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

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

But then in May, US president Trump had an apparent change of heart; despite election promises of prioritizing US jobs, Trump publicly anxious that ZTE's near-bankruptcy was causing there to be "too many jobs in China lost".

According to a recent CNBC article, US Secretary of Commerce Wilbur Ross has called the deal "the strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls". Last year, ZTE settled the case with the U.S. government, promising to pay $890 million in fines and punish dozens of ZTE executives who orchestrated the illicit technology sales.

He noted that if the company does violate it again, in addition to the billion dollars they are paying the USA up front, it would have "to put $400 million into escrow". ZTE will have to welcome a team of "special compliance coordinators" for a period of 10 years to ensure that it is adhering to the terms of the new agreement.

"By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China", Chuck Schumer, the US Senate Democratic leader, said in a statement.

Arkansas Senator Tom Cotton has a cautious approach to the Chinese telecom companies ZTE and Huawei.

Recently, ZTE has signed a preliminary agreement that would lift the ZTE ban imposed by the US Department of Commerce that prevented US companies from buying electronic components from Chinese suppliers. They will simply monitor the compliance of the company with the USA export control laws.

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Before April 16, a settlement with Washington keeping the ban from going into effect had been in place since March 2017, after ZTE agreed to punish those responsible for covering up its sales to Iran and pay about two-thirds of a US$1.2 billion penalty. The company was subverting USA laws by buying United States components, incorporating them into its own devices which it exported to Iran and North Korea.

The Trump administration stuck a deal Thursday with Chinese telecom ZTE to let the company do business in the USA even though it previously violated sanctions against Iran.

Ross also said that the company will have to replace its entire management and board of directors as part of the deal. The US Commerce Department is also appointing watchdog officers to monitor ZTE's compliance with US export laws for the next decade. This compromise would allow the company to once again use USA -made components in their products-although at a large cost.

The agreement is likely to draw criticism from some US lawmakers, who note intelligence agencies have warned ZTE's technology and phones pose a major cybersecurity threat.

The Commerce Department denial order prevented ZTE from utilizing key technology from USA suppliers like Qualcomm and and Broadcom, making it hard to produce smartphones or telecommunications equipment. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .

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