Anti-ZTE language dropped from defense bill

ZTE appears to have overcome the final hurdle in its path to restarting its business, as politicians on Capitol Hill have removed language from a defense bill that would have re-imposed a technology access ban, say press reports. The company now is in position to resume full operations, after stopping most of its activities this past May in the wake of the ban, imposed when ZTE was found to have violated terms of a disciplinary agreement arising from improper export of U.S. technology.

ZTE appears to have overcome the final hurdle in its path to restarting its business, as politicians on Capitol Hill have removed language from a defense bill that would have re-imposed a technology access ban, say press reports. The company now is in position to resume full operations, after stopping most of its activities this past May in the wake of the ban, imposed when ZTE was found to have violated terms of a disciplinary agreement arising from improper export of U.S. technology (see "U.S. Commerce Dept. finds ZTE violated export disciplinary agreement, bans U.S. component supply").

U.S. senators unhappy with the deal reached between the Department of Commerce and ZTE to rescind the ban had included language in a defense appropriations bill that would put the ban back in place (see “ZTE must disclose Chinese government stake as part of new agreement”). As the House version of the bill did not contain similar language, the anti-ZTE language was subject to negotiation between members of the two Congressional houses – as well as lobbying from the Trump Administration.

The senators behind the anti-ZTE effort -- Senators Tom Cotton (R-AR), Chris Van Hollen (D-MD), and Chuck Schumer (D-NY) – expressed their displeasure at the defeat, with a tweet from Van Hollen typical:

Despite bipartisan support to put American national security before jobs in China, Republican leadership refused to take any real, substantive action on ZTE. Instead, they joined President Trump in bowing to Beijing. It’s weak and shameful. https://t.co/OtZKvYkQSL

— Chris Van Hollen (@ChrisVanHollen) July 20, 2018

The new agreement called for ZTE to pay $1 billion in fines, plus place another $400 million in escrow, before the ban would be lifted. ZTE fulfilled these requirements earlier this month, and the ban was lifted July 13 (see "ZTE back in business as Commerce technology ban suspended"). The company faces a laundry list of requirements it must fulfill to ensure the ban is not re-imposed. They include a complete turnover of senior management from senior vice president and above (which has been fulfilled; see “ZTE names new board per Commerce Department agreement” and “Department of Commerce eases ZTE restrictions”) as well as appointment of an on-site compliance team.

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