Zte Superseding Agreement

If you have any questions regarding this tender or if we can help you navigate through the impact of this agreement on current or outstanding commitments with ZTE or DOC, please contact your lawyer Akin Gump or: In addition to the civil fine, ZTE must comply with several other conditions under the new agreement, which together are the most severe sanction that BIS has ever imposed on a company. In particular, on June 7, Commerce Secretary Wilbur Ross announced that the U.S. government had reached an agreement with ZTE Corporation (ZTE) to rescind a restraining order suspending ZTE`s export privileges for a period of seven years. Under the new agreement, ZTE must pay $1 billion to trustees in a U.S.-approved bank within 90 days of that order. The Bureau of Industry and Security (BIS) rescinds the restraining order after receiving payment and informs the public that ZTE has been removed from the rejected list. In June 2018, following discussions between President Trump and the Chinese government, the BIS announced a settlement agreement (previously described) anticipating the lifting of ZTE`s refusal order in exchange for additional fines and enhanced compliance measures. The BIS has also granted limited service authorizations, including the ability to continue to support existing networks and equipment and ZTE phones (as noted above), while the replacement agreement has not been respected. 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. Transactions involving ZTE Corporation and ZTE Kangxun were only authorized as part of a series of temporary licences to minimize the crippling effects of the action.

In March 2017, ZTE finally secured a combined civil and criminal agreement of $1.19 billion with the BIS, ofAC and the Department of Justice, which were subject to a seven-year refusal order. Then, in April 2018, the U.S. government activated this review order on the basis of obvious statements from ZTE to BIS before and after the conclusion of the agreement. ZTE was essentially cut off from the acquisition of the U.S. parts and components needed to manufacture its products and would have been forced to cease operations. The new regulations prohibit the BIS from rescinding the refusal order until ZTE pays a fine of $1 billion and $400 million for future violations. ZTE has also agreed to lay off its directors and management, establish an independent compliance team to provide real-time reports directly to LA BIS, conduct a series of audits, and publish the U.S. export controls classification and content calculations for its EAR-submitted articles to help its business partners comply with the United States.