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US signs off on deal to lift trade sanctions against ZTE
ZTE Corp. will regain access to U.S. technology after the U.S. Commerce Department today signed off on a final deal subject to the Chinese electronics giant making a final payment.
The deal was brokered by the Trump Administration in response to a decision by the Commerce Department to ban ZTE from being able to obtain U.S. technology in April after it breached a previous deal. ZTE was found to have sold U.S. technology to Iran and North Korea.
The deal requires ZTE to pay a $1 billion fine, place $400 million in escrow as insurance against future breaches and replace its senior management and board of directors.
ZTE has been moving toward reaching the agreement, most recently having replaced both its executive team and board of directors as of July 5. The company undertook a clean sweep of its C-suite positions — chief executive officer, chief technology officer, chief financial officer and other senior managers. Xu Ziyang, ZTE’s former managing director for Europe, was appointed ZTE’s new CEO.
According to Reuters, the only outstanding part of the deal is ZTE paying $400 million into escrow. Once it does so, the ban will be removed.
ZTE currently has part of the ban temporarily lifted until Aug. 1, but that only applies to servicing existing customers. A full lifting of the ban will allow it to use chips manufactured by companies such as Qualcomm Technologies Inc. and Intel Corp. in its products again.
The lack of access to U.S. technology, which accounts for an estimated 25 to 30 percent of the components used in its product portfolio, caused ZTE to announce in May that it was ceasing major operations. So a resumption of supply would see ZTE resume production.
“The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case,” the Commerce Department said in a statement. “It will deter future bad actors and ensure the Department is able to protect the United States from those that would do us harm.”
While legally moving ahead, the deal still faces a potential challenge from Congress after the Senate voted against the deal June 18.
Photo: Kārlis Dambrāns/Flickr
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