ZTE agrees to 'strictest' US Commerce settlement

Donald Trump

ZTE will pay a $1 billion fine, change its board and management, and put $400 in escrow.

The logo of ZTE Corp is seen on its building in Beijing, China April 19, 2018.

Under the deal, the ban is suspended for 10 years and can be activated by Commerce should the company commit additional violations during that decade-long "probationary period", the department said in a statement announcing the agreement.

Some officials involved with the negotiations have said they were unrelated to the ongoing trade talks between the US and China, but others have suggested that ZTE was a bargaining chip for the USA and that China could make other concessions now that ZTE has won a reprieve. The United States has reached a deal with the Chinese telecommunications giant that includes a $1 billion fine, according to Commerce Secretary Wilbur Ross. "If they commit any further violations, we would again be able to deny them access to U.S. technology as well as collect the additional US$400 million in escrow".

ZTE could not be reached for comment by either Reuters or the Post.

Ross, speaking about the agreement on CNBC today, said he did not think the arrangement would have any effect on tariff talks with China. "It's unprecedented to have US agents as monitors".

Back in April, the United States government announced a complete and total ban of any U.S. components manufacturers from selling to Chinese telecom and handset giant, ZTE (HKG:0763).

Crack open some ZTE Android phones, and you'll find that Qualcomm Inc. - an American company - designs most of their processors.

Commerce had imposed a seven-year ban on ZTE doing business in the U.S.in April as part of a package of penalties levied after the company sold American-made products to Iran, a violation of US sanctions. When U.S. regulators found that ZTE had not complied with the terms of the agreement, they cut off the firm from its U.S. parts suppliers.

U.S. President Donald Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra $70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies. That left a US deficit of more than $375 billion. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .

"At about 6 a.m. this morning, we executed a definitive agreement with ZTE". The U.S. responded to this information with a denial order which made it illegal for U.S. companies to do business with ZTE.

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