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Deal reached to rescind ZTE Denial Order

31 May 2018 - ZTE,Industry Blog

The U.S. Government has reached a deal with China that will enable ZTE to access U.S. technology once again, reported media outlets on Friday. A tweet from President Donald Trump that day appeared to corroborate the reports.

Outlets such as ReutersThe New York Times, and others reported Friday that a deal has been reached. The Chinese telecommunications technology company will have to pay another fine, make changes to its management personnel, and agree to have U.S. compliance officers onsite, according to the reports. The terms echo statements made earlier in the week by U.S. officials (see, for example, “If ZTE freeze to thaw, let it happen quickly” and "Commerce Secretary Ross: Progress being made on ZTE alternatives").

President Trump appeared to confirm the reports via his Twitter account, stating that ZTE would have to pay a $1.3 billion fine, change its management and board, and agree to “purchase U.S. parts,” alongside unspecified “high level security guarantees.”


Meanwhile, the South China Morning Post reports that a reshuffling of senior management positions within ZTE has already begun.

Reports that a deal was near appeared early last week. However, President Trump tweeted on May 22 that no deal was in place (see “Mixed signals on Commerce deal with ZTE”) that would rescind the Denial Order that banned ZTE’s access to U.S. technology for seven years. The Commerce Department’s Bureau of Industry and Security imposed the ban after it was determined ZTE had violated the terms of a disciplinary order from March 2017 arising from export of systems with U.S.-based technology to Iran and North Korea in violation of export bans (see “U.S. Commerce Dept. finds ZTE violated export disciplinary agreement, bans U.S. component supply”).

Members of Congress, meanwhile, have criticized the prospects of a deal that would ease restrictions on ZTE, with Senator Marco Rubio (R-FL), who ran against President Trump during the Republican presidential primaries, among the harshest critics.

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