ZTE U.S. ban lifted

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A denial of export order which banned Chinese telecommunications equipment and systems supplier ZTE from doing business with American firms has been lifted.

U.S. secretary of commerce Wilbur L. Ross, Jr. has announced that ZTE has placed the required $400 million in escrow at a U.S. bank, after which the Department of Commerce lifted the denial order on ZTE in accordance with a June settlement agreement. The funds are in addition to the $1 billion penalty that ZTE paid to the U.S. Treasury last month, and further still to the $892 million in penalties ZTE has already paid to the U.S government under a March 2017 settlement agreement.

The denial order followed a 2017 agreement from the Chinese telecommunications equipment and systems supplier to a combined civil and criminal penalty and forfeiture of $1.19 billion for shipping telecommunications equipment over a six-year period to Iran and North Korea during an export ban. The company is then said to have made false statements about the activity, obstructing justice by preventing disclosure to and ultimately misleading the U.S. government (see U.S. banned from selling to ZTE after activation of export denial).

Earlier this month, the Department of Commerce’s Bureau of Industry and Security (BIS) relaxed the ban slightly, allowing ZTE to conduct business on a limited scale (see Some trade restrictions eased on ZTE). Commenting on the latest developments Secretary Ross said: ‘While we lifted the ban on ZTE, the Department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations. Three interlocking elements – a suspended denial order, the $400 million in escrow, and a compliance team selected by and answerable to the Department – will allow the Department to protect U.S. national security.’

Under the new agreement, ZTE will have to retain a team of special compliance coordinators selected by the Department’s Bureau of Industry and Security (BIS) for a period of 10 years. Their function will be to monitor on a real-time basis ZTE’s compliance with U.S. export control laws. ZTE has also replaced the entire board of directors.

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