ZTE closer to re­sum­ing busi­ness

China Daily (USA) - - ACROSS AMERICA -

The United States said on Wednes­day that it signed an agree­ment with ZTE Corp that paves the way for the Chi­nese tech com­pany to re­sume oper­a­tions af­ter a nearly three-month ban on do­ing busi­ness with Amer­i­can sup­pli­ers.

The ban on China’s No. 2 telecom­mu­ni­ca­tions equip­ment maker will be re­moved once the com­pany de­posits $400 mil­lion in an es­crow ac­count, the US Com­merce De­part­ment said in an emailed state­ment an­nounc­ing that an es­crow agree­ment had been signed.

“Once the mon­i­tor is se­lected and brought on board, the three-pronged com­pli­ance regime — the new 10-year sus­pended de­nial or­der, the $400 mil­lion es­crow, and the mon­i­tor — will be in place,” Com­merce said in the state­ment.

Most oper­a­tions of the Shenzhen-based com­pany were sus­pended in April af­ter the US govern­ment slapped a seven-year ban on its pur­chase of cru­cial US com­po­nents, in­clud­ing chips, al­legedly for breach­ing sanc­tions on the ex­port of goods to Iran.

The com­pany is cur­rently op­er­at­ing on a tem­po­rary waiver that ex­pires Aug 1.

“To­day’s an­nounce­ment marks the be­gin­ning of the end of this long-run­ning saga,” said Wash­ing­ton at­tor­ney Dou­glas Jacobson, who rep­re­sents ZTE sup­pli­ers.

Once the ban is lifted, ZTE, which em­ploys around 80,000 peo­ple, is ex­pected to restart ma­jor oper­a­tions. The re­prieve for ZTE co­in­cides with a new Trump ad­min­is­tra­tion threat of 10 per­cent tar­iffs on $200 bil­lion of Chi­nese goods.

The Com­merce De­part­ment said the ZTE ac­tion is a law en­force­ment mat­ter un­re­lated to broader dis­cus­sions of trade pol­icy.

US sup­pli­ers have been anx­ious to re­sume busi­ness since US Com­merce Sec­re­tary Wil­bur Ross an­nounced the set­tle­ment on June 7. ZTE paid over 200 US com­pa­nies more than $2.3 bil­lion in 2017, in­clud­ing Qual­comm Inc, In­tel Corp, Broad­com Inc and Texas In­stru­ments Inc.

Shares of smaller US sup­pli­ers, which are more de­pen­dent on ZTE, pared losses af­ter the news.

ZTE’s shares were sus­pended for al­most two months af­ter the ban was im­posed and have lost about half their value.

On July 2, the US Com­merce De­part­ment is­sued a “lim­ited ser­vice au­tho­riza­tion” to ZTE, al­low­ing some of its busi­ness ac­tiv­i­ties to re­sume tem­po­rar­ily — un­til Aug 1.

The au­tho­riza­tion al­lows ZTE to con­duct busi­ness nec­es­sary to main­tain ex­ist­ing net­works and equip­ment in the US.

To­day’s an­nounce­ment marks the be­gin­ning of the end of this lon­grun­ning saga.” Dou­glas Jacobson, ZTE lawyer

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