The US Department of Commerce on Friday lifted a ban on US companies
selling goods to ZTE Corp, allowing China’s second-largest
telecommunications equipment maker to resume business.
The Commerce Department removed the ban shortly after ZTE deposited
$400 million in a US bank escrow account as part of a settlement reached
last month. The settlement also included a $1 billion penalty that ZTE
paid to the US Treasury in June, Reuters reported.
“The department will remain vigilant as we closely monitor ZTE’s
actions to ensure compliance with all US laws and regulations,” Commerce
Secretary Wilbur Ross said in a statement that described the terms of
the deal as the strictest ever imposed in such a case.
Ross claimed that the terms will allow the department to protect US national security.
ZTE, which relies on US components for its smartphones and networking
gear, ceased major operations after the ban was ordered in April.
US President Donald Trump tweeted in May that he closed down ZTE and let it reopen, although no agreement had been reached.
White House trade adviser, Peter Navarro, said last month Trump agreed
to lift the ban as a goodwill gesture to Chinese President Xi Jinping.
The company had made false statements about disciplining 35 employees
involved with illegally shipping US-origin goods to Iran and North
Korea, Commerce Department officials said. ZTE pleaded guilty last year
over the sanctions violations.
ZTE paid $892 million in penalties to the United States in connection
with the 2017 settlement and guilty plea. The latest $1.4 billion deal
comes on top of that.
The $400 million will remain in escrow for as long as 10 years to
provide the US government access to the money if ZTE violates the June
ZTE paid US companies more than $2.3 billion in 2017, including Qualcomm Inc, Intel Corp, Broadcom and Texas Instruments Inc.
The company, which employs some 80,000 people, got a limited one-month
waiver last week to maintain existing networks and equipment.
ZTE has replaced its board of directors and senior management, as
required by the June settlement, the Commerce Department said.
It will now operate with a 10-year suspended ban hanging over its head,
which the United States can activate if it finds new violations. The
current ban could have lasted seven years.