China's ZTE signed preliminary agreement to lift USA ban

ZTE signs preliminary agreement to lift US ban

ZTE will reportedly pay over $1 billion to lift US ban

The Trump administration has walked a fine line, stressing that any ZTE deal is separate from ongoing trade negotiations with China.

Ross said on Thursday the penalty is the largest the Commerce Department has ever levied.

He noted that if the company does violate it again, in addition to the billion dollars they are paying the United States up front, it would have "to put $400 million into escrow". The company will also have to keep a team of "compliance coordinators" for the next 10 years, which will be selected by the DoC.

US Commerce Secretary Wilbur Ross defended the new agreement, saying in a statement: "We will closely monitor ZTE's behavior".

The Chinese smartphone and telecom company ZTE will officially be allowed to do business in the USA again. Instead of disciplining all employees involved, the department said, ZTE had paid some of them full bonuses and then lied about it.

Reuters reported exclusively on Tuesday that ZTE had signed a preliminary agreement with the Commerce Department, along with the fine and other terms. In response to this situation, the U.S. government chose to prohibit the companies of that country for seven years to purchase components of the Chinese corporation, a measure that forced ZTE to temporarily cease its activities in the cell phone sales market. So the U.S. went nuclear on ZTE, imposing a seven-year ban on USA companies selling technology to the Chinese firm.

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ZTE also did not immediately respond to requests for comment.

Trump tweeted last month that he told Commerce officials to find a way for ZTE to resume operations, later suggesting penalties of a $1.3 billion fine and changes to its board and top management. The company was allowed continued access to the USA market under the 2017 agreement.

The ban in effect nearly destroyed ZTE as it now relies on many components from American companies.

Washington and Beijing have pursued a halting series of trade talks, with Trump demanding a $200 billion reduction in its trade deficit with China.

The terms outlined by Reuters are similar to the those Trump outlined in a May 25 tweet, saying that ZTE might reopen "with high level security guarantees, change of management and board, [and it] must purchase us parts and pay a $1.3 Billion fine".

But it came shortly after Chinese officials offered to buy an additional $70 billion in USA goods to cut the trade deficit, moving toward meeting one of Trump's central demands on trade. This includes once again being able to receive Qualcomm SoCs and the Android OS for their smartphones, along with the numerous components used in their networking gear.

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