China’s ZTE Corporation is back to business after the United States lifted a nearly three-month-long ban on exports to the company, a move that brought its operations to a halt.
The smartphone maker paid $1.4 billion in penalty to the US Department of Commerce following which the authorities lifted the ban rescuing the company from the brink of a financial collapse. The penalty included a $400 million escrow to a U.S. bank, in addition to the $892 million that was paid by the Chinese giant to the US government under a March 2017 settlement agreement.
Two of the world’s largest economies United States and China are embroiled in a trade war, with matters worsening after the US levied another 25% tariffs on Chinese exports worth $34 billion. China had previously imposed tariffs on 128 U.S. goods worth $3 billion in retaliation to the tariffs on Chinese exports worth $50 billion.
In April, US Department of Commerce imposed a seven-year ban that kept ZTE from doing business with American companies, after the tech-giant violated sanction agreements by selling American technology to Iran and North Korea. The move nearly led to ZTE’s closure.
However, in May President Donald Trump levied heavy penalties on the company and asked for a management shuffle to allow the company to stay in business. In response ZTE fired its entire board and appointed a new chairman last month.
In a statement released by the Department of Commerce, Wilbur Ross, Secretary of Commerce said: “While we lifted the ban on ZTE, the Department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations.”
“Three interlocking elements—a suspended denial order, the $400 million in escrow, and a compliance team selected by and answerable to the Department—will allow the Department to protect U.S. national security,” Ross added.