US Suspends Tech Ban In Exchange For Record Fines & US Oversight

China's ZTE said it ceased major operations last month due to the ban

China's ZTE said it ceased major operations last month due to the ban

That report said ZTE would have to pay a total of $1.7 billion in penalties, with a preliminary deal including a $1 billion fine and $400 million in escrow in case of future violations.

The terms of the deal include a $1 billion penalty against ZTE and dictate that the company install a US chosen compliance team.

Commerce Secretary Wilbur Ross says the US has struck a deal with Chinese telecom giant ZTE to end crippling American sanctions.

The company settled criminal and civil charges a year ago in connection with violating USA sanctions against Iran and North Korea. Trump has countered that USA companies were also hurt by the ban because they could no longer sell parts to the firm.

ZTE's survival has been a topic of discussion in high-level US-China trade talks. Although not specifically stated, the announcement implies that ZTE will no longer be banned from selling technology to other countries and that American companies will no longer be banned from selling components to ZTE, either.

Under the new agreement, ZTE is also subject to changes in its corporate leadership, as well as strict BIS compliance requirements.

ZTE ceased major operations earlier this year because of the ban.

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US goods exported to China a year ago totaled $130 billion while Chinese imports to the USA totaled $506 billion.

According to a Commerce Department filing from April, ZTE never reprimanded its 35 lower-level employees, and worse, it made false statements to the Department about its compliance.

The Trump administration has walked a fine line, stressing that any ZTE deal is separate from ongoing trade negotiations with China. Should ZTE break any of the terms of the new agreement with the US during its ten-year probationary period, that money will be paid out to the USA government.

Back in April, as punishment for continued violations of a previous export ban settlement with the US, the US Department of Commerce's Bureau of Industry and Security enacted a denial order against ZTE.

Ross, speaking about the agreement on CNBC today, said he did not think the arrangement would have any effect on tariff talks with China.

US Commerce Secretary Wilbur Ross, who is now in Beijing for trade talks with China and told CNBC that a deal worth $1.4 billion had been struck.

Over the weekend, ZTE signed the agreement in principle drawn up by the United States, but the amended settlement agreement has not yet been signed, sources said. It has enjoyed the backing of Chinese President Xi Jinping, who has been negotiating with Trump over a broader trade agreement.

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