Wilbur Ross says Trump administration has reached "definitive agreement" with ZTE

Wilbur Ross says Trump administration has reached

Wilbur Ross says Trump administration has reached "definitive agreement" with ZTE

The fines announced on June 7 come on top of $892 million ZTE has already paid for breaking USA sanctions by selling equipment to North Korea and Iran. Ross told CNBC the Chinese telecom company will pay the $1 billion fine, replace its entire management team and board and embed a new compliance department that reports to the U.S.

Ross said the US will install its "own compliance people" to monitor the company and shareholders will bring in new management and board.

The Trump administration has agreed to relax its punishment of Chinese telecom company ZTE, Commerce Secretary Wilbur Ross said Thursday.

Whatever the case, as long as ZTE can keep its nose clean and adhere to the terms of this newest deal with the US government, it will be able to solider on as China's second-largest smartphone OEM.

In April, the US Department of Commerce issued an order barring US companies from selling software or hardware to ZTE for seven years, after the company violated US sanctions by working with Iran and North Korea. Trump has countered that USA companies were also hurt by the ban because they could no longer sell parts to the firm. And the company will be required to host and pay for a US-selected compliance team that will oversee the company's compliance over the term of the agreement.

The tentative agreement is under review by both US and Chinese officials and could fall apart under final reviews, according to one of the people, who spoke on condition of anonymity to discuss internal deliberations. But Reuters reports that ZTE and the United States government have signed a preliminary agreement that will lift the Denial Order.

The company will pay a $1 billion fine and agree to establish and pay for an in-house compliance team staffed by USA experts, Ross told CNBC.

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One of the US companies caught in the crossfire is Qualcomm Inc, whose products account for the lion's share of chips inside ZTE smartphones.

"ZTE is essentially on probation", said Amanda DeBusk, chair of the global trade and government regulation practice at Dechert LLP and a former commerce official.

The new deal will also see ZTE paying $400m into a holding account to insure against future violations.

Ross, speaking about the agreement on CNBC today, said he did not think the arrangement would have any effect on tariff talks with China.

Senator Ron Wyden raised both issues Thursday as he called for the agreement to be reversed.

Trump previously highlighted the fact that ZTE buys a tremendous amount of equipment from American companies and claimed an agreement to revive the company would be just a small component of an overall trade deal with China.

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