USA reveals ZTE settlement details, ban still in place

A woman stands outside a building of ZTE Beijing research and development center in Beijing China

A woman stands outside a building of ZTE Beijing research and development center in Beijing China

The Chinese smartphone and network equipment maker had been caught selling goods and services to North Korea and Iran, violating USA sanctions.

It would also ban USA government agencies from purchasing any devices or services from ZTE or Huawei, another major Chinese telecom firm, or using government loans to subsidize any subsidiaries or affiliates of the two companies.

After Mr. Trump stepped in, the Commerce Department changed its mind and ordered the $1 billion fine, and said the USA would send a compliance team to oversee the company's operations.

Last week, the United States reached a deal with the Chinese technology giant that would remove the ban.

It's unclear how a showdown would play out, but ZTE said Tuesday that it will resume trading shares Wednesday, ending a two-month suspension. The idea of ZTE being used as a bargaining chip in trade negotiations with China angered lawmakers, who view the company as a national security issue.

North Korea: Trump Agreed to Lift Sanctions
She said the global community was at the beginning of a very long process: "The detail is still to be worked through". So you never know. "So talking about withdrawal of U.S. forces is something that needs to be really thought through".

ZTE has more than a dozen senior vice presidents, which is a level below executive vice president, said the company source who declined to be identified as they were not authorized to speak to the media.

Under the settlement, ZTE will pay a total civil penalty of $1.7 billion, including $361 million already paid as part of a March 2017 agreement, the $1 billion fine and the $400 million that will go into escrow. The department also will select a monitor, known as a special compliance coordinator, within 30 days to report on compliance by ZTE and its affiliates worldwide for 10 years. Its Shenzhen shares fell by their 10 per cent limit to 28.18 yuan after it confirmed details of the agreement publicized by the US government on Monday.

The share falls in Shenzhen and Hong Kong were widely expected. Senators on both sides of the aisle criticized Trump for calling on the Commerce Department to reverse its position, with many saying ZTE poses a risk to USA national security.

On Tuesday, senators on both sides of the aisle spoke out against Trump's deal, which is believed to have been made to soften a potential trade war in China, following the announcement of steel and aluminium tariffs on the country's exports. After all, a Congressional report from 2012 called ZTE and Huawei threats to USA national security. North Korea is largely dependent on economic ties with China, where leaders had claimed that absent a ZTE deal, the telecom giant would collapse.

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