China’s ZTE expected to take last step to lift ban, says official

ZTE is expected to deposit US$400 million in an escrow account in a US bank in the ‘next couple of days,’ says US Department of Commerce official

PUBLISHED : Saturday, 23 June, 2018, 4:30am
UPDATED : Saturday, 23 June, 2018, 4:40am

ZTE Corp is expected to deposit US$400 million in an escrow account in a US bank in the “next couple of days,” the last step the Chinese telecoms company must take before a ban on US suppliers can be lifted, a US Department of Commerce official said on Friday.

ZTE, which makes smartphones and networking gear, agreed to pay a US$1 billion penalty and put US$400 million in an escrow account as part of a settlement agreement reached on June 7 to regain access to the US market, which it needs for components.

ZTE, China’s No. 2 telecommunications equipment maker, ceased major operations after the Commerce Department imposed the ban in April.

Chinese companies in the US are repatriating profits as trade tensions rise, survey shows

The company had broken a prior agreement, the Commerce Department said, by making false statements about disciplining some executives involved in illegally shipping goods to Iran and North Korea, which are subject to US sanctions themselves, and an elaborate cover-up that led to a March 2017 settlement agreement with US authorities.

The escrow account in the new settlement is intended to allow the US government access to the US$400 million in case ZTE violates the latest deal.

An escrow agreement, which defines the conditions under which the money could be released, was in the process of being finalised, sources said Friday.

One source said that ZTE was hopeful the US$400 million could be deposited on or before Monday.

ZTE paid the US$1 billion penalty last week, people familiar with the matter have told Reuters.

Spokespeople for ZTE did not immediately respond to requests for comment.

Blog on US-China trade war by Shenzhen academic posing as US professor goes viral in China

Under the new Commerce Department settlement, ZTE agreed to numerous conditions beyond monetary penalties, including changing its board and leadership within 30 days.

The Republican-controlled US Senate passed legislation this week that would overturn the agreement, in a rare rebuke to US President Donald Trump, who favoured the fines over the harsher bans. But the measure, an amendment to a massive defence policy bill, is still several steps from becoming law, and the White House has said it will push its allies in Congress not to let the amendment move forward.