ZTE signs preliminary agreement to lift USA ban

ZTE will reportedly pay total of $1.7B to lift US Commerce Department ban

U.S. Commerce Secretary Wilbur Ross said on Thursday that Washington has reached a deal with ZTE Corp that would reverse a ban on buying parts from U.S. suppliers, allowing China's No. 2 telecommunications equipment maker to get back into business.

Reuters reported Tuesday that under the preliminary agreement, ZTE would pay a $1 billion fine in addition to another $400 million in an escrow in case it commits future sanctions violations. That settlement also reportedly doesn't include the $361 million ZTE already paid to the Commerce Department. Hopefully this time ZTE respects the wishes of the USA government to not sell to banned countries and ultimately this may lead to China and the US finally coming to a real agreement on the larger on-going trade discussion. Gogo Wireless was one of the first US companies to speak publicly about the potential impact of the ZTE ban.

ZTE could not be reached for comment by either Reuters or the Post.

Though some Trump administration officials attempted to frame the ZTE sanctions as a separate national security issue, the president himself appeared to pull the discussions into the broader talks over trade.

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Mr Ross emphasised that the agreement was separate from trade negotiations between the United States and China. Further fees could be assessed for a grand total as much as $1.7 billion. ZTE's failure to comply with these terms triggered the suspended denial order that prohibits American companies from doing business with the Shenzhen-based company, plunging it into crisis.

ZTE has promised to replace its board and executive team as part of the deal. An agreement that allows the crippled company to reopen was seen as a key Chinese demand as the world's two largest economies try to avoid a trade war that could undermine global growth. "Congress should move in a bipartisan fashion to block this deal right away".

The sources said ZTE also agreed to allow USA representatives to make site visits without coordinating with Chinese government officials, as required by a non-public agreement between the countries.

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

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