Published: Sat, June 09, 2018
Money | By Armando Alvarado

ZTE signs initial agreement to end US ban on Chinese company

ZTE signs initial agreement to end US ban on Chinese company

The ban on ZTE became a key focus in crunch trade talks between Washington and Beijing, and a deal to lift it was struck as US President Donald Trump seeks trade concessions from China and negotiations continue to avoid a trade war between the world's two largest economies.

Separately, The South China Morning Post reports that ZTE has sent out letters of reprimand to 35 current and former employees involved in the illegal sales to Iran as it sought to claw back bonuses from those responsible individuals who had already left the telecom firm.

In April, the U.S. accused ZTE of not living up to the terms of the March agreement and banned it from dealing with United States companies for seven years - effectively a death sentence because up to 60% of the components of its mobile phones, for example, are sourced from American firms.

Some officials involved with the negotiations have said they were unrelated to the ongoing trade talks between the US and China, but others have suggested that ZTE was a bargaining chip for the USA and that China could make other concessions now that ZTE has won a reprieve. ZTE also exported similar material to North Korea.

There are also some political ramifications to this deal - which are outside the scope of AnandTech's purview - but as the New York Times notes, many see this as part of a larger peace offering in ensuring a new trade deal between the USA and China. 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.

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According to Reuters, the company has agreed to pay a total of $1.7 billion in penalties in a settlement with the Commerce Department.

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

In addition to the additional fines, ZTE will also replace their entire board of directors and senior leadership, as well as retain a special compliance team answerable to BIS for 10 years. Their function will be to monitor on a real-time basis ZTE's compliance with USA export control laws. The company already has a US court-appointed monitor.

According to Reuters, ZTE has signed a preliminary agreement that will lift the ban on USA companies providing ZTE with goods. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .

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