Technology

Biden-Harris Administration and BAE Systems, Inc., Announce CHIPS Preliminary Terms to Support Critical U.S. National Security Project in Nashua, New Hampshire

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U.S. Department of Commerce Outlines Potential Funding of Approximately $35 Million in Support of U.S. Defense Capabilities, Including F-35 Fighter Jet Program

Today, the Biden-Harris Administration announced that the U.S. Department of Commerce and BAE Systems Electronic Systems, a business unit of BAE Systems, Inc., have signed a non-binding preliminary memorandum of terms (PMT) to provide approximately $35 million in federal incentives under the CHIPS and Science Act to support the modernization of the company’s Microelectronics Center, a mature-node production facility in Nashua, New Hampshire. The project will replace aging tools and quadruple the production of chips necessary for critical defense programs including the F-35 fighter jet program.

The Department’s PMT with BAE Systems, Inc., marks the beginning of the next phase of implementation of the CHIPS and Science Act, a key part of President Biden’s Investing in America agenda.

“We have been clear since day one that the CHIPS for America Program is about advancing our national security and strengthening domestic supply chains, all while creating good jobs supporting long-term U.S. economic growth. As national security becomes as much about the chips inside of our weapons systems as the weapons systems themselves, this first CHIPS announcement shows how central semiconductors are to our national defense,” said Secretary of Commerce Gina Raimondo. “Thanks to President Biden’s Investing in America agenda, we have reached preliminary terms to make a substantial investment in New Hampshire’s expanding defense industrial base, which will help make our country and supply chains more secure and bolster the economy of the Granite State.”

“This announcement delivers on President Biden’s commitment to restoring American leadership on semiconductors, advancing our national security, and creating good family-sustaining jobs here in New Hampshire and around the country,” said Director of the National Economic Council Lael Brainard.

“This announcement of the PMT with BAE Systems, Inc., demonstrates our vision for the CHIPS for America program to ensure that we have a robust production capacity for the chips vital to U.S. national security,” said Under Secretary of Commerce of Commerce for Standards and Technology Dr. Laurie E. Locascio.  “This is the first of many announcements that will enhance our nation’s manufacturing capacity and create new jobs and opportunities in communities across the country.”

“Microelectronics are at the heart of the technology and products we make for our defense and aerospace customers—from next-generation aircraft and satellites to military-grade GPS and secure communications,” said Tom Arseneault, president and CEO of BAE Systems, Inc. “This funding will help modernize our Microelectronics Center and fulfill the promise of the CHIPS and Science Act by increasing our capacity to serve national defense programs, growing our technical workforce, and helping to strengthen the nation’s onshore supply chain. This initiative is the result of a strong partnership with federal, state, and local government.”

As explained in the Department’s first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a CHIPS incentives award, including the amount and form of the award. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed project and other information contained in the application. After satisfactory completion of the due diligence phase, the Department may enter into final award documents with the applicant. Terms of the final award documents are subject to negotiations with the applicant and may differ from the terms of the PMT.

President Biden signed the bipartisan CHIPS and Science Act into law in August 2022, which is a critical part of revitalizing American semiconductor manufacturing to create jobs, strengthen supply chains, protect national security, and advance U.S. competitiveness.

In a little more than a year since the CHIPS Act was signed into law, the Department has moved quickly to create the CHIPS Program Office and the CHIPS R&D Office and has built a team that represents decades of experience across industry and government. In February 2023, the Department released the first Notice of Funding Opportunity for commercial manufacturing facilities, and then opened it to include large supply chain projects. The Department also released a Notice of Funding Opportunity for smaller semiconductor supply chain projects and expects to launch the National Semiconductor Technology Center (NSTC) in the near future.

About CHIPS for America

The Department has received more than 550 statements of interest and nearly 150 pre-applications, full applications, and concept plans for CHIPS Incentives. The Department is continuing to conduct rigorous evaluation of applications to determine which projects will advance U.S. national economic security, attract more private capital, and deliver other economic benefits to the country.

CHIPS for America is part of President Biden’s economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. NIST promotes U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. NIST is uniquely positioned to successfully administer the CHIPS for America program because of the bureau’s strong relationships with U.S. industries, its deep understanding of the semiconductor ecosystem, and its reputation as fair and trusted.

U.S.-UK Joint Statement on the U.S-UK Data Bridge

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Washington D.C., June 9 – U.S. Secretary of Commerce Gina Raimondo and UK Secretary of State for Science, Innovation, and Technology the Rt Hon Chloe Smith MP issued a joint statement yesterday on the announcement that both countries have committed in principle to establish a data bridge.

“Today, President Joseph R. Biden and Prime Minister Rishi Sunak announced that they have committed in principle to establish a data bridge allowing for the free flow of data between organizations in the United Kingdom and participating organizations in the United States.

“This announcement represents the UK’s intent to establish a data bridge for the UK Extension to the U.S.-EU Data Privacy Framework, subject to the UK’s data bridge assessment and further technical work being finalized, and dependent on the U.S. designation of the UK as a qualifying state under Executive Order 14086.

“Today’s announcement also reflects two years of progress and is a key step towards realizing both countries’ mutual ambition to establish a data bridge that would restore a robust and reliable mechanism for U.S.-UK data flows. 

“A U.S.-UK data bridge would uphold the rights of data subjects, facilitate responsible innovation, and provide individuals in both countries greater access to the services that suit them, whilst reducing the burdens on businesses and delivering better outcomes for people.

“We expect that the establishment of the data bridge will also further facilitate transfers to U.S. organizations that rely on other data transfer mechanisms under UK law.

“Reaching this significant milestone builds on the goal set at the inaugural meeting of the U.S.-UK Comprehensive Dialogue on Technology and Data, in January, to finalize a data bridge for U.S.-UK data flows in 2023 and is reflective of the importance of international collaboration to meet the global challenges and opportunities on data.

“We will continue working together to facilitate trusted cross-border data flows, including on multilateral initiatives, such as the Global Cross-Border Privacy Rules Forum, and through international fora, such as the Organization for Economic Cooperation and Development (OECD).”

U.S. Commerce Department Releases Strategic Plan to Boost America’s Competitiveness

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WASHINGTON – Today the Department of Commerce released its fiscal year 2022-2026 Strategic Plan laying out an agenda for innovation, resilience and equity to strengthen America’s competitiveness in the 21st century.  Along with the strategic plan, the Department also published the first-ever learning agenda, through which all bureaus will build rigorous evidence on program outcomes. 

“Everything we do at the Department is focused on increasing America’s competitiveness in the global economy.  With this plan, we are positioning America’s workers and businesses for success in the 21st century.  And all Americans, especially those that have been historically excluded, will share in our prosperity,” said Commerce Secretary Gina Raimondo. 

The Department has revised its mission statement to underscore the connection between our programs and all Americans. As of today, the Department’s mission is to create the conditions for economic growth and opportunity for all communities.

The Department’s strategic plan has five goals: 

  • Drive American innovation and global competitiveness. By investing in resilient supply chains, advancing emerging and critical technologies, and engaging in strategic partnerships with allies, we will expand opportunities for American innovators, workers, and businesses. At the same time, improve cybersecurity, promote intellectual property rights, and vigorously enforce our trade rules.
  • Foster inclusive capitalism and equitable economic growth. By creating an economy that works for all Americans, we will translate short-term growth into long-term prosperity. Once in-a-generation investments in broadband and economic development will empower entrepreneurs in all regions of the country. Smart workforce development will align workers’ skills with industry needs and provide wraparound support so job seekers can successfully complete their training.
  • Address climate crisis through mitigation, adaptation, and resilience efforts. By accelerating cutting-edge clean technologies advancing our collection and dissemination of climate data and investing in restoration and preparation, we will combat climate change, protect the ocean, and lead the world toward a clean energy future while creating millions of good-paying jobs. 
  • Expand opportunity and discovery through data. By leveraging our world-class scientific and statistical tools, we will establish a level playing field for American workers and businesses in the global economy. 
  • Provide 21st century service with 21st century capabilities. By deploying smart technology and modernizing our systems for hiring and procurement, we will ensure that across the Commerce Department’s 13 bureaus are focused on achieving results for the American people and American businesses.

The creation of the strategic plan was a collaborative effort involving staff from every Department of Commerce bureau and serves as a foundation for equitable economic growth and opportunity. The plan is in direct alignment with the President’s FY 23 budget request which reflects the Department’s role to drive U.S. competitiveness at home and abroad, and the Administration’s focus on economic growth and job creation. Department leaders and employees will use this plan to transform strategies into actions, and actions into results for all communities.

New Data Strategy to Enhance Equitable Economic Growth, Spur Good-Paying Jobs for All Americans

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The strategic leverage of data will also provide increased competitive advantage to U.S. businesses and research institution. 

Today, U.S. Secretary of Commerce Gina M. Raimondo announced a series of tools and initiatives to execute the Department of Commerce’s Data Strategy for fiscal years 2021-2024. With representation from every bureau, Commerce’s Data Governance Board (CDGB) developed this innovative Data Strategy to address some of our most pressing equity challenges around job growth, distribution of resources, and other measures of economic well-being.

“The 2020 Census, which was carried out accurately and dutifully in the face of unprecedented circumstances by the civil servants here in Washington and their partners across the country, showed that people of color now represent more than two-fifths of Americans and over half of the nation’s youth,” said Deputy Secretary of Commerce Don Graves. “Here at Commerce, and across the federal government, we have an obligation to create economic conditions that recognize the power of diversity and favor the inclusion of all Americans, while using data to brighten the future of our nation’s children.”

“With women, particularly women of color, earning pennies on the dollar in wages compared to white men, and the number of working minority business owners suffering due to this pandemic, Commerce data is needed now more than ever to enhance equitable economic growth and help our communities build back better,” said Secretary Raimondo.” “By leveraging Commerce data, we will spur good-paying jobs, empower entrepreneurs to innovate and grow, and help all American workers and businesses to compete here at home and abroad.”

Several tools and initiatives are currently underway at the Department, relying on the exponential amount of data on the nation’s economy, population, and environment that the Department generates, collects, stores, and analyzes. Here are just a few of the exciting initiatives that will be enhanced by the new Commerce Data Strategy:

  • Making the Data Available and Accessible: Through the implementation of this strategy, the data tools within the Commerce Data Hub will enable insights to the nation’s economy and population, including demography, housing, socioeconomics, and businesses. These publicly available datasets and tools assist federal agencies and other entities in the equitable distribution of resources and identifying underserved communities to empower all Americans. The Commerce Data Hub will provide a Commerce-wide data inventory and search portal that will ultimately aggregate and promote all its data assets in one location showcasing each bureau’s specific data search capabilities
  • Driving Technological Innovation: The Opportunity Project (TOP) drives innovation by helping companies, non-profits, and universities utilize federal data to develop new technologies and innovative solutions which advance equitable economic growth. Currently, TOP has focused its efforts on challenges such as improving minority businesses’ access to capital (MBDA), tackling the climate crisis through climate-smart communities (NOAA), increasing content accessibility for multilingual communities (NYC Mayor’s Office), and others.
  • Democratizing Data: Commerce wants to empower communities to leverage data that will inform their decisions and drive lasting change. By producing a series of Data for Everyone Summits, we seek to partner with community organizations, advocacy groups, and government partners to understand the barriers to accessibility of government data and improve usability in underserved communities. Ensuring that individuals have the tools they need to effectively use government data. The Big Data Project (BDP) enables innovation in environmental services using NOAA data accessed through Cloud Service Providers (CSPs). Through public-private partnerships with CSPs, Commerce aims to democratize access to NOAA data by reducing and removing obstacles to the public use of NOAA data. With increased access to key data, communities have an enhanced capacity to implement a resilience plan that allows them to withstand and recover from the impacts of a changing climate. Using a data-driven approach for climate resilience is more crucial than ever.
  • Promoting Appropriate Date Use: The Department recognize the importance of protecting privacy, respecting intellectual property, addressing cybersecurity concerns, and fostering an ethical data lifecycle that minimizes algorithmic risk of unintended bias. The Census Bureau will soon be launching The Combating Bias Toolkit, which aims to curate a collection of tools that help mitigate and correct sources of bias in federal data.

U.S. Department of Commerce Establishes National Artificial Intelligence Advisory Committee

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U.S. Secretary of Commerce Gina Raimondo today announced that the Commerce Department has established a high-level committee to advise the President and other federal agencies on a range of issues related to artificial intelligence (AI). Working with the National AI Initiative Office (NAIIO) in the White House Office of Science and Technology Policy (OSTP), the Department is now seeking to recruit top-level candidates to serve on the committee.

A formal notice describing the National Artificial Intelligence Advisory Committee (NAIAC) and the call for nominations for the committee and its Subcommittee on Artificial Intelligence and Law Enforcement appears in the Federal Register published today.

“AI presents an enormous opportunity to tackle the biggest issues of our time, strengthen our technological competitiveness, and be an engine for growth in nearly every sector of the economy,” said Secretary Raimondo. “But we must be thoughtful, creative, and wise in how we address the challenges that accompany these new technologies. That includes, but is not limited to, ensuring that President Biden’s comprehensive commitment to advancing equity and racial justice extends to our development and use of AI technology. This committee will help the federal government to do that by providing insights into a full range of issues raised by AI.”

“We have seen major advances in the design, development, and use of AI, especially in the past several years,” said Eric Lander, White House Science Advisor and OSTP Director. “We must be sure that these advances are matched by similar progress in ensuring that AI is trustworthy, and that it ensures fairness and protections for civil rights. I look forward to working with and learning from this committee.”

The National AI Initiative Act of 2020 calls for the Secretary of Commerce, in consultation with the Director of the Office of Science and Technology Policy and other department officials, the Secretary of Defense, the Secretary of Energy, the Secretary of State, the Attorney General, and the Director of National Intelligence, to establish the NAIAC. The committee is to provide recommendations on topics including the current state of U.S. AI competitiveness; progress in implementing the Initiative; the state of science around AI; issues related to AI workforce, including barriers to employment supporting opportunities for historically underrepresented populations; how to leverage initiative resources; the need to update the initiative; the balance of activities and funding across the initiative; the adequacy of the National AI R&D Strategic Plan; management, coordination, and activities of the initiative; adequacy of addressing societal issues; opportunities for international cooperation; issues related to accountability and legal rights; and how AI can enhance opportunities for diverse geographic regions.

The NAIAC will consist of expert leaders from a broad and interdisciplinary range of AI-relevant disciplines from across academia, industry, non-profits and civil society, and federal laboratories. These experts will be qualified to provide advice and information on science and technology research, development, ethics, standards, education, fairness, civil rights implications, technology transfer, commercial application, security, and economic competitiveness related to AI.

With AI already changing how society addresses economic competitiveness, national security challenges, and equitable opportunities, NIST and its researchers are dedicated to ensuring AI technologies are developed and used in a trustworthy and responsible manner that allows for accuracy, security, explainability and interpretability, reliability, privacy, safety, and the mitigation of bias. Trustworthy data, standards, and integration of machine learning and AI in applications are critical for the successful deployment of new technologies and the identification and mitigation of sources of algorithmic bias.

Nominations for the Committee and Subcommittee on Artificial Intelligence and Law Enforcement will be accepted on an ongoing basis and will be considered as vacancies arise. The National Institute of Standards and Technology will provide administrative support to the committee. Details for submitting nominations are included in the Federal Register notice.

Commerce Clears Way for U.S. Companies to More Fully Engage in Tech Standards-Development Bodies

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U.S. Secretary of Commerce Wilbur Ross announced a new rule today ensuring U.S. industry’s ability to more fully contribute to standards-development activities in the telecommunications sector. International standards serve as the critical building blocks for technological development by enabling functionality, interoperability, and safety. U.S. participation and leadership in standard-setting influences the future of 5G, autonomous vehicles, artificial intelligence, and other cutting-edge technologies.

“The United States will not cede leadership in global innovation. This action recognizes the importance of harnessing American ingenuity to advance and protect our economic and national security,” said U.S. Department of Commerce Secretary Wilbur Ross. “The Department is committed to protecting U.S. national security and foreign policy interests by encouraging U.S. industry to fully engage and advocate for U.S. technologies to become international standards.”

This action is meant to ensure Huawei’s placement on the Entity List in May 2019 does not prevent American companies from contributing to important standards-developing activities despite Huawei’s pervasive participation in standards-development organizations.

Under the new Bureau of Industry and Security (BIS) rule, technology that would not have required a license to be disclosed to Huawei before the company’s placement on the Entity List can be disclosed for the purpose of standards development in a standards-development body without need for an export license. In amending the Huawei Entity Listing, the rule promotes U.S. national security and foreign policy interests by facilitating U.S. leadership in standards-development bodies.

The general advisory opinion posted by BIS on August 19, 2019, is no longer in effect. The Department will continue to engage with stakeholders and take the actions necessary in the interest of U.S. national security and foreign policy.

Background:

• In 2019, BIS added Huawei Technologies Co., Ltd and its foreign affiliates (collectively, “Huawei”) to the Entity List under the Export Administration Regulations (EAR) because Huawei posed a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States.

• Sent to the Federal Register on Friday, June 12, the action authorizes the release of U.S. technology designated as EAR99 or controlled only for Anti-Terrorism reasons on the Commerce Control List without a license, in the context of “voluntary consensus standards bodies” of which Huawei is a participant, for the purpose of contributing to the revision or development of a “standard,” as defined in Office of Management and Budget Circular A-119 (Rev. 2016).

The rule returns U.S. industry to the status quo ante, from an Entity List perspective, with respect to disclosures of such technology to Huawei and its affiliates in legitimate standards development contexts only, and not for commercial purposes. Disclosures for commercial purposes remain “subject to the EAR” and are still subject to recordkeeping and all other applicable EAR requirements.

Department of Commerce Renews Temporary General License for 45 Days

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Today, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce announced it was extending a Temporary General License (TGL) for Huawei Technologies Co. Ltd. and its non-U.S. affiliates on the Entity List for an additional 45 days.  The TGL was implemented as a measure to prevent interruption of existing network communication systems in rural U.S. regions and permit global network security measures.  The TGL is intended to allow time for companies and persons to shift to alternative sources of equipment, software and technology (i.e., those not produced by Huawei or one of its listed affiliates).  

The 45-day extension is necessary to allow existing telecommunication providers—particularly those in rural U.S. communities—the ability to continue to temporarily and securely operate existing networks while they identify alternatives to Huawei for future operation.  American technology should not be acquired by Huawei and its foreign affiliates and used in a manner that undermines U.S. national security or foreign policy interests.  During the next 45 days, the Department intends to determine the need for any future extensions of the TGL. 

The TGL amends the Export Administration Regulations (EAR) to authorize specific, limited engagement in transactions involving the export, reexport, and transfer of items subject to the EAR to Huawei Technologies Co. Ltd. and non-U.S. affiliates on the Entity List until April 1, 2020.  

Huawei was added to the Entity List after the U.S. government concluded the company poses a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States, including, by engaging, among other things, in alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions, among other illicit activities, including charges of conspiracy to commit racketeering activities announced by the Department of Justice today.

The Bureau of Industry and Security’s mission is to advance U.S. national security and foreign policy objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership. BIS is committed to preventing U.S.-origin items from supporting Weapons of Mass Destruction (WMD) projects, terrorism, or destabilizing military modernization programs. 

Measuring the Value of the U.S. Space Economy

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According to the Commerce Department’s website，The Space Economy Satellite Account (SESA) is a new, collaborative effort to measure the relative importance of the space sector on the U.S. economy, with a special emphasis on the growing commercial space segment. This new account is part of the economic satellite accounts produced by the Bureau of Economic Analysis (BEA). A satellite account refers to statistics that complement BEA’s official U.S. economic statistics, such as GDP and personal income. These satellite accounts provide additional detail and allow for a more in-depth analysis of key sectors of the U.S. economy, such as health care, travel and tourism, and outdoor recreation.

Using input from industry experts and multiple government agencies, chiefly the U.S. Department of Commerce (DOC) Office of Space Commerce, the forthcoming SESA statistics will show the impact of the U.S. space economy on the overall U.S. economy. Specifically, the SESA statistics will provide an estimate of the space economy’s contribution to current-dollar gross domestic product (GDP) and will illustrate the contributions of individual industries to the U.S. space economy. In addition to GDP, the SESA will include gross output, compensation, and employment by industry statistics for the space economy.

Upcoming Event: Discover Global Markets

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Indo-Pacific
Opportunities at the Convergence of Aerospace + Defense + Security
Dec. 10-12, 2018 | Salt Lake City, UT

About Discover Global Markets

Discover Global Markets is the U.S. Department of Commerce’s flagship event series for U.S. exporters.

In just a few days, attendees will uncover new exporting opportunities, learn from seasoned exporters, and connect with hundreds of networking contacts.

Sign up for e-mail updates to learn about upcoming events in the Discover Global Markets series.

At Each Discover Global Markets Conference, you will:

  • Meet one-on-one with U.S. Commercial Diplomats visiting from abroad
  • Participate in panel discussions on the latest industry trends
  • Identify new and emerging markets of opportunity ahead of your competition
  • Learn about U.S. export programs designed to cut your time to market
  • Network with U.S. trade officials, leading private sector experts and like-minded U.S. businesses active in overseas markets

U.S. Department of Commerce Announces Selection of ZTE Special Compliance Coordinator

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August 24, Secretary of Commerce Wilbur L. Ross, Jr. announced the selection of Roscoe C. Howard, Jr. to be the Special Compliance Coordinator (SCC) for Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (collectively, ZTE). The Special Compliance Coordinator was selected after a rigorous search by the Bureau of Industry and Security (BIS). This appointment is the result of the historic settlement between the Department of Commerce and ZTE that includes a $1.761 billion fine, a ten-year probationary period, and the installation of the coordinator to conduct regular and comprehensive compliance supervision by a team answerable to BIS.

“Today’s appointment is the continuation of the unprecedented measures imposed on ZTE by the Department of Commerce,” said Secretary Ross. “Mr. Howard is exceptionally well-versed in corporate compliance, having tried more than 100 cases as a federal prosecutor, as well as helping those in the private sector on compliance and ethics issues.”

“I am honored to be selected for this critical role,” said Mr. Howard. “My team and I will be vigilant in efforts to ensure that ZTE complies with all U.S. export control laws and regulations.”

Mr. Howard is a Partner in Barnes & Thornburg’s Litigation Department in Washington, D.C. He is a graduate of Brown University and earned his J.D. from the University of Virginia School of Law. He previously served as the U.S. Attorney for the District of Columbia from 2001-2004. Prior to his appointment, Mr. Howard was a tenured, full professor at the University of Kansas School of Law. He has twice served as an Associate Independent Counsel under both Republican and Democrat Presidents and was an Assistant U.S. Attorney in the District of Columbia and in the Eastern District of Virginia. Howard has served as an Associate Independent Counsel on two occasions. During his first occasion serving as an Associate Independent Counsel, Howard served as a lead prosecutor for the Office of Independent Counsel (OIC) investigating questionable programs, officials and activities at the U.S. Department of Housing and Urban Development under former Secretary Samuel R. Pierce, Jr. During his second occasion serving as an Associate Independent Counsel, Howard was lead trial counsel in the fraud, false statements and gratuities investigation and trial of former Secretary of Agriculture A. Michael Espy.

The Special Compliance Coordinator’s function will be to coordinate, monitor, assess, and report on compliance with U.S. export control laws by ZTE, its subsidiaries, and affiliates worldwide. As stated in the Superseding Agreement and Order, the coordinator will operate with unprecedented access across the company.

In addition to the requirement to retain the coordinator, the Superseding Agreement and Order imposed a $1.761 billion monetary penalty, a ten-year conditionally-suspended denial order, which BIS can activate in the event of additional violations during the ten-year probationary period, and a requirement that ZTE replace the entire board of directors and the senior leadership of the company.

BACKGROUND:

On April 15, 2018, BIS activated the seven-year conditionally-suspended denial order against ZTE in response to ZTE’s admission that it made false statements to the U.S. Government during the probationary period when the company falsely stated that it would or had disciplined numerous employees responsible for the violations that led to the March 2017 settlement agreement. ZTE instead rewarded that illegal activity with bonuses. This action followed the March 2017 settlement agreement, in which ZTE agreed to a then record-high BIS civil penalty of $661 million, after engaging in a multi-year conspiracy to supply, build, and operate telecommunications networks in Iran using U.S.-origin equipment in violation of the U.S. trade embargo, and committing hundreds of U.S. sanctions violations involving the shipment of telecommunications equipment to North Korea. Moreover, ZTE also made false statements and obstructed justice by creating an elaborate scheme to prevent disclosures to and mislead the U.S. Government. In addition to monetary penalties, ZTE had agreed to a seven-year suspended denial of export privileges.

The Department of Commerce’s Bureau of Industry and Security is the principal agency involved in the implementation and enforcement of export controls for commercial technologies and many military items. The BIS Office of Export Enforcement detects, prevents, investigates, and assists in the sanctioning of illegal exports of such items.