U.S. Cuts Deal With Sanctioned Chinese Tech Company ZTE

EnlargeSpencer Platt  Getty Images

EnlargeSpencer Platt Getty Images

On top of the fine, ZTE will place $400m in an escrow account for future violations, while the US Commerce Department will embed a compliance team within the company. -China trade talks. Trump tweeted on May 14 that he and Chinese President Xi Jinping were working together to help ZTE "get back into business, fast".

The ban amounted to a death sentence for the company, which relies on USA parts.

ZTE will pay a $1 billion fine and have to put $400 in escrow for violating sanctions, Ross said Thursday during an interview on CNBC. In addition, he said, "we still retain the power to shut them down again", if the USA finds the company doesn't abide by the settlement terms.

The deal announced by Commerce Secretary Wilbur Ross allows ZTE to stay in business.

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

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"At about 6 a.m. this morning, we executed a definitive agreement with ZTE".

Senate Majority Leader Charles E. Schumer called for Congress to reverse the decision, which is unlikely.

Still, the resolution of the ZTE case may clear the way for the United States to make progress in its trade talks with China.

The Commerce Department denial order prevented ZTE from utilizing key technology from USA suppliers like Qualcomm and and Broadcom, making it hard to produce smartphones or telecommunications equipment.

ZTE did not immediately respond to requests for comment on Thursday. Instead, ZTE seems to have given bonuses to those same executives.Because of this, the Department of Commerce ordered the denial of export privileges against ZTE, which also meant that American companies would no longer be able to sell equipment to ZTE. It paid $890 million in fines.

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USA senators said they plan legislation to roll back the agreement.

ZTE says it does business with telecom providers, governments and corporate network clients in more than 160 countries.

Mr Ross emphasised that the agreement was separate from trade negotiations between the U.S. and China.

Qualcomm gains 2.5% and NXP is up 3.2%.

Democrat and Republican senators denounced Trump's offer to ease the ZTE sanctions as an offer that imposed punitive measures the company had already disregarded once before, while garnering no true concessions from China. "Export control and sanctions laws should not be negotiable, because fidelity to the rule of law is a key part of what distinguishes the USA from a country like China that is ruled by a Communist dictatorship". But the president has repeatedly spoken of the enforcement matter as part of efforts to overhaul the US commercial relationship with China.

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ZTE's survival has been a topic of discussion in high-level U.S. Oclaro got 18% of its business from ZTE previous year, while 30% of Acacia's total revenue was from ZTE.

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