ZTE sends 400 million hostages, gets back in business stateside

US commerce dept. counts escrow cash, warns it's always watching, Congress still split

Chinese telco kit-maker ZTE is back in business in the USA after doing everything asked of it by the nation’s authorities.

US secretary of commerce Wilbur Ross late last week issued a statement that said his “Department lifted the denial order on ZTE pursuant to a June settlement agreement that included the harshest penalties and strictest compliance measures ever imposed in such a case.”

Those requirements included the lodgement of US$400 in escrow as part of a “suspended denial order” that can be forfeit if ZTE steps beyond the terms of its agreement with the USA. The $400m is on top of a $1bn penalty paid to Get Out Of Jail (not) Free and $892m of past payments to settle other matters.

Ross 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.” He added that the “interlocking” penalties of the fine, the escrowed funds and “a compliance team selected by and answerable to the Department” will together “allow the Department to protect U.S. national security.”

That’s an odd choice of words, as what got ZTE into trouble was flouting trade sanctions against Iran, rather than allegations that its kit is best not-used by US companies.

ZTE has done all that was asked of it by the USA, replacing its entire board, adopting compliance measures and accepting US oversight.

The end of the affair (for now) is as good for the USA as it is for ZTE, as the Chinese company buys plenty of US-made and/or designed components that it would have been unable to acquire without the deal. US companies can breathe a sigh of relief at news they still have a customer … and then cross their fingers that ZTE behaves.

Donald Trump won’t mind either: he made ZTE a personal matter between himself and Chinese premier Xi Jinping and could well see the company’s compliance as evidence of his awesome deal-making and trade negotiation prowess.

He'll probably keep the matter off Twitter for a while, as the US Congress is still considering whether to re-impose the ban. ®

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