United States strikes ZTE deal, commerce secretary announces, but congressional critics object

ZTE signs preliminary agreement to lift US ban

After a personal plea from Chinese President Xi Jinping to help the company get back into business, President Donald Trump said last month that the punishment of ZTE would lead to "too many jobs in China lost", directing the government to fix the situation.

Reuters says that the deal will include ZTE paying a $1 billion fine for violating usa sanctions, as well as putting additional funds in escrow in case of any future violations. Further, the sources added that the Commerce Department plans to amend its 2017 settlement agreement and count the $361 million ZTE paid as a part of that.

The Trump administration stuck a deal Thursday with Chinese telecom ZTE to let the company do business in the USA even though it previously violated sanctions against Iran.

"At about 6 a.m. this morning [June 7], we executed a definitive agreement with ZTE", US Commerce Secretary Wilbur Ross told US business network CNBC.

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

ZTE ceased major operations earlier this year because of the ban.

ZTE's survival has been a topic of discussion in high-level US-China trade talks.

ZTE did not respond to repeated requests for comment.

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The new agreement will force ZTE to replace its top management and board, Ross said.

It had been speculated that any deal could be scuppered by resistance from both Democrats and Republicans in US Congress, who believe Trump is bowing to pressure and that ZTE could be a possible threat to national security.

The tentative agreement is under review by both US and Chinese officials and could fall apart under final reviews, according to one of the people, who spoke on condition of anonymity to discuss internal deliberations. It agreed to pay $890 million in fines, dismiss four employees, and discipline 35 others by either denying them their bonuses or reprimanding them. We will closely monitor ZTE's behavior. And the company will be required to host and pay for a US-selected compliance team that will oversee the company's compliance over the term of the agreement. They will simply monitor the compliance of the company with the USA export control laws.

The June pact is costly for a company with revenues of US$17 billion a year.

Since then, President Trump and his friends have stepped in to help ZTE stay alive, even though there is bipartisan agreement that the USA shouldn't.

The suppliers include Qualcomm, Broadcom, and Intel Corp, as well as smaller optical component makers Acacia Communications Incand Oclaro.

The company was fined $1.2 billion previous year.

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