Economy

ZTE Sings An Agreement To Restart Its Operations In The US Market

ZTE Sings An Agreement To Restart Its Operations In The US Market

The Commerce Department blocked ZTE's access to USA 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.

"The sources requested anonymity because they were not authorized to publicly discuss the matter".

President Donald Trump's administration has reached a "definitive agreement" to end crippling sanctions on Chinese telecom giant ZTE Corp., Commerce Secretary Wilbur Ross revealed on Thursday. This will allow the United States to claim a total penalty of as much as $1.7 billion. It's not clear that Congress can do anything to stop the deal, though a bipartisan group of senators has signed on to legislation that would make it more hard for ZTE to operate in the U.S. Meanwhile, on the business side, some U.S. companies got a boost from the announcement.

"The President just caved on a deal with ZTE, a Chinese company that our intelligence professionals say poses a national security threat", Rep. Adam Schiff (D-Calif.) tweeted. ZTE reached an agreement to turn over $1.19 billion and punish executives involved in the scheme, but in April the US determined that the company hadn't lived up to its promises.

While the details of last weekend's deal have yet to be revealed, it is understood that ZTE has promised to replace its board and executive team in 30 days.

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.

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ZTE's resuscitation with USA help has met strong resistance in Congress, where both Democrats and Trump's fellow Republicans have accused him of bowing to pressure from Beijing to help a company that has been labelled a threat to United States national security. "They will pay for those people", Mr. Ross said.

Immediately after the deal was announced, Republican senator Marco Rubio lashed out at the agreement, calling it a "very bad deal" on Twitter, and vowing to continue his push for congressional action to block it.

Back in April, the United States government announced a complete and total ban of any USA components manufacturers from selling to Chinese telecom and handset giant, ZTE (HKG:0763).

In April, Washington banned the sale of crucial USA components to the company after finding it had repeatedly lied and failed to take action against workers responsible for the sanctions violations. Shenzhen-based ZTE has a subsidiary in Richardson, Texas. Instead of disciplining all employees involved, the department said, ZTE had paid some of them full bonuses and then lied about it. The U.S.is maintaining its 10-year export ban on ZTE, but the ban is indefinitely suspended and is likely to remain suspended if ZTE complies with the U.S. trade laws.

That was a serious problem for ZTE because the company is heavily dependent on U.S. components for its smartphone business. "ZTE misled the Department of Commerce". Both ZTE and Huawei devices were even banned from being marketed in U.S. military bases.

ZTE must hire a new compliance team selected by the U.S. Commerce Department for a 10-year term.