Trump Reverses ZTE Penalties in Exchange for Trade Concessions

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Friday, June 22, 2018
Abstract: 
On June 7, 2018, U.S. Secretary of Commerce Wilbur Ross announced that Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (“ZTE Kangxun”) (collectively, “ZTE”) has agreed to severe additional penalties and compliance measures to replace the U.S. Commerce Department’s Bureau of Industry and Security (VIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement.  The new agreement requires ZTE to pay $1 billion and place an additional $400 million in suspended penalty money in escrow before BIS will remove ZTE from the Denied Persons List.  The penalties are in addition to the $892 million in penalties ZTE has already paid to the U.S. government under the March 2017 settlement agreement.