US lifts export ban on suppliers to China's ZTE

July 13, 2018

"While we lifted the ban on ZTE, 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
The United States on Friday 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 US Commerce Department said it would continue to monitor the company to prevent further violations of US sanctions on Iran and North Korea.

"While we lifted the ban on ZTE, 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.

But the move to reverse the harsh penalties, made at President Donald Trump's insistence, has left US lawmakers irate. Congress has taken steps to keep the ban in place and accused Trump of rewarding a company which had repeatedly flouted American law, lied to authorities and engaged in espionage.

The about-face to rescue to the company created a stark contrast with the escalating trade war between Washington and Beijing.

The Commerce Department in April banned US companies from supplying ZTE with crucial components, forcing it to halt operations, after officials found further violations even after reaching a settlement in March of last year over the initial complaints.

The company had paid bonuses rather than reprimanding employees involved in illegal activity and created an "elaborate scheme" to deceive US officials and obstruct justice, US officials said.

But as a favor to Chinese President Xi Jinping, Trump ordered Commerce to ease the penalties on ZTE.

In an agreement struck last month, Washington agreed to lift the export ban if ZTE paid an additional $1 billion fine—beyond the $892 million penalty imposed in 2017.

The company also was required to replace its board of directors, retain outside monitors and put $400 million in escrow to cover any future violations—a final step it took this week.

In a statement this week, Senator Mark Warner of Virginia, the senior Democrat on the Select Committee on Intelligence, lambasted the reversal, saying the US military and spy agencies had branded ZTE an "ongoing threat" to US national security.

"This sweetheart deal not only ignores these serious issues, it lets ZTE off the hook for evading sanctions against Iran and North Korea with a slap on the wrist," Warner said.

Explore further: ZTE shares surge 22% as US sanctions lift moves step closer

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