On Thursday, March 24, 2016, the US Commerce Department’s Bureau of Industry and Security (“BIS”) is scheduled to publish a temporary general license in the Federal Register relating to Zhongxing Telecommunications Equipment Corporation (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. (“ZTE Kangxun”). As detailed in a previous post, BIS added these two companies and two affiliated entities (Beijing 8-Star and ZTE Parsian) to the Export Administration Regulations’ (“EAR”) Entity List on March 8, 2016.
The temporary general license will restore the EAR licensing and other requirements that applied to exports, reexports, and in-country transfers to ZTE Corporation and ZTE Kangxun prior to March 8, 2016. In other words, the licensing requirements that were imposed on ZTE Corporation and ZTE Kangxun on March 8, 2016 will not apply during the period that the temporary general license is in effect — i.e., from the date of publication of the general license in the Federal Register (scheduled for March 24, 2016) through June 30, 2016. As such, items that could be supplied to ZTE Corporation or ZTE Kangxun before March 8, 2016 without triggering license requirements under the EAR (e.g., under a license exception or because the items are not controlled for export to the particular country of destination) may again be supplied to those entities without a specific license from BIS.
Please note that the general license does not apply to the other two ZTE entities added to the Entity List on March 8, 2016 — i.e., Beijing 8-Star and ZTE Parsian. Accordingly, a specific license from BIS will continue to be required for any export, reexport, or in-country transfer of any item subject to the EAR to these two entities. An item is subject to the EAR if it is (i) of US origin, (ii) exported from the United States, (iii) manufactured outside the United States but incorporates more than applicable de minimis levels of controlled US content, or (iv) a foreign direct product of certain national security controlled US technology.
BIS is issuing the temporary general license in connection with a request by ZTE Corporation and ZTE Kangxun to remove or modify their listings on the Entity List and the binding commitments made by these two entities to the US Government. The temporary general license may be renewed to extend beyond June 30, 2016 if the US Government determines that ZTE Corporation and ZTE Kangxun are performing their undertakings to the US Government and are otherwise cooperating with the US Government in this matter.