United States lifts ban on suppliers selling to China’s ZTE

  • United States lifts ban on suppliers selling to China’s ZTE

United States lifts ban on suppliers selling to China’s ZTE

Commerce on Wednesday said it signed an agreement with ZTE, China's No. 2 telecommunications maker, paving the way for it to resume operations after a almost three-month ban on doing business with American suppliers.

The saga over the fate of the Chinese firm began in April when Commerce banned US companies from selling to ZTE as punishment for its failure to honor an earlier USA agreement to resolve its sanctions-busting sales to North Korea and Iran. The fine was paid in late June, and Ross said Friday that the $400 million had arrived at a U.S. bank.

"The department will remain vigilant as we closely monitor ZTE's actions to ensure compliance with all USA 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.

"While we lifted the ban on ZTE, the Department will remain vigilant as we closely monitor ZTE's actions to ensure compliance with all USA laws and regulations", said Secretary Ross.

The terms will allow the department to protect USA national security, Ross said.

We write to express our strong support for measures in the Senate-passed Fiscal Year 2019 National Defense Authorization Act (FY 2019 NDAA) that would reinstate USA government penalties against ZTE, a Chinese state-directed telecommunications company, and modernize the Committee on Foreign Investment in the United States (CFIUS).

The $400 million will remain in escrow for as long as 10 years to provide the U.S. government access to the money if ZTE violates the June settlement.

Shares of ZTE in Shenzhen also surged by the maximum daily 10 percent following the announcement of the news. The news came after markets closed in Asia.

The United States has formally lifted a crippling ban on exports to China's ZTE, rescuing the smartphone maker from the brink of collapse after it was denied key components.

The company, which employs some 80,000 people, got a limited one-month waiver last week to maintain existing networks and equipment.

The Shenzhen-based company last week appointed a new chief executive, three executive vice presidents and 17 senior vice presidents, after terminating the employment contracts of former senior management staff as part of a settlement deal with the USA for breaches of a United States export ban on doing business with Iran and North Korea.

ZTE are now faced with a ten year suspended ban on sourcing any USA parts or products.

They pushed for the inclusion of legislation to reinstate the ZTE ban in the National Defense Authorization Act, or NDAA, a must-pass defence policy bill.

~ Senators say Chinese company poses a national security threat to the US ~.

The fate of the ZTE amendment is not clear.

"The substantial decrease in results was mainly due to operating losses and provision for losses resulting from the suspension of the major operating activities", ZTE said in the exchange filing.

A US investigation into ZTE was launched after Reuters reported in 2012 that the company had signed contracts to ship hardware and software worth millions of dollars to Iran from some of the best-known USA technology companies.