ZTE fined $1 billion

ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

Secretary of Commerce Wilbur Ross has announced that telecommunications provider and mobile device maker ZTE, which is based in Shenzhen, China, has agreed to pay $1 billion in penalties and place an additional $400 million in escrow to cover potential future trade penalties.

In April, the U.S. Commerce Department banned ZTE from buying parts from American suppliers after the company was found to have falsely informed the U.S. government that it had disciplined employees responsible for violations that led to a settlement past year. Reuters reports U.S Commerce Department ban on ZTE is likely to be lifted although " no definitive agreement has been signed by both parties" just yet.

The fine comes on top of a roughly $1 billion penalty ZTE has already paid for having sold equipment to North Korea and Iran in violation of US sanctions.

"If they do violate it again, in addition to the billion dollars they are paying us up front, we had them put $400 million in escrow", he said.

Critics like senator Marco Rubio have criticized the Trump administration's willingness to cut a deal with ZTE, saying it undercuts U.S. national security.

ZTE's dispute with the U.S. government stems from allegations that the Chinese company sold technology to North Korea and Iran in defiance of USA sanctions. Apparently, a part of the reason is that ZTE wants to replace a top executive with one from another company which the U.S. considers a potential threat, so we'll have to wait and see where things go from here... The ban also hurt American companies that supply ZTE.

Trump's North Korea summit may bring peace declaration - but at a cost
Trump has credited his "maximum pressure" policy with bringing North Korea to the negotiating table. The president's national security strategy, released in December, said little on the subject.

Zhongxing Telecommunications Equipment (ZTE) Corporation is a Chinese company headquartered in Shenzhen, Guangdong, China.

In return, the United States will be suspending - but not removing - the USA technology export ban that has caused the company to grind to a halt to begin with.

Under the deal, ZTE must retain a compliance team selected by the Commerce Department for 10 years.

Reuters reported exclusively on Tuesday that ZTE had signed a preliminary agreement with the Commerce Department, along with the fine and other terms.

"We are literally embedding a compliance department of our choosing into the company to monitor it going forward", said Ross on CNBC.

The U.S. also needs China's help negotiating the denuclearization of North Korea ahead of a June 12 summit between President Donald Trump and North Korea's Kim Jong Un. "This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29 billion". The Chinese authorities' involvement, on the backdrop of ongoing trade negotiations with the USA, have saved ZTE from almost-certain death.

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