WSGR ALERT

ZTE Update: Order Signed, but Denial of Export Privileges Still Is in Effect

June 11, 2018

Today, the U.S. Department of Commerce published the signed Superseding Order implementing the new settlement reached with Zhongxing Telecommunications Equipment Corporation (ZTE Corporation) and ZTE Kangxun Telecommunications Ltd. (ZTE Kangxun) (collectively "ZTE").1 As noted in our June 7, 2018, WSGR Alert, the new settlement will result in the suspension of the denial of export privileges imposed against ZTE. However, ZTE must first pay the monetary penalties of $1.4 billion (including $1 billion to the Department of Commerce an additional $400 million placed into an escrow account) before the Commerce Department's Bureau of Industry and Security (BIS) will suspend the denial order. ZTE has 60 days from June 8, 2018, to pay the $1 billion and has 90 days to comply with the escrow requirements. Once ZTE has fulfilled its obligations regarding the monetary penalties, BIS will remove them from its List of Denied Persons.

With payment of the monetary penalties and the suspension of the denial order, ZTE will be removed from BIS's List of Denied Persons and, as a result, ZTE can again receive and participate in transactions involving virtually any commercial items exported from the U.S. BIS will make a public announcement once ZTE has paid the monetary penalties and is removed from the List of Denied Persons. Also, BIS has posted Frequently Asked Questions on the new ZTE settlement.2 As the ZTE export enforcement matter has been very fluid, WSGR will continue to keep you updated.

If you would like to discuss this matter or have any questions about export compliance, please contact Josephine Aiello LeBeau, 202-973-8813, jalebeau@wsgr.com; Melissa Mannino, 202-973-8856, mmannino@wsgr.com; Anne Seymour, 202-973-8874, aseymour@wsgr.com; or any attorney in the export control and economic sanctions regulatory practice at Wilson Sonsini Goodrich & Rosati.