanctions.