The U.S. Department of Commerce announced on April 16, 2018, that its Bureau of Industry and Security (BIS) has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (collectively, “ZTE”) due to false statements ZTE made during settlement negotiations with BIS for previous export violations.

The Denial Order immediately prohibits any person from exporting or reexporting, directly or indirectly, any item subject to the U.S. Export Administration Regulations (EAR) to ZTE, and from servicing such items. The vast majority of items that are located within the United States, or that are outside the United States but of U.S. origin, are subject to the EAR, including software, hardware, and technology. The Denial Order also prohibits any person from taking any action to facilitate export of an item to ZTE from the United States, including financing or other support activities, and from acquiring any items from ZTE that had been exported from the United States. The denial of ZTE’s export privileges will continue for a period of seven years from an earlier order—i.e., until March 13, 2025.

We expect that the Denial Order will have significant impact on U.S. businesses that trade with ZTE. If you would like additional information about the issues addressed in this client alert, please contact Rich Matheny or Jacob Osborn, or the Goodwin attorney with whom you typically consult.