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Thursday, July 12, 2018
 U.S. Signs Deal to Lift ZTE Ban
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Message Text: Chinese ZTE has inked an agreement with the Trump administration to allow the company to resume doing business with American suppliers, meeting a key Chinese government demand.

The Chinese telecoms gear-maker signed an escrow agreement with the Commerce Department and a ban on U.S. technology purchases will lift as soon as ZTE deposits $400 million, the department said Wednesday.

ZTE last month took a major step forward in meeting the White House's conditions by sacking its entire board and appointing a new chairman. Its new management faces the challenge of rebuilding trust with phone companies and corporate customers. But the company is said to be facing at least $3 billion in total losses from a months-long moratorium that choked off the chips and other components needed to make its networking gear and smartphones.

In addition, ZTE must hire an outside compliance monitor selected by the Commerce Department. The department missed a 30-day deadline to choose the monitor, but said on Wednesday the timetable was adjusted to conduct "due diligence."

"Once the monitor is selected and brought on board, the three-pronged compliance regime -- the new 10-year suspended denial order, the $400 million escrow, and the monitor -- will be in place," Commerce said in the statement. "The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case. It will deter future bad actors and ensure the Department is able to protect the United States from those that would do us harm."

ZTE also agreed to allow the U.S. government unfettered site visits to verify U.S. components are being used as claimed by ZTE, and to post calculations of the U.S. components in its products on its website in Chinese and English.

The ban was imposed after ZTE broke an agreement reached after ZTE pleaded guilty in U.S. federal court last year for illegally shipping U.S. goods and technology to Iran, in violation of U.S. sanctions.

 
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