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United States reaches deal with Chinese tech firm ZTENaija247news

10 June, 2018, 11:18 | Author: Shawna Walton
  • ZTE has been banned from purchasing sensitive technology from the US over its illegal sales to Iran and North Korea

The United States and China have reached a deal that allows the Chinese telecommunications giant ZTE Corp.to stay in business in exchange for paying an additional $1 billion in fines and agreeing to let US regulators monitor its operations.

The trouble with ZTE goes back to previous year when the company admitted to selling us technology to Iran and North Korea in violation of economic sanctions.

ZTE did not immediately respond to requests for comment on Thursday.

For breaking an agreement that was put in place after it pleaded guilty to violating U.S. sanctions in 2017, the Department of Commerce banned all United States businesses from selling components to Chinese manufacturer ZTE for seven years in April. 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.

The department says the deal includes a $1 billion penalty against ZTE and a USA -chosen compliance team to be embedded at the company.

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

For those unaware, Shenzhen-based ZTE violated sanctions placed on both Iran and North Korea by the U.S. Their function will be to monitor on a real-time basis ZTE's compliance with USA export control laws. Reuters earlier on Tuesday reported that ZTE has signed an agreement in principle that would allow the crippled company to resume operations. The U.S. Department of Commerce wishes to amend the settlement agreement so that the $361 million that the company had already paid would be included.

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

Under President Donald Trump 's administration, ZTE's status as a Chinese multinational has also put it in the fray of a larger trade dispute between the us and China. "This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29 billion". It was blocked from purchasing parts from US companies, sanctions that had crippled the company.

Under the deal, the ban is suspended for 10 years and can be activated by Commerce should the company commit additional violations during that decade-long "probationary period", the department said in a statement announcing the agreement.

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