June 18, 2018

ZTE will reportedly pay over $1 billion to lift U.S. ban

09 June 2018, 07:23 | Melvin Schneider

The Trump administration is putting the finishing touches on a deal with ZTE. Bloomberg’s Jodi Schneider reports

The Trump administration is putting the finishing touches on a deal with ZTE. Bloomberg’s Jodi Schneider reports

Ross also said that a compliance team picked by the USA will be embedded at ZTE and that the Chinese company must change its board and executive team in 30 days.

"ZTE is essentially on probation", said Amanda DeBusk, chair of the global trade and government regulation practice at Dechert LLP and a former commerce official. For other USA companies, ZTE is a supplier. It's certainly a good precedent for this situation.

The news did little to appease critics. It was introduced by Republican Senator Tom Cotton and Democrat Chris Van Hollen as an amendment to the National Defense Authorization Act, or NDAA, a defense policy bill Congress passes every year. These concerns aren't new; back in 2012, the House permanent select committee on intelligence released a report on the serious counterintelligence concerns associated with ZTE equipment.

ZTE plead guilty to conspiring to violate U.S. sanctions against Iran and North Korea in a USA court past year.

The trouble with ZTE goes back to previous year when the company admitted to selling USA technology to Iran and North Korea in violation of economic sanctions. As a result, BIS activated a suspended denial order against the company which effectively prohibited them from using US -built components in their devices and selling their products in the States.

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".

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In return, the Commerce Department will lift the denial order banning ZTE from buying American products, which has crippled the company.

Washington lawmakers were indignant last month after Trump offered to rescue ZTE as a personal favor to Chinese President Xi Jinping - even though the company is widely considered a liability for U.S. national cyber-security.

DWYER: Today's deal came less than two months after the original seven-year ban was announced and less than one month after President Trump tweeted that he wanted to help ZTE survive.

Washington and Beijing have reached a deal to ease sanctions that brought Chinese smartphone maker ZTE to the brink of collapse, the US Commerce Department announced Thursday.

Negotiations over ZTE had been linked to wider trade talks between the U.S. and China. The dominance of US semiconductor tech in Chinese phones has actually led to great angst in Beijing, and reveals that American firms are ahead in semiconductor and other technologies. In addition, lawmakers on both sides of the aisle have criticized bailing out ZTE.

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

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