Some officials involved with the negotiations have said they were unrelated to the ongoing trade talks between the US and China, but others have suggested that ZTE was a bargaining chip for the USA and that China could make other concessions now that ZTE has won a reprieve.
The Chinese smartphone and telecom company ZTE will officially be allowed to do business in the US again. ZTE was assessed $2.29 billion in civil and criminal penalties by the Commerce Department and other USA agencies since past year.
The deal includes a $1 billion penalty against ZTE, and a compliance team, chosen by the USA, will be embedded at the company, Commerce Secretary Wilbur Ross told CNBC Thursday morning. In addition, the company will put $400 million into an escrow account, which the US can access if it finds ZTE to be out of compliance with the agreement. In the event that the company violates the terms of the new agreement, this money will automatically go to the U.S government.
The Department of Commerce notes this is the largest penalty it has ever levied on a single company. The United States has reached a deal with the Chinese telecommunications giant that includes a $1 billion fine, according to Commerce Secretary Wilbur Ross. "If they commit any further violations, we would again be able to deny them access to USA technology as well as collect the additional $400 million in escrow".
The U.S. blocked ZTE's access to U.S. suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.
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Yin's letter said the issue will not be fully resolved until the US government approves the agreement and unspecified conditions are met, according to the Post.
Now, though, Reuters is reporting that a deal has been negotiated that would allow ZTE to get back in business with the export ban behind them, but with some big changes.
The company announced it was shutting down just weeks after the ban was announced.
ZTE, which sources up to 30 per cent of its components from the USA, paused its operations as a result and claimed its survival was at risk. Separately, Qualcomm is trying to get Chinese approval for its pending $44 billion acquisition of NXP Semiconductors NV. Shares of Qualcomm Inc QCOM.O rose 2 per cent to US$61.255, while NXP jumped 6.2 per cent to US$121.60.