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United States reaches deal with China's ZTE, commerce secretary says

11 June, 2018, 17:43 | Author: Lawrence Cooper
  • ZTE signs preliminary agreement to lift US ban

In its settlement with Washington, ZTE agreed to pay a $1 billion fine, allow a compliance team chosen by the United States to be embedded in the company and replace its executive team and board of directors.

According to the Hong Kong-based English-language daily, "The reprimand and forfeiture of bonuses were part of the original settlement that ZTE had reached with the USA government".

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. He later tweeted that the ZTE talks were "part of a larger trade deal" being negotiated with China. Secretary of Commerce Wilbur Ross said in a press release, "We will closely monitor ZTE's behavior". In addition, the company will put $400 million into an escrow account, which the US can access if it finds ZTE to be out of compliance with the agreement.

Neither the Commerce Department, the White House nor ZTE immediately responded to requests for comment.

Ross, speaking about the agreement on CNBC on Thursday, said he did not think the arrangement would have any effect on tariff talks with China. China has vowed to retaliate on everything from US soybeans to airplanes, and said it will abandon its commitments if the USA follows through on its tariff threat. Post calculations of USA parts in the company's products would also have to be on a public website.

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ZTE was fined US$1.2 billion in March 2017, but in April, Washington banned the sale of crucial United States components to the firm after finding it had lied multiple times and failed to take action against employees responsible for sanctions violations.

One of the USA companies caught in the crossfire is Qualcomm Inc, whose products account for the lion's share of chips inside ZTE smartphones.

ZTE's survival has been a topic of discussion in high-level U.S. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .

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. Qualcomm rose 2 per cent. In a memo to staff, Chairman Yin Yimin said ZTE would look to get back into business as soon as possible, and hold those responsible for the breach accountable, a company source said.

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