US Cuts Deal With Chinese Smartphone Maker ZTE, Despite Opposition From Senators

US Cuts Deal With Chinese Smartphone Maker ZTE, Despite Opposition From Senators

US companies provide an estimated 25 to 30 percent of components in ZTE's equipment, which includes smartphones and gear to build telecommunications networks.

The agreement requires ZTE to pay almost $1 billion United States dollars, as well as keep $400 million of penalty in escrow, or in custody of a third party, before the Commerce Department's Bureau of Industry and Security (BIS) will remove the company off of its Denied Persons List.

The Department of Commerce will also change its 2017 settlement agreement with ZTE, counting the $361 million it has already paid in penalties toward the sum, Reuters reported.

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

In return, the U.S.is rescinding the seven-year ban on exporting components from USA -based companies in its continuing operations (primarily, producing smartphones). The company will also have to keep a team of "compliance coordinators" for the next 10 years, which will be selected by the DoC. Ross had been instructed to look into easing restrictions on ZTE by President Trump, who had received a personal request from Chinese President Xi Jinping.

But then in May, US president Trump had an apparent change of heart; despite election promises of prioritizing US jobs, Trump publicly anxious that ZTE's near-bankruptcy was causing there to be "too many jobs in China lost". Ross, speaking on CNBC today, said that a compliance team picked by the us will be embedded at ZTE.

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Ross said the deal was struck at around 6 a.m. ET on Thursday, and it will impose "the most strict compliance that we've ever had on any company, American or foreign".

"But to just shut the company down due to senior level management mistakes doesn't make sense nor help the global telecom market", he added.

ZTE's return to the US market is good news for several American companies. They must also post calculations of the usage of USA -made components on a public website. That penalty was assessed following an investigation showing that ZTE had violated US sanctions and had provided technology to Iran and North Korea.

The US had blocked ZTE's access to American suppliers, saying it had violated a sanctions settlement.

Washington and Beijing have pursued a halting series of trade talks, with Trump demanding a $200 billion reduction in its trade deficit with China.

Shares of Acacia and Oclaro extended their gains on Tuesday in heavy trading after news of the preliminary deal, ending up 1.7 percent and 1.8 percent, respectively.

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