Commerce Secretary Wilbur Ross on Thursday announced a deal with Chinese telecommunications company ZTE that includes a $1 billion fine - a move that may indicate progress in high-stakes trade talks between the USA and China.
The deal announced by Commerce Secretary Wilbur Ross allows ZTE to stay in business.
On Tuesday, it was reported that ZTE, the fourth-largest smartphone maker in the U.S. by market share, had agreed in principle to a settlement that would lift the seven-year Commerce Department ban preventing United States companies from doing business with it. Commerce Department spokesman James Rockas told Reuters on Tuesday that "no definitive agreement has been signed by both parties". The ban also hurt American companies that supply ZTE. He countered by highlighting that ZTE "buys a big percentage of individual parts from U.S. companies" and saying the telecom giant's fate reflects the U.S. relationship with China. Republican Senators Marco Rubio and Susan Collins are co-sponsors, as are Democrats Richard Blumenthal and Bill Nelson.
The agreement also follows a reported offer by Beijing to ramp up purchases of American goods and thereby drive down the yawning trade deficit between the world's two largest economies - moving part-way towards meeting a key demand of US President Donald Trump in ongoing trade talks.
If you'll recall, last month ZTE was handed an export ban as the result of not following the terms of a court case years ago. However ZTE's immediate woes now appear to be coming to an end; the Bureau of Industry and Security and ZTE have come to an agreement that will see the USA tech ban suspended in return for a massive settlement, leadership changes, and allowing significant & ongoing USA oversight of the company's compliance.
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Commerce Secretary Wilbur Ross announced an agreement with ZTE early Thursday that would impose additional financial penalties on and install US -approved compliance officials within ZTE.
USA chipmaker Qualcomm has been trying to buy NXP Semiconductors of the Netherlands, but given the company's global reach, the deal had to be approved by numerous countries' antitrust regulators, including China's. The U.S. government feared that ZTE would then be exporting that technology to sanctioned countries again. The company already has a USA court-appointed monitor.
Senate Democratic leader Chuck Schumer called the agreement "a 180-degree turn away from the president's promise to be tough on China".
A US investigation into ZTE was launched after Reuters reported in 2012 the company had signed contracts to ship hardware and software worth millions of dollars to Iran from some of the best-known usa technology companies.
The U.S. and China are in a race to build the first 5G network, in part because it means jobs.
Shares in NXP Semiconductors NV rose 4.9 percent in NY after news of the ZTE deal was announced. Qualcomm rose 1.3 percent.