US, China Reach Deal to End Sanctions on Telecom Giant ZTE

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The United States and China have reached a deal that allows the Chinese telecommunications giant ZTE Corp.to stay in business in exchange for paying an additional $1 billion in fines and agreeing to let USA regulators monitor its operations.

ZTE had been facing a seven-year ban on doing business in the U.S. That's because it violated an agreement with the U.S. after it got caught evading sanctions against North Korea and Iran.

However, Commerce Department spokesman James Rockas told Reuters that "no definitive agreement has been signed by both parties".

ZTE did not immediately respond to requests for comment today.

Ross, speaking on CNBC on Thursday, said that ZTE also must put $400 million in escrow, which will be forfeited if there are any violations of the agreement.

William Reinsch, a trade expert at the Center for Strategic and International Studies, said the ZTE offer suggested Beijing could have concessions to Trump on trade but it remained unclear whether these were of equal value. ZTE was assessed $2.29 billion in civil and criminal penalties by the Commerce Department and other USA agencies since past year.

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WILBUR ROSS: It imposes the most strict compliance that we've ever had on any company, American or foreign.

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. ZTE purchase key components from US -based companies like Intel and Qualcomm. The Department of Commerce said that the measures and fine come in addition to the $892 million in penalties ZTE paid back in March 2017.

It's been a really rough couple of months for ZTE, but according to new reports, the company's troubles may soon be over as it has apparently almost reached a deal with the United States government.

The settlement in March 2017 was reached after ZTE was found to have violated a US trade embargo by engaging in a multi-year conspiracy to use equipment that originated in the United States for telecommunications networks in Iran.

Ross said going forward, the deal imposes the "most strict" compliance on ZTE.

"The total deal is $1.4 billion". It also requires a US-chosen team of compliance experts to be embedded into the company, who will report directly to the next chairman. The Chinese authorities' involvement, on the backdrop of ongoing trade negotiations with the US, have saved ZTE from almost-certain death.

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