Zte Settlement Agreement 2018

On March 23, 2017, ZTE reached an agreement with the U.S. government to clarify civil and criminal charges that ZTE violated U.S. export control sanctions and legislation by illegally shipping products from U.S. countries to Iran and North Korea. As part of this agreement, ZTE agreed to pay a combined fine of up to $1.19 billion and agreed not to commit further offences that were committed as a result of the withdrawal of its export privileges for a period of seven years. [1] The transaction agreement also subjected ZTE to a mandatory and regular report. In accordance with this requirement, the U.S. government requested a report on the status of individuals previously disciplined as part of the company`s efforts to respond to violations that led to the settlement agreement. ZTE`s state report showed that the company had provided false information about its disciplinary efforts and that it had not committed to correcting its previous inaccuracies until after receiving the february 2, 2018 request for information. The BIS then activated the seven-year refusal order and added ZTE to the list of rejected persons.

This step effectively cut ZTE from U.S. components and software and had a significant global impact on network operators and consumers using ZTE mobile phones. The U.S. Department of Commerce announced yesterday that it has reached a new settlement agreement with Chinese telecommunications giant ZTE to replace the opt-out order that was activated by the Commerce Department`s Bureau of Industry and Security (BIS) on April 15, 2018. The refusal decision, which prohibited U.S. producers from supplying ZTE with low-level electronic components and other low-level electronic components of technology and other commercial software, caused shockwaves across the global telecommunications industry and threatened to shut down ZTE, China`s second-largest telecommunications equipment manufacturer, from its operations. With the new transaction contract, ZTE`s export privileges in exchange for ZTE`s agreement to pay a $1.4 billion fine, replace the entire management team and keep a team of compliance specialists incorporated into ZTE will be back in place for ten years. The timing of ZTE`s reintroduction is uncertain, but Wiley Rein will continue to monitor this matter closely. The termination decision is the latest development in BIS`s long-standing application process against ZTE, China`s second-largest manufacturer of telecommunications equipment and large customers for U.S.

chips and components. This case first attracted public attention in March 2016, when ZTE Corporation, ZTE Kangxun and two other ZTE units (Beijing 8-Star and ZTE Parsian) were added to the BIS entity list and subject to a strict licensing requirement for all items under U.S. jurisdiction.

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