ZTE Said to Have Signed Preliminary Agreement to Lift US Ban

ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

The company has signed an agreement in principle that would lift the ban on buying components from U.S. suppliers, paving the way for it to resume operations, Reuters reported overnight, citing people it did not identify.

Reuters reported Tuesday that under the preliminary agreement, ZTE would pay a $1 billion fine in addition to another $400 million in an escrow in case it commits future sanctions violations.

"At about 6 a.m. this morning, we executed a definitive agreement with ZTE", Ross told CNBC. Hopefully this time ZTE respects the wishes of the USA government to not sell to banned countries and ultimately this may lead to China and the US finally coming to a real agreement on the larger on-going trade discussion.

The deal also includes a suspended 10-year ban on buying US components that could be activated by any violations, people familiar with the arrangement told Reuters. Besides having to pay a huge fine, ZTE must also allow unrestricted visits meant to verify that United States components are being used as claimed by the company. A ZTE spokesman couldn't be reached for comment. The U.S. position has been that the fine is a law enforcement action, which should not be included in the discussions around trade. The U.S. also needs China's help negotiating the denuclearization of North Korea ahead of a June 12 summit between President Donald Trump and North Korea's Kim Jong Un.

At the weekend, the company is believed to have agreed to the plan although a "settlement" document has yet to be signed.

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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".

Citing "sources familiar with the matter", Reuters disclosed Tuesday that ZTE could soon be allowed to buy the US products.

As part of the deal, sources said, ZTE promised to replace its board and executive team in 30 days.

Regardless of those talks, the Trump administration is facing a deeply hostile reaction from Congress, where there is bipartisan opposition to the deal. "It would also allow unfettered site visits to verify that USA components are being used as claimed by the company". Smaller makers of optical components, including Oclaro and Acacia, rely more heavily on ZTE's business.

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