No agreement yet between US, China on ZTE: Trump aide

Eileen GuzmanJun 08, 2018

Ross said the US will install its "own compliance people" to monitor the company and shareholders will bring in new management and board.

Commerce Secretary Wilbur Ross says the U.S. has struck a deal with ZTE to end sanctions.

The ban amounted to a death sentence for the company, which relies on us parts.

It will be required to put $400 million in escrow, which it would forfeit if it violates USA sanctions on Iran or North Korea again. Meanwhile to ensure ongoing compliance, ZTE is being required to put a further $400M in escrow, which would be forfeit if they violated U.S. export regulations again.

Both Republicans and Democrats criticized Trump's willingness to make a deal on ZTE. The deal will allow the company to restart operations after it pays a $1 billion fine and installs US compliance officers to monitor its activity. Secretary of Commerce Wilbur Ross said in a press release, "We will closely monitor ZTE's behavior".

Senate Democratic leader Chuck Schumer called the agreement "a 180-degree turn away from the president's promise to be tough on China".

Eric Altbach, a former deputy assistant U.S. Trade Representative who spent years negotiating with the Chinese, said the U.S. may have agreed to go easier on ZTE in exchange for China approving an American company's acquisition of a Chinese firm.

The probe found that ZTE bought USA components and incorporated them into its equipment, illegally shipped them to Iran, and devised elaborate schemes to hide the illegal activity.

Under the terms of the settlement, ZTE is paying an immediate $1B fine, on top of the existing $892M in fines they've already paid related to their misconduct in this case.

Reuters reports that "ZTE promised to replace its board and executive team in 30 days". Post calculations of United States parts in the company's products would also have to be on a public website.

Chinese telecoms company ZTE will likely continue to exist, thanks to a deal brokered between it and the United States government today.

"The objective was not to put ZTE out of business", Treasury Secretary Steven Mnuchin said. Its R&D centers are in China, the U.S., Europe, Japan and Canada.

Reviving ZTE has been a personal focus for President Trump, whose government is in the middle of broader trade negotiations with the Chinese government.

"It doesn't really move the ball forward on the deeper structural issues in U.S".

US goods exported to China a year ago totalled $130 billion while Chinese imports to the USA totalled $506 billion.

ZTE supplier Oclaro Inc was up 1.3 percent while Acacia Communications Inc was down 0.6 percent.

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