On July 13, 2018, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) issued an order (“Termination Order”) immediately terminating the denial order issued on April 15, 2018 against Zhongxing Telecommunications Equipment Corporation (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. (“ZTE Kangxun” and, collectively, “ZTE”) that had prohibited dealings with ZTE involving items subject to US jurisdiction. ZTE has been removed from the Denied Persons List, and exporters and reexporters are no longer generally prohibited from supplying to ZTE items subject to US jurisdiction, including parts and components, or servicing such items for ZTE.
On July 2, 2018 the US Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a temporary authorization permitting certain limited transactions with Zhongxing Telecommunications Equipment Corporation (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. (“ZTE Kangxun” and, collectively with ZTE Corporation, “ZTE”) that would otherwise be prohibited under the denial order BIS activated against ZTE on April 15, 2018. The license grants authorization to all persons, aside from those located in Cuba, Iran, North Korea, Sudan and Syria, to resume certain technical support activities with ZTE from July 2 to August 1, 2018.
On June 7, 2018, the US Department of Commerce announced that Zhongxing Telecommunications Equipment Corporation (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. (“ZTE Kangxun” and, collectively with ZTE Corporation, “ZTE”) had agreed to additional penalties and compliance measures to secure their removal from the Bureau of Industry and Security (“BIS”) Denied Persons List and regain access to US products and components. The new agreement imposes significant additional fines on ZTE, requires the company to carry out management changes, and institutes strict compliance requirements. Importantly, ZTE has not yet been removed from the Denied Persons List and remains subject to the existing restrictions until certain steps are taken. Nevertheless, the agreement sets out a path forward for ZTE to soon resume operations that had otherwise stalled due to the lack of access to US items.
The Trump Administration and Congress are tightening investment restrictions and export controls to address technology transfer concerns. These measures initially focus on China, but will have broader effects on investments in the United States and transfers of emerging technologies.