US lifts ban on ZTE suppliers


US lifts ban on ZTE suppliers

We strongly oppose the June 2018 deal with ZTE negotiated by the Commerce Department's Bureau of Industry and Security (BIS) to lift the seven-year ban against the export of USA parts and components to ZTE.

Last week, a bipartisan group of senators introduced legislation that could reinstate some of the penalties on ZTE.

This week, President Trump's Commerce Department announced an agreement to lift the ban preventing Chinese telecom giant ZTE from doing business with American suppliers.

The senators not only requests that the penalties be reinstated, but that the USA henceforth prohibit all government and military personnel from "using or procuring equipment from, or entering into contracts with ZTE or Huawei", because of the potential espionage threat which the companies pose. The ban was imposed after the United States government determined that ZTE violated terms of a 2017 settlement, reached after ZTE illegally shipped USA equipment to Iran and North Korea.

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

ZTE pleaded guilty and settled with Commerce past year over the illegal shipments.

USA officials said the company violated US sanctions against exporting to Iran and North Korea.

ZTE paid $892 million in penalties to the United States a year ago in connection with the 2017 settlement and guilty plea.

Since the White House agreed to lift the ban, the company's stock has soared, as have the shares of its USA suppliers, including Qualcomm, Intel, Broadcom, and Texas Instruments.

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

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 U.S. for breaches of a U.S. export ban on doing business with Iran and North Korea.

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.