The Commerce Department removed the ban shortly after ZTE
deposited $400 million in a U.S. bank escrow account as part of
a settlement reached last month. The settlement also included a
$1 billion penalty that ZTE paid to the U.S. Treasury in June.
"The department will remain vigilant as we closely monitor ZTE's
actions to ensure compliance with all U.S. 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.
The terms will allow the department to protect U.S. national
security, Ross said.
The administration has clashed with lawmakers from its own party
over issues related to China, and this was no different. On
Friday, Senator Marco Rubio, a Republican, criticized the
lifting of the ban.
"ZTE should be put out of business. There is no ‘deal’ with a
state-directed company that the Chinese government and Communist
Party uses to spy and steal from us where Americans come out
winning," Rubio said in a statement.
A photograph circulating among employees around midnight showed
ZTE's new chief executive and 10 other managers each giving a
thumbs-up to the news, which was flashed on a screen at the
company, according to a person familiar with the matter.
The reprieve follows threats by the Trump administration this
week to impose 10 percent tariffs on $200 billion of Chinese
goods in a trade war.
ZTE did not respond to requests for comment.
ZTE, which relies on U.S. components for its smart phones and
networking gear, ceased major operations after the ban was
ordered in April.
U.S. 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 U.S.-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 U.S. government access to the money if ZTE
violates the June settlement.
On Thursday, ZTE's Hong Kong shares surged about 24 percent
after Reuters broke news the United States had signed an escrow
agreement that paved the way for ZTE to deposit the $400
million.
ZTE's U.S.-listed shares fell 2.4 percent to $3.70 on Friday.
The news came after markets closed in Asia.
Shares of U.S. suppliers Acacia Communications and Lumentum
Holdings rose more than 3 percent on the news before ending less
than 1 percent higher.
ZTE paid U.S. 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
noted.
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.
Many U.S. lawmakers see the company as a national security
threat and, on Thursday, a group of Republican and Democratic
U.S. senators urged that ZTE's penalties be reinstated.
The U.S. Senate paved the way for a showdown with Trump over the
issue last month, when it passed an annual defense policy bill
with an amendment attempting to reverse the deal. Its fate is
unclear.
Reuters reported on U.S. demands for a deal on June 1, and on
June 5, revealed that ZTE had signed a preliminary agreement
with the Commerce Department, along with the fine and other
terms. It also broke news of the ban in April.
A U.S. 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 U.S. technology companies.
(Reporting by Karen Freifeld; additional reporting by Sijia
Jiang in Hong Kong and Sinead Carew and Chuck Mikolajczak in New
York and Diane Bartz in Washington; Editing by Richard Chang and
Tom Brown)
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