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US Lifts Trade Restrictions On China’s ZTE Temporarily

March 23, 2016 - Written By Kishalaya Kundu

Chinese telecom equipment and electronics company, ZTE Corporation, has got a temporary reprieve from the trade restrictions that were imposed by the US federal government because of its alleged business links with an Iranian telecom company. However, the decision isn’t entirely a bolt from the blue, as media reports from a few days back already suggested that the US is planning to ease the trade restrictions on ZTE temporarily. The reprieve will be in place till the 30th of June this year, and will be contingent on ZTE co-operating fully with US authorities on their investigations. The restrictions would have severely dented ZTE’s business prospects, as it would have prevented US companies from having any sort of direct or indirect trade relations with ZTE. Meaning, American firms would not have been able to export any form of technology or equipment to the Chinese telecom giant as long as the curbs were in place.

Iran, of course, is currently enduring tough US sanctions over its controversial Plutonium enrichment program, meaning, US-based companies and any company doing business with them are banned from having any direct or indirect links with any business based out of the Middle Eastern country. However, this isn’t the first time ZTE has found itself at odds with US authorities over this issue. While alleged business relations with the state-owned Iranian telecom company has landed ZTE in the mess that it finds itself in currently, the company has previously also been suspected of carrying out business as usual with other countries under US sanctions, like Cuba, North Korea, Sudan and Syria.

To bring everyone up to speed, ZTE has been under investigation by US federal agencies over the past four years for alleged violation of US sanctions on Iran. The company was suspected of using a complex network of shell companies to hide its exports to the state-run Iranian telecommunications company, TCI (Telecommunications Company of Iran). Following a four-year long investigation, the US Department of Commerce found that the Shenzhen, Guangdong-based firm was indeed in violation of the US-imposed trade embargo on the Middle-Eastern country, and slapped export restrictions on the Chinese firm earlier this month. Now that the US has had a change of heart, ZTE will be hoping that it can get away with not much more than a slap on the wrist this time around.