United States reaches deal with Chinese tech firm ZTENaija247news

ZTE agrees to US demands

United States reaches deal with Chinese tech firm ZTENaija247news

U.S Senate Democratic leader Chuck Shumer quipped, "By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China".

"Today, [U.S. Commerce Department's Bureau of Industry and Security] is imposing the largest penalty it has ever levied and requiring that ZTE adopt unprecedented compliance measures", said Secretary Ross. Sources say the preliminary deal includes a $1 billion fine against the Chinese company and an additional $400 million in escrow in the event of future violations.

The compliance team will be in place for 10 years and monitor "on a real-time basis" ZTE's compliance with USA export control laws, the Commerce Department said in a release announcing the settlement. Ross, speaking on CNBC today, said that a compliance team picked by the USA will be embedded at ZTE. ZTE purchase key components from US -based companies like Intel and Qualcomm.

In return, the Commerce Department will lift the denial order banning ZTE from buying American products, which has crippled the company. Their function will be to monitor on a real-time basis ZTE's compliance with USA export control laws.

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The US Department of Commerce will take into account the $361 million paid by the company a year ago, which will allow the US to claim a $1.7 billion fine.

"The provision of false statements to the United States government, despite repeated protestations from the company that it has engaged in a sustained effort to turn the page on past misdeeds, is indicative of a company incapable of being, or unwilling to be, a reliable and trustworthy recipient of US-origin goods", the commerce department said.

After having been found to have sold equipment to sanctioned countries such as Iran and North Korea, ZTE was previously fined $1.19 billion.

The sources said ZTE also agreed to allow USA representatives to make site visits without coordinating with Chinese government officials, as required by a non-public agreement between the countries. The department has assigned compliance coordinators to work on the case and monitor if ZTE will still violate laws, at least, for the next ten years.

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The terms outlined by Reuters are similar to the those Trump outlined in a May 25 tweet, saying that ZTE might reopen "with high level security guarantees, change of management and board, [and it] must purchase USA parts and pay a $1.3 Billion fine". "ZTE has also been replacing some of its top executives in a bid to make good on its pledge".

Trump has indicated he views the handling of ZTE as part of his administration's broader effort to renegotiate trade conditions with China. For the U.S.to shut down one of China's largest companies is a very dramatic type of move.

USA goods exported to China a year ago totaled US$130 billion while Chinese imports to the USA totaled US$506 billion.

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