Commerce Secretary: US reaches deal with China's ZTE

Commerce Secretary: US reaches deal with China's ZTE

President Donald Trump has drawn criticism from members of Congress for trying to reach a deal to save ZTE and the jobs it provides to Chinese workers. Meanwhile to ensure ongoing compliance, ZTE is being required to put a further $400M in escrow, which would be forfeit if they violated U.S. export regulations again.

"Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before BIS will remove ZTE from the Denied Persons List".

"At about 6:00 A.M. this morning, we executed a definitive agreement with ZTE and that brings, that brings to a conclusion this phase of the developing with them", Ross said in an interview with CNBC. The move will allow the company to get back into the business.

In April, the US Commerce Department blocked American firms from selling parts or providing services to ZTE, which also makes telecommunications equipment. They must also post calculations of the usage of US -made components on a public website. The company already has a United States court-appointed monitor. It's not clear that Congress can do anything to stop the deal, though a bipartisan group of senators has signed on to legislation that would make it more hard for ZTE to operate in the U.S. Meanwhile, on the business side, some U.S. companies got a boost from the announcement.

More news: Amazon buys United Kingdom rights to 20 Premier League matches

The company will pay a $1 billion fine and agree to establish and pay for an in-house compliance team staffed by USA experts, Ross told CNBC. Their function will be to monitor on a real-time basis ZTE's compliance with USA export control laws. 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.

This marks a dramatic change of viewpoint for Secretary Ross, who in April blasted ZTE and levied the original 7-year ban. According to Trump administration officials, ZTE gave numerous wayward executives their full 2016 bonuses and then lied about it to the U.S. government. The company already has a USA court-appointed monitor.

The suppliers include Qualcomm Inc (QCOM.O), Broadcom Inc (AVGO.O) and Intel Corp (INTC.O), as well as smaller optical component makers Acacia Communications Inc (ACIA.O) and Oclaro Inc (OCLR.O). The US government will receive up to $1.7 billion in fines as part of the settlement.

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