ZTE signs agreement with U.S. to lift trade ban

ZTE signs agreement with U.S. to lift trade ban

Chinese telecommunications giant ZTE Corp. was poised to resume business with its USA suppliers as the last major hurdle of the deal President Donald Trump made to save the firm had been cleared. After many suspensions, fines and a total trade ban, now the DoC has announced on Twitter that the agreement is about to be finalized. The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case.

ZTE, China's second largest telecoms manufacturer, depends on US-made components for the production of its handsets. Everything could have been over if ZTE had said it was some miscommunication, but the United States found out the company deliberately ignored the embargo and went ahead with Iranian deal.

ZTE has paid the $1 billion fine to the Treasury Department.

The Commerce Department in April announced severe penalties against ZTE, punishment for violating sanctions by selling products to Iran and North Korea and then lying about its practices to federal investigators.

Why it matters: The US and China might be locked in a trade war, but it appears that the ZTE ban is one area where Donald Trump isn't clamping down hard.

A few weeks later, the House of Representatives passed its own version that would allow ZTE to continue using United States suppliers, but would bar ZTE from selling its products and services to U.S. government agencies. Shares of smaller USA suppliers, which are more dependent on ZTE, pared losses after the news, including optical component makers Acacia Communications Inc, Oclaro Inc and Lumentum Holdings Inc.

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Last week, the Commerce Department temporarily lifted part of the ban, but that only applied to the maintenance of existing networks and equipment. It also will operate for the next 10 years under a suspended ban.

ZTE also agreed to allow the US government unfettered site visits to verify USA components are being used as claimed by ZTE, and to post calculations of the USA components in its products on its website in Chinese and English.

Leaders of intelligence agencies have said they are concerned that ZTE, Huawei Technologies and some other Chinese companies are beholden to the Chinese government or Communist Party, raising the risk of espionage.

The US House and Senate have each passed amendments to their defence bills that would roll back Trump's settlement.

Chuck Schumer, the Senate's top Democrat, on Wednesday called the ZTE deal "awful" and said it would "undermine our national and economic security".

The Senate and the House are in the process of reconciling the differences between the two versions.

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