Published: Sun, June 10, 2018
Money | By Hannah Jacobs

China's ZTE signs deal to lift U.S. ban

China's ZTE signs deal to lift U.S. ban

The preliminary deal includes a $1 billion fine against ZTE along with $400 million in escrow to cover any future violations, said sources aware of the development.

As part of the agreement, ZTE has promised to replace its current board of directors and executive team within thirty days and will allow the company periodic inspections to verify that the locally manufactured components are being used as agreed.

Commerce Secretary Wilbur Ross says the usa has struck a deal with Chinese telecom giant ZTE to end crippling American sanctions.

ZTE's latest brush with US regulators came after the company's business dealings with Iran and North Korea violated USA trade agreements.

Ross also referenced the potential impact on USA companies that supply parts to ZTE. The decision to embed a USA -appointed compliance team is potentially more stringent than the management purge Trump initially floated.

ZTE was originally posted on to the Denied Persons List in April 2018, when it was announced that the United States had banned the company from purchasing parts from USA companies, such as Alphabet's (NASDAQ:GOOG) Google and Qualcomm (NASDAQ:QCOM).

But early this year, the USA government discovered that ZTE had not followed through on its promise. He called the deal brokered a "strict settlement" calling it the "largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls".

ZTE has already paid a $1.19 billion fine for violating U.S. sanction.

According to a Commerce Department filing from April, ZTE never reprimanded its 35 lower-level employees, and worse, it made false statements to the Department about its compliance.

However, Mr Ross stated that the ZTE agreement would not have any effect on the talks.

ZTE did not immediately respond to requests for comment today.

Reviving ZTE has been a personal focus for President Trump, whose government is in the middle of broader trade negotiations with the Chinese government.

This move was slammed by members of Congress from both parties, who said the President's tweet was irresponsible.

"Even China's State-owned Assets Supervision and Administration Commission had harsh words for ZTE, saying that the company was "stupid and passive" and that "[ZTE had] taken risks to engage in illegal operations numerous times".

The deal could be a harbinger of progress in separate and fraught trade talks between the world's two largest economies although Commerce Secretary Wilbur Ross on Thursday reiterated a denial that there was any connection between the two.

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