CHINA TOPIX

Updated 2:12 PM EST, Wed, Jan 29, 2020

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U.S. Pulls Out ZTE from Trade Blacklist

ZTE agreed to pay nearly $900 million for violating U.S. trade agreement.

(Photo : Getty Images) ZTE agreed to pay nearly $900 million for violating U.S. trade agreement.

The United States Department of Commerce's Bureau of Industry and Security has removed ZTE from its so-called Entity List or a trade blacklist.

The Chinese telecommunications equipment maker has pleaded guilty to violating sanctions on Iran and agreed to pay nearly $900 million. ZTE’s removal from the blacklist indicated the end of a tense period for the company and it will once again be able to do business with companies within the States. Being in the Entity List could severe ties to critical U.S. suppliers. 

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“By acknowledging the mistakes we made, taking responsibility for them... we are committed to a ZTE that is fully compliant, healthy and trustworthy,” said ZTE Chief Executive Zhao Xianming said in an emailed statement.

In 2016, ZTE had been accused of selling network and telecommunications equipment to both sanctions-hit Iran and North Korea. This is in violation of US trade agreement and ZTE covered their tracks by putting the deals through its Chinese subsidiaries. It has also shipped $32 million worth of products containing American-made equipment to Iran between 2010 and 2016 without the proper licensing.

U.S. Commerce Department has placed export restrictions on ZTE after committing violations. ZTE pleaded guilty to three charges including conspiracy to export unlawfully, obstructing justice, and making false statements to federal investigator.

Aside from agreeing to pay a criminal and civil penalty of $892.4 million, ZTE has paid additional $300 million penalty over a seven-year period that it is liable to pay if it fails to comply with the requirements of the agreement. 

Moreover, ZTE has created a new compliance committee to supervise changes in policies and procedures. It has also replaced three of its most senior executives and appointed a new U.S. based export compliance officer.

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