ZTE reaches billion dollar deal with USA government

ZTE reaches billion dollar deal with USA government

ZTE reaches billion dollar deal with USA government

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.

U.S Senate Democratic leader Chuck Shumer quipped, "By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China". The government will suspend the 10-year ban but it can activate the ban if there are any 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 told CNBC this morning that the USA has struck a deal to lift sanctions on the electronics giant.

ZTE pleaded guilty a year ago to conspiring to evade US embargoes by buying USA components, incorporating them into ZTE equipment and illegally shipping them to Iran, paying almost $900 million in fines.

Ross said today the penalty is the largest the Commerce Department has ever levied.

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Neither the Commerce Department, the White House nor ZTE immediately responded to requests for comment. "It's unprecedented to have USA agents as monitors ..."

Ross said the US will install its "own compliance people" to monitor the company and shareholders will bring in new management and board. Hopefully this time ZTE respects the wishes of the US government to not sell to banned countries and ultimately this may lead to China and the USA finally coming to a real agreement on the larger on-going trade discussion.

China-based ZTE has reportedly signed an agreement in principle that would lift a U.S. Commerce Department ban on the company which barred it from buying from U.S. suppliers. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .

The sources said that ZTE has also agreed to allow USA representatives to make site visits without coordinating with Chinese government officials, as required by a non-public agreement between the countries. The team will monitor ZTE's adherence to US export control laws - an arrangement the department described as the most stringent requirements it has ever imposed. That left a USA deficit of more than $375 billion.

Do you think this agreement will act as a good way to keep ZTE in check?

Shares of Qualcomm Inc rose 2 percent to $61.255, while NXP jumped 6.2 percent to $121.60. "I hope that we can devote ourselves to hard work and innovation and get the company back into business as soon as possible".

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