US, China reach $1.4 billion sanctions deal over ZTE: Commerce Dept


US Commerce Secretary Wilbur Ross said his department will end sanctions against embattled Chinese telecom equipment maker ZTE, resolving one issue that has increased tensions between Washington and Beijing.

The company was found to have shipped its sophisticated telecommunications equipment to both nations and to have repeatedly lied to USA investigators about its actions.

In addition to the $1 billion penalty, the agreement requires ZTE to place $400 million in escrow to cover 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.

To date, total penalties have already reached about $2.29 billion.

The move eases a seven-year ban on ZTE buying American parts, which Commerce levied in April.

The compliance team will be in place for 10 years and monitor "on a real-time basis" ZTE's compliance with U.S. export control laws, the Commerce Department said in a release announcing the settlement.

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According to reports out of China, ZTE has been making plans to resume manufacturing within hours from the official lift of the us embargo, which deprived it of crucial usa -made components including SoCs, radio chips, and software.

ZTE did not respond to repeated requests for comment. US President Donald Trump came under criticism for announcing last month that he would reverse the ban, with some lawmakers warning that payments do not address security concerns over Chinese telecommunications equipment.

Ross called ZTE's actions a "world-class embarrassment", and said that the US deal with ZTE imposes the "most strict" compliance ever on any company. ZTE is also being forced to replace its board of directors and senior leadership. Now ZTE has got to pay a $1 billion fine and submit to USA oversight. But it seems ZTE is definitely in a better position now than it was just a few weeks ago. This compromise would allow the company to once again use US -made components in their products-although at a large cost.

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

Under those terms, ZTE could no longer use any United States made components or software, effectively being banned from installing Qualcomm chipsets or Android software on their phones.

DUSTIN DWYER, BYLINE: There had been word in recent days of a possible deal between ZTE and US regulators.