Commerce lifts ZTE export ban

Date: Tuesday, July 31, 2018
Source: American Shipper

 After Chinese telecommunications company ZTE placed $400 million in escrow at a U.S. bank, the Commerce Department lifted its export denial order against the company, which had been in effect since April 15, Commerce Secretary Wilbur Ross announced Friday.
   The escrow payment was made in addition to a $1 billion penalty imposed by Commerce, which Treasury collected last month.
   Commerce and the Chinese government made an agreement in June to lift the denial order should Beijing complete penalty and escrow payments combining for $1.4 billion and replace ZTE senior managers and board members, among other things.
   ZTE has replaced “the entire board of directors and senior leadership for both” ZTE Corporation and ZTE Kangxun Telecommunications Ltd., Commerce said in its Friday announcement.
   ZTE also is required under the agreement to retain a team of special compliance coordinators selected by and answerable to Commerce’s Bureau of Industry and Security (BIS) for 10 years, Commerce noted.
   “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,” Ross said in a statement. “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.”
   ZTE sources about 60 percent of the materials and components for its smartphones from U.S. suppliers.
   The agreement establishes a suspended export denial order to be in place for 10 years that BIS can activate in the event of additional violations.
   The compliance team installed via the agreement “vastly improves the speed” with which Commerce can detect and deal with any violations, Commerce said. 

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