Commerce Secretary: U.S. reaches deal with China’s ZTE

Commerce Secretary: U.S. reaches deal with China’s ZTE

Commerce Secretary: U.S. reaches deal with China’s ZTE

Trump previously highlighted the fact that ZTE buys a tremendous amount of equipment from American companies and claimed an agreement to revive the company would be just a small component of an overall trade deal with China.

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. But under the deal announced Thursday, ZTE will pay an additional $1 billion penalty and put another $400 million in escrow to cover possible future violations.

The compliance team will report jointly to the new ZTE chairman and the US Commerce Department.

In this file photo taken on June 2, 2018, Commerce Secretary Wilbur Ross leaves a hotel in Beijing. The order effectively cut off the company off from receiving most United States technology, and as a result of this ban, ZTE's operations, which heavily relied on importing both hardware and software from the U.S., ground to a halt, putting the future of the company in doubt. Their function will be to monitor ZTE's compliance with US export control laws. This settlement is in response to the U.S. Commerce Department's Bureau of Industry and Security (BIS) denial order that was imposed as a result of ZTE violating its March 2017 settlement agreement. At the same time, it continued to ask the USA government to lift the ban.

The agreement is controversial: ZTE had been sanctioned by the USA for doing business with North Korea and Iran.

In case you haven't been following along, ZTE previously agreed to certain conditions back in March 2017 after they were found to have ignored US sanctions and shipped products to both North Korea and Iran. Key US components-such as glass from Corning, processors from Qualcomm, and software from Google's Android-were no longer available to the company, meaning it could not make many of its phones. The US Commerce Department is also appointing watchdog officers to monitor ZTE's compliance with US export laws for the next decade. Ross had been instructed to look into easing restrictions on ZTE by President Trump, who had received a personal request from Chinese President Xi Jinping.

ZTE's return to the USA market is good news for several American companies. It has a small but rising share of the smartphone business in the US.

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

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