Commerce Department, ZTE reach deal to lift technology ban

U.S. Commerce Department and ZTE have reached a deal that would lift the ban on ZTE’s access to U.S. technology. The 10-year agreement, announced yesterday, requires ZTE to pay $1 billion in fines, put another $400 million in escrow against future potential violations, replace its current senior leadership team and board of directors, and accept and pay for the placement within the company of a team chosen by the U.S. that would monitor and report on ZTE’s compliance going forward.

U.S. Commerce Department and ZTE have reached a deal that would lift the ban on ZTE's access to U.S. technology. The 10-year agreement, announced yesterday, requires ZTE to pay $1 billion in fines, put another $400 million in escrow against future potential violations, replace its current senior leadership team and board of directors, and accept and pay for the placement within the company of a team chosen by the U.S. that would monitor and report on ZTE's compliance going forward. The team would report jointly to the Commerce Department's Bureau of Industry and Security (BIS) and whomever is named ZTE's new chairman.

The Commerce Department retains the right to re-impose the technology ban if ZTE fails to comply with the new deal's terms. The Commerce Department announcement did not include a timeframe in which ZTE must set all the building blocks of the agreement in place but did say that ZTE must perform the financial transactions before the technology access ban will be lifted. Press reports state that ZTE has 30 days to replace its management and board.

The technology access ban, imposed when the Commerce Department determined this past April that ZTE had violated terms of a previous disciplinary agreement, then lied about it, put ZTE out of operation (see "ZTE halts major operations after ban on access to U.S. components"). The company has not made a public statement regarding the deal or about how long it would take to resume normal operations.

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