USA strikes ZTE deal, commerce secretary announces, but congressional critics object

USA strikes ZTE deal, commerce secretary announces, but congressional critics object

Troy Powers
June 8, 2018

After the U.S. Department of Commerce banned ZTE from importing US-made components, due to the company violating an agreement it made in 2017, ZTE shut down most operations while it fought to lift the ban.

For breaking an agreement that was put in place after it pleaded guilty to violating USA sanctions in 2017, the Department of Commerce banned all United States businesses from selling components to Chinese manufacturer ZTE for seven years in April. The decision amounted to a death sentence to ZTE, which relies on USA parts and which announced that it was halting operations.

ZTE will pay a $1 billion penalty, and put another $400 million in escrow to cover possible future violations before being stricken from a sanctions list.

"We think this settlement, which brought the company - a $17 billion company - it its knees, more or less put them out of business, now they're accepting having the compliance team come in, whole new management, whole new board, should serve as a very strong deterrent not only for them but for other potential for bad actors", Ross said.

It's not clear why the Trump administration was so willing to strike a deal with ZTE less than two months after handing down a harsh punishment.

ZTE was fined United States dollars 1.2 billion in March 2017, but in April, Washington banned the sale of crucial USA components to the firm after finding it had lied multiple times and failed to take action against employees responsible for sanctions violations.

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

ZTE is a Chinese telecommunications manufacturer, founded in 1985, that makes low-cost Android smartphones.

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A ZTE spokesman couldn't be reached for comment. Instead, ZTE seems to have given bonuses to those same executives.Because of this, the Department of Commerce ordered the denial of export privileges against ZTE, which also meant that American companies would no longer be able to sell equipment to ZTE.

"I think where we ended up on ZTE is in a better place", said Gutierrez, who has been critical of other Trump administration trade policies. "No decision has been reached by both sides as of now", Kudlow told reporters.

Zhongxing Telecommunications Equipment (ZTE) Corporation is a Chinese company headquartered in Shenzhen, Guangdong, China. The gear maker pleaded guilty previous year in federal court in Texas for conspiring to violate US sanctions to Iran.

USA chipmaker Qualcomm has been trying to buy NXP Semiconductors of the Netherlands, but given the company's global reach, the deal had to be approved by numerous countries' antitrust regulators, including China's.

ZTE's survival has been a topic of discussion in high-level U.S.

The Chinese Commerce Ministry said Thursday that some progress was made in talks that ended last weekend.

A sign of ZTE Corp is pictured at its service centre in Hangzhou, Zhejiang province, China May 14, 2018.

ZTE supplier Oclaro Inc was up 1.3 percent while Acacia Communications Inc was down 0.6 percent.