The U.S. has struck a deal with Chinese telecommunications giant ZTE to get it back in business, but first the company will need to pay a record-large fine, Secretary of Commerce Wilbur Ross revealed Thursday.
“At about 6 a.m. this morning, we executed a definitive agreement with ZTE. And that brings to a conclusion this phase of the development with them,” Ross revealed in an interview on CNBC Thursday morning, adding, “We still retain the power to shut them down again.”
The company will be required to pay a total fine of $1 billion, put another $400 million in escrow to be forfeited should ZTE violate the terms of the agreement and permit necessary inspections by a U.S.-selected compliance team to impose “the most strict compliance that we’ve ever had on any company, American or foreign,” the secretary explained.
ZTE will also need to replace its senior management.
“I’m very, very happy with this arrangement,” Ross said, adding, “It is the strictest and largest fine that has ever been brought by the Commerce Department.”
The Trump administration imposed a crippling components export ban, lasting seven years, prohibiting American firms from selling parts to the Chinese telecom company in April after it violated a 2017 deal with the U.S. government following an admission of guilt concerning alleged sanctions violations, specifically selling products containing American technology to Iran and North Korea.
As ZTE products include components produced by American companies like Qualcomm and Intel, the ban hit the Chinese company hard. Devastated by the ban, the company halted most of its operations a few weeks later. Shortly thereafter, President Donald Trump announced on Twitter that his administration was working with China to get ZTE “back into business.” (RELATED: Trump Says He’s Working With Beijing To Get A Troublesome Chinese Company ‘Back Into Business’)
The president received bipartisan criticism from both sides, with many accusing the president of yielding ground on a critical issue to secure a deal to end the dispute with Beijing over trade. (RELATED: China Warns The US Will Not See Any Changes On Trade If Trump Pushes Ahead With Tariffs)
The U.S. and China are still in negotiations about a broader agreement on trade, but Trump’s tariffs threaten to tank any potential deal.
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