Chinese phone maker ZTE saved from brink after deal with U.S.

ZTE signs preliminary agreement to lift US ban

ZTE signs preliminary agreement to lift US ban

Trump barged into the ZTE case last month by tweeting that he was working with President Xi Jinping to put ZTE "back in business, fast" and save tens of thousands of Chinese jobs.

In line with recent speculation, the tech giant agreed to what Commerce Secretary Wilbur Ross aptly labeled as "the strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls".

The Trump administration stuck a deal Thursday with Chinese telecom ZTE to let the company do business in the USA even though it previously violated sanctions against Iran.

A US-appointed compliance team will monitor the arrangement, which if broken will see ZTE surrender the $400 million and be banned from the U.S. component market for ten years. Further fees could be assessed for a grand total as much as $1.7 billion. The government will suspend the 10-year ban but it can activate the ban if there are any violations.

Early reports claimed that ZTE had already signed an agreement with the United States with these terms, but a spokesperson in touch with Politico says that "no definitive agreement has been signed by both parties". The decision to embed a US -appointed compliance team is potentially more stringent than the management purge Trump initially floated. At the same time, it continued to ask the USA government to lift the ban.

United States 'closed the door' on tariff talks — European Union trade official
The US is Mexico's largest trading partner, receiving about 80 per cent of the country's exports. The result has been a boon for Texas and the United States, as well as Mexico and Canada.

China's ZTE will pay a $1 billion penalty and will embed a US -appointed compliance team, terms that are similar to those President Trump discussed last month when he revealed that Chinese leaders had asked him to look into the matter. Specifically, some observers are looking for China's Ministry of Commerce to finally approve Qualcomm's bid to purchase NXP.

In addition, the company is agreeing to retain a team of special compliance coordinators selected by USA regulators. These coordinators will report directly to the Commerce Department's Bureau of Industry and Security for 10 years. China has vowed to retaliate on everything from US soybeans to airplanes, and said it will abandon its commitments if the USA follows through on its tariff threat.

One of the United States companies caught in the crossfire is Qualcomm Inc QCOM.O , whose products account for the lion's share of chips inside ZTE smartphones.

It crippled the company, which shut down major operations and left it unlikely to survive - until President Donald Trump got involved. That left a US deficit of more than $375 billion. For example, Gogo Wireless uses ZTE equipment for its in-flight connectivity systems.

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