US lifts ban on suppliers selling to China’s ZTE

BARCELONA, SPAIN - FEBRUARY 22: A logo sits illuminated outside the ZTE pavilion on the opening day of the World Mobile Congress at the Fira Gran Via Complex on February 22, 2016 in Barcelona, Spain. The annual Mobile World Congress hosts some of the world's largest communications companies, with many unveiling their latest phones and wearables gadgets. (Photo by David Ramos/Getty Images)

The Department of Commerce on Friday lifted a ban on US companies selling goods to ZTE, 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, as part of a settlement reached last month. The settlement also included a $1 billion penalty ZTE paid to the US Treasury in June.

“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 an emailed statement that described the penalties and other conditions as the strictest ever imposed in such a case.

The terms “will allow the department to protect US national security,” Ross said.

ZTE did not immediately respond to requests for comment.

ZTE, which relies on US components for its smart phones and networking gear, ceased major operations after the ban was ordered in April.

The punishment came after the company made false statements about disciplining 35 employees involved with violating US sanctions and illegally shipping US-origin goods to Iran and North Korea, Commerce officials said.

ZTE pleaded guilty and settled with Commerce last year over the sanctions violations.

ZTE paid $892 million in penalties to the United States last year 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 settlement.

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