Trade war: United States reaches deal with Chinas phone maker ZTE Corp

Trade war: United States reaches deal with Chinas phone maker ZTE Corp

Trade war: United States reaches deal with Chinas phone maker ZTE Corp

The Commerce Department said Thursday that ZTE must also put $400 million in escrow - a sum that it would forfeit if it violated Thursday's agreement.

If you'll recall, last month ZTE was handed an export ban as the result of not following the terms of a court case years ago. The deal also includes a new 10-year ban that is suspended unless there are future violations.

In addition, a compliance team chosen by the United States will be embedded at ZTE and the Chinese company must change its board and executive team.

Commerce Secretary Wilbur Ross on Thursday announced a deal with Chinese telecommunications company ZTE that includes a $1 billion fine - a move that may indicate progress in high-stakes trade talks between the USA and China.

"We will closely monitor ZTE's behavior", Commerce Secretary Wilbur Ross said in a statement.

He said the Commerce Department's $1.4 billion fine, including $400 million in escrow, brings USA penalties between last year and this year to $2.3 billion.

"This is a pretty strict settlement, the strictest and largest fine that has ever been brought by the Commerce Department against any violator of export controls", Ross said in an interview with CNBC.

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ZTE did not immediately respond to requests for comment on Thursday. Ross, speaking on CNBC today, said that a compliance team picked by the USA will be embedded at ZTE.

Ross said the United States will install its "own compliance people" to monitor the company, and shareholders will bring in new management and board.

The May ban came after the government determined that ZTE violated terms of a 2017 settlement by failing to fire employees involved with illegally shipping U.S. equipment to Iran and North Korea.

In April, the Commerce Department barred ZTE from importing American components for seven years, having concluded that it deceived USA regulators after it settled charges last year of sanctions violations: Instead of disciplining all employees involved, Commerce said, ZTE had paid some of them full bonuses and then lied about it. That left a US deficit of more than $375 billion.

U.S. President Donald Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra $70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies. The agreement signals that China will be more likely to approve the $43 billion acquisition of NXP by Qualcomm Inc., a deal that has been pending for 18 months.

The U.S. Commerce Department has struck a deal with China's ZTE, paving the way for the telecom giant to again do business with U.S. companies. Qualcomm rose 2 per cent.

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