ZTE agrees to 'strictest' US Commerce settlement

ZTE signs preliminary agreement to lift US ban

ZTE will reportedly pay over $1 billion to lift US ban

The Commerce Department, which oversees sanctions enforcement, told Reuters on Tuesday that "no definitive agreement has been signed by both parties".

The White House didn't respond to a request for comment.

The agreement requires ZTE to pay almost $1 billion Dollars, as well as keep $400 million of penalty in escrow, or in custody of a third party, before the Commerce Department's Bureau of Industry and Security (BIS) will remove the company off of its Denied Persons List.

Ross announced the denial order in April, claiming ZTE made false statements about employee disciplinary actions related to the illegal shipping of telecom equipment to Iran and North Korea.

As part of the agreement, ZTE has promised to replace its current board of directors and executive team within thirty days and will allow the company periodic inspections to verify that the locally manufactured components are being used as agreed.

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.

US goods exported to China a year ago totaled $130 billion while Chinese imports to the USA totaled $506 billion. The department has assigned compliance coordinators to work on the case and monitor if ZTE will still violate laws, at least, for the next ten years. The ban also hurt USA companies like Qualcomm that supply ZTE. The move will allow the company to get back into the business.

"We are literally embedding a compliance department of our choosing into the company to monitor it going forward", Ross said.

Chinese President Xi Jinping personally intervened with US President Donald Trump, who instructed Ross to find a solution.

The Trump administration yesterday announced a deal to allow the telecommunications company to resume buying from USA companies, eliminating a key sticking point for the two nations in their talks on trade. Further fees could be assessed for a grand total as much as $1.7 billion.

ZTE will also be required by the new agreement to retain a team of special compliance coordinators selected by and answerable to BIS for a period of 10 years.

According to the Hong Kong-based English-language daily, "The reprimand and forfeiture of bonuses were part of the original settlement that ZTE had reached with the United States government". "It's unprecedented to have USA agents as monitors".

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