US Department of Commerce terminates denial order for ZTE

July, 2018

Move follows ZTE’s payment of a $1bn penalty and the placing of $400m in escrow.

US Department of Commerce terminates denial order for ZTE

The US Department of Commerce’s Bureau of Industry and Security (‘BIS’) has lifted ZTE’s denial order, effective 13 July. The termination of the denial order follows ZTE’s payment of a $1bn penalty and the placing of $400m in escrow.

ZTE, China’s second-largest telecoms producer, is no longer subject to any US export control restrictions, with the exception of Iranian affiliate ZTE Parsian, which remains on the Entity List.

BIS’s denial order, issued in April, cut off ZTE’s access to essential US parts and components, crippling its operations. The move was motivated by apparent ‘false statements’ given by ZTE during and after the negotiation of its $1.19bn criminal and civil settlement agreement with BIS, the Office for Foreign Assets Control (‘OFAC’) and the Department of Justice in 2017, which included the denial order, suspended for seven years.

In June, BIS issued a new settlement agreement, following discussions between President Trump and the Chinese President Xi Jinping ahead of critical trade talks. The June settlement imposed additional monetary penalties (the $1bn penalty and $400m in escrow paid by ZTE) and the strictest US compliance measures ever imposed against a company. BIS issued temporary licences to allow for the interim support of existing networks, equipment and ZTE phones until the new agreement came into effect.

The sums paid by ZTE to the US government under the 2018 and 2017 settlements constitute the largest civil penalty ever paid for violations of US export controls. Under the exacting requirements of the new settlement, ZTE must allow a US compliance team answerable to BIS to monitor and report on its operations for a period of ten years. If there is evidence of further non-compliance, ZTE will forfeit the funds paid in escrow and risk a ten-year suspended denial order. ZTE also had to replace its entire board of directors and senior leadership.


Commerce’s termination of the denial order can be found here:

BIS’s 2018 settlement agreement can be found here:

Commerce’s press release can be found here:



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