USA places trade embargo on Chinese telecom equipment maker

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Dr. Ian Levy (Technical Director of the National Cyber Security Centre) is writing to telecommunications organisations regarding the potential use of ZTE equipment and services in the United Kingdom telecommunications infrastructure environment.

In March 2017, ZTE settled after the US government discovered that it was shipping USA technology to sanctioned countries such as North Korea and Iran.

Unlike Huawei, ZTE is a state-owned company, which seems to raise more questions even for the United Kingdom government, which hasn't banned Huawei hardware yet. "This egregious behavior can not be ignored", Secretary Ross said.

It paid $890 million in fines and penalties, with an additional penalty of $300 million that could be imposed. USA versions of ZTE phones were found to have a backdoor in 2012.

NCSC technical director Dr. Ian Levy wrote a letter addressing concerns to telecoms organisations regarding the use of ZTE equipment and services in the UK.

Finisar Corporation (NASDAQ: FNSR) said in a 10-k filing it counts ZTE as a major client, but didn't disclose how much revenue the company accounts for.

Douglas Jacobson, an exports control lawyer who represents suppliers to ZTE, called the ban highly unusual and said it would severely affect the company. For starters, it prevents the ZTE from buying hardware components from companies like Qualcomm and Intel.

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The U.S. action against ZTE is likely to further exacerbate current tensions between Washington and Beijing over trade.

Denying ZTE export privileges prevents the company from "participating in any way in any transaction" subject to the US government's Export Administration Regulations, which govern sales of sensitive technology overseas.

A five-year federal investigation found last year that ZTE had conspired to evade USA embargoes by buying US components, incorporating them into ZTE equipment and illegally shipping them to Iran.

Allowing Huawei, ZTE, and other related entities access to USA government communications would be inviting Chinese surveillance into all aspects of our lives.

Secretary of Commerce Wilbur L. Ross, Jr. announced that the U.S. Department of Commerce's Bureau of Industry and Security (BIS) has blocked ZTE from exporting technology from U.S. companies.

ZTE, which devised elaborate schemes to hide the illegal activity, agreed to plead guilty after the Commerce Department took actions that threatened to cut off its global supply chain.

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