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

Friday, 08 Jun, 2018

The United States and China have reached a deal that allows the Chinese telecommunications giant ZTE Corp.to stay in business in exchange for paying an additional $1 billion in fines and agreeing to let USA regulators monitor its operations.

Mr. Ross said the compliance team would be staffed by Chinese-speaking US agents and would report to ZTE's new management as well as the Commerce Department. He later tweeted that the ZTE talks were "part of a larger trade deal" being negotiated with China. WIthout access to these American companies, ZTE essentially can't do business.

The U.S. and China are in a race to build the first 5G network, in part because it means jobs.

In April, Ross's department re-activated sanctions against ZTE, claiming that ZTE had been making false statements about measures the company had agreed to take against employees running a unit that was doing business with Iran in violation of sanctions.

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 us parts and pay a $1.3 Billion fine".

"The total deal is $1.4 billion". Overall this an unprecedented agreement with the BIS in both the size of the fines and the overall scope of the compliance monitoring.

Under the deal, ZTE will change its board and management within 30 days, pay a $1 billion fine and put an additional $400 million in escrow.

Following the ban on selling USA -made hardware (and potentially software) to ZTE earlier this year, it appears that the company may have reached a compromise with the us government, according to Reuters.

Commerce Secretary Wilbur Ross announced a deal with Chinese telecommunications company ZTE amid U.S.

In April, the Chinese group was cut off from United States technology products for violating U.S. sanctions against North Korea and Iran - measures which threatened to put ZTE out of business. The move will allow the company to get back into the business.

ZTE did not immediately respond to requests for comment on Thursday. Chinese telecom firms like ZTE and Huawei are suspected of having ties to the Chinese military, and their products already are banned on many USA military bases.

The terms, they said, were in line with Reuters reporting on the USA demands Friday.

USA chipmaker Qualcomm has been trying to buy NXP Semiconductors of the Netherlands, but given the company's global reach, the deal had to be approved by numerous countries' antitrust regulators, including China's. "The ZTE case was a thorn in the side for China ..."

ZTE supplier Oclaro Inc rose nearly 1% while Acacia Communications Inc. was down 1.5%. Both companies' share prices rose Thursday, with NXP up more than 6 percent in midday trading.