- The United States officially lifted the ZTE ban on working with American companies.
- ZTE paid a $1 billion fine to lift the ban.
- The Commerce Department will be overseeing ZTE as it gets this second chance.
It’s been a whirlwind ride for ZTE over the past several weeks, with the United States government issuing a ban on American companies doing business with the Chinese smartphone manufacturer.
However, today (via Reuters) the United States officially lifted that ban, which will allow ZTE to resume its business practices, including those with American companies.
But just because the ban is gone doesn’t mean that ZTE is entirely in the clear. “While we lifted the ban on ZTE, [the Commerce Department] will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Commerce Secretary Wilbur Ross said in a statement.
As part of the deal to lift the ban, ZTE had to pay a $1 billion penalty and place $400 million in an escrow account that it will lose if it is caught in any wrongdoing related to the previous restrictions.
ZTE’s troubles started when it was caught red-handed violating various international trade laws. The company then dug itself an even deeper hole when it was found trying to hide its violations.
In response to this flagrant illegal activity, the Commerce Department followed through on its previously-decided penalty for such violations: a full ban on working with any American entities, among other sanctions.
Whether ZTE thought that the United States would never institute such a ban or if it was simply playing fast-and-loose we may never know. But ZTE understood the severity of its predicament when industry experts began seriously discussing ZTE closing its doors for good after the ban essentially destroyed its ability to make and sell smartphones.
In a last-minute Hail Mary, the Chinese government pleaded with United States President Donald Trump to lift the ban, citing the loss of thousands of Chinese jobs should ZTE fold. Trump decided to lift the ban, but U.S. Senators fought to uphold the Commerce Department’s decision.
Eventually, Trump won out, and ZTE was given the OK. Today, that decision becomes official, and ZTE is back in business.
Time will tell if ZTE can prove that it appreciates this profound leniency by conducting its business strictly within the letter of the law.