ZTE slumps after agreeing $1 billion fine and major overhaul

Howard TerryJun 14, 2018

Once the defense legislation passes the Senate, it must be reconciled with the House version of the bill before it can be sent to the White House for Trump's signature or veto.

The ban, which has prevented ZTE from buying the USA components it relies on to make smartphones and other devices, will not be lifted until ZTE pays a fine and places $400-million more in an escrow account in a US -approved bank. It would hurt ZTE for sure, but keep the company in business.

It's expected that this new amendment will make its way into the National Defense Authorization Act which is also expected to make its way through Congress and finally signed into law by President Trump.

ZTE is back in business: What now?

Trump's administration struck a deal with ZTE last Thursday, which allowed the company to continue buying components from the USA, under supervision, with a $1 billion fine. It's a stunning turnaround, though it had been signalled for some weeks. -China relations, national security, trade and President Donald Trump's ties to fellow Republicans in the Senate.

While ZTE almost shut down, it got a reprieve from President Donald J. Trump, who wanted the Commerce Department to lift the ban. However, it wouldn't be the first time the President chose the unexpected route. But the Trump administration and the Commerce Department later announced a deal struck with ZTE that would again allow it to access US-manufactured parts.

Republican and Democratic senators who support the original ZTE punishments feel strongly that ZTE's flagrant violations deserve the ultimate punishment, and not a "slap on the wrist" fine.

"ZTE said they couldn't remain in business, or at least not remain anything other than a cell phone hand-held business, if the denial order from March was in effect". Under the deal, ZTE also agreed to allow the US government easier access to verify the company's shipments for items subject to the regulations. The terms of that deal stipulate that the company has to install a whole new set of directors, embed a US-chosen compliance department and pay a $1 billion penalty. "For me, it was more than that". The move by senators on Monday to include it in the annual must-pass defense bill came just hours before Trump meets with North Korean leader Kim Jong Un.

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