Commerce Department Lifts Ban on U.S. Suppliers Selling to ZTE

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The deal to save ZTE by allowing it to resume business with U.S. firms was directed by President Donald Trump.

The deal to save ZTE by allowing it to resume business with U.S. firms was directed by President Donald Trump.


Photo:

wang zhao/Agence France-Presse/Getty Images

Chinese telecommunications giant ZTE Corp. can resume business with its U.S. suppliers after meeting the conditions of a deal President

Donald Trump

made to save the company.

On Friday, ZTE no longer appeared on the Commerce Department’s updated “denied persons list,” meaning U.S. suppliers can again sell to the Chinese firm.

The Commerce Department had said it would remove the ban on U.S. firms selling to ZTE after the firm deposited $400 million into an escrow account and paid a $1 billion fine as part of a penalty for its violations of an earlier settlement.

The saga over the fate of the Chinese firm began in April when Commerce banned U.S. companies from selling to ZTE as punishment for its failure to honor an earlier U.S. agreement to resolve its sanctions-busting sales to North Korea and Iran.

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Because ZTE relies on U.S. suppliers to make its smartphones and to build telecommunications networks, the penalty was effectively a death knell.

On May 13, Mr. Trump tweeted that he and Chinese President

Xi Jinping

were “working together” to find a way to help the company get back into business.

The Commerce Department struck a new deal with ZTE on June 7 that assigned the financial penalties and required ZTE to agree to replace its board of directors and senior leadership team and fund a team of U.S. compliance officers to monitor the company for 10 years.

A large bipartisan group in Congress, however, has initiated a plan to preserve Commerce’s earlier, harsher penalty on national-security grounds. ZTE has repeatedly violated U.S. sanctions, and U.S. intelligence officials also have long warned that its equipment could be used to spy on Americans. The company has denied the accusation.

Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com