ZTE pays $400 million into escrow, BIS removes ZTE from denied persons list.

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ZTE Company Logo from Wikipedia/ZTE.com

This just in, ZTE has complied with the terms of their agreement and placed $400 million into escrow. As a result, the US Department of Commerce, Bureau of Industry Security has terminated the April 15, 2018 denial order and removed ZTE from the denied persons list. The full release from the US DOC, BIS website can be found here.

Here’s a listing of all previous ZTE posts on this blog:

ZTE and Commerce sign escrow agreement – denial ban is one step closer to being lifted.

ZTE Open for US Business – sort of and only until August 1, 2018.

ZTE deal is good to go – House bill does not include Senate language “undoing” ZTE deal.

ZTE pays $1 billion fine, $400k into escrow soon.

In-depth details of the ZTE deal.

Senate passes amendment to undo Trump’s ZTE deal.

Deal reached between the US and ZTE.

ZTE facing $1.7 billion penalty?

The real reason Trump is working to reverse the 7 year ZTE ban? To help U.S. companies!

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

Deal reached to allow ZTE to purchase U.S. hardware and software?

ZTE may need to change management and board in order to access US suppliers.

ZTE report to the HKEX on the impact of the US denial order: “major operating activities of the Company have ceased”.

ZTE and Huawei banned for sale to US military personnel.

ZTE banned from purchasing US technology for 7 years.

 

 

 

ZTE and Commerce sign escrow agreement – denial ban is one step closer to being lifted.

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Photo by Luke Hui on Pexels.com

Earlier today, the U.S. Department of Commerce announced they had reached an escrow agreement with ZTE. As you are aware, in order to lift the denial ban put in place in April 2018 (and be authorized to purchase goods and services from US companies), ZTE must pay $1 billion dollar fine and place $400 million into an escrow account.

Commerce announced today an agreement was reached with ZTE. The next step is for ZTE to deposit the $400 million into the escrow account. Upon deposit, the Department of Commerce, Bureau of Industry and Security will lift the denial ban. According to the June 8, 2018 superseding order, ZTE has until September 8, 2018 to deposit the funds – based on today’s news it appears ZTE is on its way to lifting the denial ban.

If you are a supplier or ZTE vendor and have any questions about the denial ban, feel free to contact export compliance attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

Check out my other ZTE posts:

ZTE Open for US Business – sort of and only until August 1, 2018.

ZTE deal is good to go – House bill does not include Senate language “undoing” ZTE deal.

ZTE pays $1 billion fine, $400k into escrow soon.

In-depth details of the ZTE deal.

Senate passes amendment to undo Trump’s ZTE deal.

Deal reached between the US and ZTE

ZTE facing $1.7 billion penalty?

The real reason Trump is working to reverse the 7 year ZTE ban? To help U.S. companies!

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

Deal reached to allow ZTE to purchase U.S. hardware and software?

 

ZTE Open for US Business – sort of and only until August 1, 2018.

According to the US Department of Commerce, Bureau of Industry and Security (BIS) website, ZTE has authorization by BIS for “Limited Service” from July 3rd – August 1st, 2018.

On July 3rd, BIS granted a limited authorization for all persons to engage in business with ZTE under the 4 following circumstances:

  1. Engagement with ZTE for all contracts entered into with ZTE before April 15, 2018.
  2. Engaging in the support, service, software updates and patches to ZTE phones.
  3. Disclosure to ZTE of information regarding security vulnerabilities in items owned, possessed or controlled by ZTE.
  4. Limited transfer of funds – can make or receive payments to and from ZTE if transactions are pursuant to this authorization.

The full text can be found here.

Any other transactions with ZTE are still subject to the denial order of April 15, 2018. The denial order is only lifted once ZTE pays the $400,000 into an escrow account. According to the superseding order that outlines the ZTE deal, ZTE has 90 days to pay the escrow funds (until September 6, 2018).

Check out my other ZTE-related blog posts:

ZTE deal is good to go – House bill does not include Senate language “undoing” ZTE deal.

In-depth details of the ZTE deal.

Senate passes amendment to undo Trump’s ZTE deal.

Deal reached between the US and ZTE.

ZTE facing $1.7 billion penalty?

The real reason Trump is working to reverse the 7 year ZTE ban? To help U.S. companies!

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

Deal reached to allow ZTE to purchase U.S. hardware and software?

ZTE may need to change management and board in order to access US suppliers.

ZTE report to the HKEX on the impact of the US denial order: “major operating activities of the Company have ceased”.

ZTE and Huawei banned for sale to US military personnel.

ZTE banned from purchasing US technology for 7 years.

If you have any questions whether your company can start engaging with ZTE, call trade specialist David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

In Houston and want to learn more about U.S. Export Controls?

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Photo by Sascha Hormel on Pexels.com

The The Bureau of Industry and Security, Outreach and Educational Services Division will hold a conference regarding “Complying with U.S. Export Controls”

Date: June 12-13, 2018

Location: Norris Conference Center, Houston, TX (City Centre)

About the program (from the BIS website):

Complying with U.S. Export Controls

The two-day program is led by BIS’s professional counseling staff and provides an in-depth examination of the Export Administration Regulations (EAR). The program will cover the information exporters need to know to comply with U.S. export control requirements on commercial goods. We will focus on what items and activities are subject to the EAR, steps to take to determine the export licensing requirements for your item, how to determine your export control classification number (ECCN), when you can export or reexport without applying for a license, export clearance procedures and record keeping requirements, and real life examples in applying this information. Presenters will conduct a number of “hands-on” exercises that will prepare you to apply the regulations to your own company’s export activities. This program is well suited for those who need a comprehensive understanding of their obligations under the EAR. Technical, policy, and enforcement professionals from BIS, as well as specialists from other agencies such as the Bureau of the Census, will participate.

About the Instructors

The instructors are experienced export policy specialists, engineers, and enforcement personnel from BIS’s Washington, D.C. headquarters and field offices, as well as representatives from other U.S. government agencies as appropriate. The instructors will be available throughout the seminar to answer your questions on how the export regulations affect the export activities of your organization or client.

Location/time

The program will be held at Norris Conference Center located at 816 Town & Country Blvd. Suite 210, Houston, Texas 77024. Registration and continental breakfast will begin at 7:30 a.m. on June 12, 2018. The program will begin at 8:30 a.m. and end at 5:00 p.m.

Registration

The registration fee for the Complying with U.S. Export Controls seminar is $525 per person before May 11, 2018 and $575 after. To register for both this program and the Technology Controls seminar on June 14, 2018, the fee is $775 before May 11 and $845 after. The fee includes continental breakfasts, coffee breaks, lunches and materials for the entire seminar. Fee is not refundable after May 18, 2018. Substitutions may be made. To guarantee placement for the BIS seminar: Click here to register.

If you have any questions about BIS, export controls or customs law, contact experienced trade and customs attorney David Hsu at 713-932-1540 or by email at dhsu@givensjohnston.com.

 

 

ZTE report to the HKEX on the impact of the US denial order: “major operating activities of the Company have ceased”.


According to a May 10, 2018 filing with the Stock Exchange of Hong Kong (HKEX) online here, ZTE announced the April 2018 BIS Denial Order has resulted in “major operating activities of the Company have ceased”.

Earlier in April 2018, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce (Commerce) issued a Denial Order against ZTE for failing to comply with the terms of a plea deal reached in 2017 after ZTE plead guilty for illegally shipping US equipment to Iran and North Korea. One often cited plea deal was for ZTE to reprimand responsible employees and deny bonuses to those employees. However, BIS determined ZTE did pay full bonuses and kept 35 employees who violated the law.

A “Denial Order” bans American companies from exporting parts to ZTE. In the instant case, ZTE is faced with a 7-year Denial Order and can no longer receive Qualcomm Snapdragon chips (84% of all ZTE phones use Snapdragon chips) and Google Android updates.

The HKEX release further states that, “the Company maintains sufficient cash”, and ends with ZTE indicating they would seek a modification or reversal of the Denial Order and update investors as soon as possible.

It will be interesting to see the second quarter ZTE results if the Denial Order is not reversed – ZTE’s shipped 75% of their smartphone shipments to the US in the first quarter of 2018.

ZTE banned from purchasing US technology for 7 years.

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ZTE Corporate Campus in Shenzhen, China; Photo Credit: Brücke-Osteuropa from Wikipedia

On Monday, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) imposed a denial of export privileges against ZTE, composed of Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (“ZTE Kangxun”).

Background

In March of 2017, ZTE agreed to pay civil and criminal penalty and forfeitures totaling $1.19 billion for shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice by preventing disclosure to and misleading the U.S. Government. In 2017, ZTE also agreed to a seven-year denial of export privileges if ZTE committed additional violations.

Commerce found ZTE made several violations such as making false statements to BIS in 2016 and making false statements about disciplinary actions against employees involved in the shipment of equipment to Iran and North Korea.

Result

By activating the seven-year denial of export privileges, ZTE is prohibited from participating in any way in any transaction subject to the EAR. The prohibition also makes it unlawful for businesses and individuals to participate in an export transaction subject to the EAR with a denied person (ZTE).

If you have any questions about how the recent ZTE order may effect your business, or have any other BIS, EAR or export compliance issues – contact experienced trade attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

Section 232 Exclusion Requests.

 

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The Bureau of Industry and Security (BIS) has released the rules and procedures to apply for a Section 232 exclusion request for imports of steel or aluminum. Additionally, the BIS also released guidelines to object to any exclusion requests.

Contact David Hsu at 832.896.6288 or dhsu@givensjohnston.com to get started today on the exclusion request process.

2018 Houston BIS Export Compliance Event – Register Now.

hall-congress-architecture-building-159213.jpegSave the date if you are in Houston and want to learn more about BIS export compliance.

The first two-day program session will be led by BIS staff and provide in depth information regarding Export Administration Regulations (EAR). Covered topics include EAR, how to determine export control classification numbers (ECCN); when to reexport without applying for a license, Export Management Compliance Program (EMCP) and more!

Additionally, session 2 on day three covers technology controls, specifically how to comply with U.S. export and reexport controls related to technology and software. Topics include export or reexport of technology, kinds of tech and software subject to EAR, license exceptions and more!

The 3-day seminar will be held at the Norris Conference Center in City Centre Houston near Beltway 8 and I-10 West.

For more details, click the link below:

http://events.r20.constantcontact.com/register/event?llr=qg6pm6iab&oeidk=a07eeqlbbsq77507f3b