[Federal Register Volume 83, Number 141 (Monday, July 23, 2018)]
[Notices]
[Pages 34825-34826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15633]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Terminating Denial Order Issued on April 15, 2018, Against 
Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun 
Telecommunications Ltd.

    In the Matter Of: Zhongxing Telecommunications Equipment 
Corporation, ZTE Plaza, Keji Road South, Hi-Tech Industrial Park, 
Nanshan District, Shenzhen, China; ZTE Kangxun Telecommunications 
Ltd., 2/3 Floor, Suite A, Zte Communication Mansion Keji (S) Road, 
Hi-New Shenzhen, 518057 China

    On March 23, 2017, I signed an order (the ``March 23, 2017 Order'') 
approving the terms of the settlement agreement entered into in early 
March 2017, between the Bureau of Industry and Security, U.S. 
Department of Commerce (``BIS''), and Zhongxing Telecommunications 
Equipment Corporation, of Shenzhen, China (``ZTE Corporation''), and 
ZTE Kangxun Telecommunications Ltd., of Hi-New Shenzhen, China (``ZTE 
Kangxun'') (collectively, ``ZTE'') (the ``March 2017 Settlement 
Agreement''), to resolve 380 violations of the Export Administration 
Regulations (the ``Regulations'')

[[Page 34826]]

admitted by ZTE and set forth in the Proposed Charging Letter attached 
to and incorporated in the March 2017 Settlement Agreement and the 
March 23, 2017 Order.\1\
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    \1\ The Regulations are currently codified in the Code of 
Federal Regulations at 15 CFR parts 730-774 (2018) (available at 
https://www.govinfo.gov/app/collection/CFR). The Regulations issued 
under the authority of the Export Administration Act of 1979, as 
amended. 50 U.S.C. 4601-4623 (Supp. III 2015). Since August 21, 
2001, the Act has been in lapse and the President, through Executive 
Order 13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which 
has been extended by successive Presidential Notices, the most 
recent being that of August 16, 2017 (82 FR 39,005 (Aug. 15, 2017)), 
has continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701, et seq.) (2012).
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    On March 6, 2018, ZTE notified BIS that it had made false 
statements in letters it sent to BIS on November 30, 2016 and July 20, 
2017, respectively, regarding the discipline of 39 employees involved 
in the violations that led to proposed charges settled through the 
March 2017 Settlement Agreement. After providing notice to ZTE and an 
opportunity to respond pursuant to the Regulations, I issued an order 
on April 15, 2018 (the ``April 15, 2018 Order''), activating the 
suspended denial of export privileges set forth in the March 2017 
Settlement Agreement and the March 23, 2017 Order. See 83 FR 17,644 
(April 23, 2018).
    On June 8, 2018, I issued a Superseding Order approving a 
superseding settlement agreement between BIS and ZTE (the ``Superseding 
Settlement Agreement''), whereby the parties agreed to additional and 
enhanced settlement terms and conditions, including, inter alia, the 
full and timely payment by ZTE of $1,000,000,000 to the Department of 
Commerce within 60 days of the date of the Superseding Order, and the 
full and timely placement of $400,000,000, within 90 days of the date 
of the Superseding Order, in an escrow account with a bank located and 
headquartered in the United States to be selected by ZTE and approved 
by BIS. The $400,000,000 escrow amount is the suspended portion of the 
$1,761,000,000 civil penalty imposed pursuant to the Superseding 
Settlement Agreement and the Superseding Order.\2\ The Superseding 
Order also provided, as agreed to by the parties, that BIS would 
terminate the denial of export privileges set forth in the April 15, 
2018 Order and remove ZTE from the Denied Persons List upon ZTE's full 
and timely payment of the $1,000,000,000 referenced above and 
compliance with the escrow requirements relating to the $400,000,000 
suspended portion of the civil penalty.
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    \2\ ZTE satisfied $361,000,000 of this civil penalty amount 
through the payment made by ZTE on or about May 19, 2017, following 
issuance of the March 23, 2017 Order.
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    ZTE has made full and timely payment of the $1,000,000,000 and has 
complied with the escrow requirements relating to the $400,000,000 
suspended portion of the civil penalty. Therefore, BIS is hereby 
terminating the April 15, 2018 Order, and BIS will remove ZTE from the 
Denied Persons List.
    This Order does not modify any provision of the Superseding Order 
or the Superseding Settlement Agreement. Under the terms of the 
Superseding Settlement Agreement and Superseding Order, if ZTE does not 
fully and timely comply with all other probationary conditions set 
forth in the Superseding Settlement Agreement and Superseding Order 
during the ten-year probationary period, the $400,000,000 suspended 
portion of the BIS civil penalty may immediately become due and owing 
in full or in part, at BIS's discretion, and the suspended denial order 
may be modified or revoked by BIS and a denial order including a ten-
year denial period activated against ZTE from the date that it is 
determined that ZTE has failed to comply.
    This Order is effective immediately and shall be served on ZTE and 
shall be published in the Federal Register.

     Issued this day of July 13, 2018.
Richard R. Majauskas,
Acting Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2018-15633 Filed 7-20-18; 8:45 am]
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