ZTE signs preliminary agreement to lift USA ban

ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

The fine announced Thursday comes on top of $892 million ZTE already has paid for breaking USA sanctions by selling equipment to North Korea and Iran.

"Now, if they do violate it again, in addition to the billion dollars they're paying us right up front, we have them put $400 million in escrow so the total deal is a billion 400 million", Ross said.

The Trump administration has struck a "definitive" deal with Chinese tech giant ZTE, Commerce Secretary Wilbur Ross announced Thursday, over strong congressional objections.

ZTE has become a critical part of the broader discussions between China and the United States, the two largest economies in the world, over trade tensions and whether the two countries can prevent a trade war that could involve billions of dollars' worth of tariffs.

The telecommunications equipment maker has been on life support since a seven-year US ban was imposed in April, breaking a 2017 agreement reached after it was caught illegally shipping goods to Iran and North Korea. When U.S. regulators found that the company had not complied with the terms of the agreement, they cut off ZTE from its U.S. parts suppliers, a move described as a "death sentence" by the company, which employs 70,000 people in China.

ZTE will also be required by the new agreement to retain a team of special compliance coordinators selected by and answerable to BIS for a period of 10 years.

The denial order put ZTE's future into jeopardy because it relies on USA components for so many of its products. Although not specifically stated, the announcement implies that ZTE will no longer be banned from selling technology to other countries and that American companies will no longer be banned from selling components to ZTE, either.

The Commerce Department action came after President Trump tweeted earlier this month that he planned to help ZTE because "too many jobs in China" would otherwise be lost.

ZTE also agreed to change its executive team and board within 30 days. The sources said that ZTE has also agreed to allow US representatives to make site visits without coordinating with Chinese government officials, as required by a non-public agreement between the countries. "This egregious behavior can not be ignored", Secretary of Commerce Wilbur Ross said in a press release at the time.

A sign for the ZTE booth was seen at the 2014 Mobile World Congress, the world's largest mobile phone trade show, in Barcelona, Spain.

The immediate ramifications of this deal are that although ZTE is becoming cash-poorer, this will allow them to resume day-to-day business operations and get the business moving again.

The problems with ZTE extend beyond its violations of sanctions.

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